Aussie rallies on U.S.-China trade deal optimism, Asia shares at 19-month highs, investors eye UK economic data - Monday, January 13th, 2020.
- Gold dips on easing U.S.-Iran tensions
- Eurozone growth seen at 1.1% in 2020 - Bundesbank official
Economic Data Ahead
- (0200 ET/0700 GMT) German wholesale price index
- (0400 ET/0900 GMT) Italy retail sales
- (0430 ET/0930 GMT) UK trade balance
- (0430 ET/0930 GMT) UK gross domestic product
- (0430 ET/0930 GMT) UK manufacturing production
- (0430 ET/0930 GMT) UK industrial production
Key Events Ahead
- No significant events scheduled
DXY: The dollar index steadied after falling from a 2-week peak in the previous session on data showing U.S. nonfarm payrolls missed forecasts with a rise of 145,000, while wages and hours worked were soft. The greenback against a basket of currencies traded flat at 97.35, having touched a high of 97.58 on Friday, its highest since Dec. 26.
EUR/USD: The euro rallied, extending gains for the third straight session after a Bundesbank official stated that the Euro zone’s economic growth is expected to reach 1.1 percent this year, supported by fiscal easing. The European currency traded 0.1 percent up at 1.1129, having touched a low of 1.1085 on Friday, its lowest since December 26. Investors’ attention will remain on German wholesale price index amid a lack of economic data from the U.S. docket Immediate resistance is located at 1.1144, a break above targets 1.1160. On the downside, support is seen at 1.1102, a break below could drag it below 1.1082.
USD/JPY: The dollar surged, hovering towards a 4-week peak hit in the previous session, boosted by optimism on the U.S.-China trade front. On Wednesday, U.S.-China trade deal is due to be signed at the White House, though talks on a Phase II deal are likely to drag on for months. The major was trading 0.2 percent up at 109.62, having hit a high of 109.68 on Friday, its highest since Dec. 13. Investors’ will continue to track the broad-based market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 109.83, a break above targets 110.05. On the downside, support is seen at 109.32, a break below could take it near at 109.11 (21-DMA).
GBP/USD: Sterling plunged; extending losses for the fifth straight session after Bank of England policymaker Gertjan Vlieghe said he will vote for a cut in interest rates later this month. The major traded 0.2 down at 1.3030, having hit a low of 1.3012 on Thursday, it’s lowest since Dec. 27. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3100 (5-DMA), a break above could take it near 1.3150. On the downside, support is seen at 1.3000, a break below targets 1.2957. Against the euro, the pound was trading 0.3 percent down at 85.34 pence, having hit a high of 84.54 on Wednesday, it’s highest since Dec. 17.
AUD/USD: The Australian dollar rose to a 1-week peak ahead of the signing of the Phase 1 trade deal between the United States and China on Wednesday. The Aussie trades 0.2 percent up at 0.6914, having hit a high of 0.6919 earlier, it’s highest since Jan. 7. Investors will continue to track overall market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate support is seen at 0.6868, a break below targets 0.6838. On the upside, resistance is located at 0.6936 (10-DMA), a break above could take it near 0.6957.
NZD/USD: The New Zealand dollar nudged higher as risk sentiment improved ahead of the planned signing of an initial U.S.-China trade deal this week. The Kiwi trades 0.2 percent up at 0.6649, having touched a low of 0.6600 on Thursday, its lowest level since Dec. 23. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6673 (10-DMA), a break above could take it near 0.6701. On the downside, support is seen at 0.6617, a break below could drag it below 0.6596.
- Asian shares rallied to fresh 19-month highs ahead of the expected signing on a Phase 1 China-U.S. trade deal, although markets await the details of the agreement.
- MSCI's broadest index of Asia-Pacific shares outside Japan jumped 0.5 percent.
- Australia's S&P/ASX 200 index declined 0.4 percent to 6,903.70 points and South Korea's KOSPI advanced 0.7 percent to 2,223.62 points.
- Shanghai composite index rose 0.1 percent to 3,095.33 points, while CSI 300 index traded 0.3 percent higher at 4,176.93 points.
- Hong Kong’s Hang Seng traded 0.8 percent higher at 28,865.76 points. Taiwan shares added 0.5 percent to 12,087.52 points.
- Crude oil prices declined as fears of conflict between the United States and Iran eased, although planned signing of an initial U.S.-China trade deal this week limited downside. International benchmark Brent crude was trading 0.2 percent lower at $64.94 per barrel by 0345 GMT, having hit a high of $71.31 on Wednesday, its highest since May 22. U.S. West Texas Intermediate was trading 0.2 percent down at $59.05 a barrel, after rising as high as $65.62 on Wednesday, its highest since April 25.
- Gold prices plunged as expectations of an interim trade deal signing between the United States and China dented safe-haven demand. Spot gold eased 0.4 percent to $1,556.24 per ounce by 0348 GMT, having touched a high of $1611.27 on Wednesday, its highest since March 2013. U.S. gold futures fell 0.2 percent at $1,556.30.
The Australian bonds jumped during Asian session of the first trading day of the week, tracking a similar movement in the U.S. Treasuries after jobs report in the States for the month of December disappointed market sentiments, along with the weakest wage data in over a year. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 4 basis points to 1.213 percent, the yield on the long-term 30-year bond plunged 5 basis point to 1.825 percent and the yield on short-term 2-year suffered 2 basis points to 0.798 percent.