Asia Markets Update On January 14th, 2020

Asia Markets Update On January 14th, 2020

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Japanese Yen eases as Washington drops China FX manipulator label, Asian shares at record high, investor await U.S.-China trade deal - Tuesday, January 14th, 2020.

Market Roundup

  • Oil prices dip as Mideast tensions ease
  • Gold falls ahead of U.S.-China trade deal

Economic Data Ahead

  • No major economic data releases

Key Events Ahead

  • (0330 ET/0830 GMT) ECB's Mersch speech

FX Beat

DXY: The dollar index declined as investors shifted their attention on the possibility of an imminent war in the Middle East after the United States imposed new sanctions on Iranian officials and businesses. The greenback against a basket of currencies traded 0.1 percent down at 97.35, having touched a high of 97.58 on Friday, its highest since Dec. 26.

EUR/USD: The euro rose, extending previous session gains ahead of the signing of the Phase 1 trade deal between the United States and China, the first staging post in ending a dispute that threatened to dent global growth. The European currency traded 0.05 percent up at 1.1137, having touched a high of 1.1147 on Monday, its highest since January 8. Investors’ attention will remain on ECB Mersch's speech, ahead of the U.S. consumer price index, monthly budget statement and Fed William's speech.  Immediate resistance is located at 1.1156 (10-DMA), a break above targets 1.1174. On the downside, support is seen at 1.1110, a break below could drag it below 1.1082.

USD/JPY: The dollar rallied to a 7-1/2 month peak after the U.S. Treasury Department reversed its decision in August to designate China as a currency manipulator. The major was trading 0.1 percent up at 110.09, having hit a high of 110.21 earlier, its highest since May 23. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index, monthly budget statement and Fed William's speech. Immediate resistance is located at 110.62, a break above targets 110.95. On the downside, support is seen at 109.76, a break below could take it near at 109.28 (5-DMA).

GBP/USD: Sterling consolidated near a 3-week low after yesterday's data showed Britain’s economy grew at its weakest annual pace in more than seven years in November, raising the chances of a cut to interest rates. The major traded flat at 1.2982, having hit a low of 1.2961 on Monday, it’s lowest since Dec. 26. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3065, a break above could take it near 1.3106. On the downside, support is seen at 1.2935, a break below targets 1.2904. Against the euro, the pound was trading flat at 85.71 pence, having hit a low of 85.81 on Monday, it’s lowest since Dec. 23.

AUD/USD: The Australian dollar surged as a high-level Chinese delegation arrived in Washington ahead of Wednesday’s signing of a trade agreement aimed at easing tensions between the two countries. The Aussie trades 0.05 percent up at 0.6905, having hit a high of 0.6919 on Monday, it’s highest since Jan. 7. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6868, a break below targets 0.6838. On the upside, resistance is located at 0.6936, a break above could take it near 0.6957.

NZD/USD: The New Zealand dollar declined, extending previous session losses, after a senior U.S. Chamber of Commerce official said it is not an end to the trade war as significant challenges remain. The Kiwi trades down at 0.6626, 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 0.6672, a break above could take it near 0.6701. On the downside, support is seen at 0.6601, a break below could drag it below 0.6588.

Equities Recap

  • Asian shares advanced as signs of goodwill between China and the United States supported optimism for global growth.
  • MSCI's broadest index of Asia-Pacific shares outside Japan rallied.
  • Tokyo's Nikkei rallied 0.6 percent to 23,996.35 points, Australia's S&P/ASX 200 index surged 0.8 percent to 6,956.20 points and South Korea's KOSPI advanced 0.4 percent to 2,237.09 points.
  • Shanghai composite index eased 0.05 percent to 3,113.96 points, while CSI 300 index traded 0.1 percent down at 4,200.66 points.
  • Hong Kong’s Hang Seng traded 0.2 percent lower at 28,901.93 points. Taiwan shares shed 0.3 percent to 12,154.57 points.

Commodities Recap

  • Crude oil prices rose as receding Middle East tensions eased market concerns, with both Tehran and Washington desisting from any further escalation after this month’s clashes. International benchmark Brent crude was trading 0.1 percent higher at $64.30 per barrel by 0339 GMT, having hit a low of $63.91 on Monday, its lowest since Dec. 12. U.S. West Texas Intermediate was trading 0.2 percent up at $58.14 a barrel, after falling as low as $57.94 on Monday, its lowest since Dec. 6.
  • Gold prices plunged to a 1-1/2 week low, as investors opted for riskier assets after the United States dropped China's designation as a currency manipulator ahead of an interim deal between the two sides to ease their trade dispute. Spot gold declined 0.5 percent to $1,539.76 per ounce by 0343 GMT, having touched a high of $1611.27 on Wednesday, its highest since March 2013. U.S. gold futures fell 0.9 percent to $1,537.10.

Treasuries Recap

The Australian bonds suffered during Asian session of the second trading day of the week, tracking a similar movement in the U.S. Treasuries as investors placed bullish bets on hopes of a U.S.-China trade deal, scheduled to be signed on Wednesday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 4 basis points to 1.252 percent, the yield on the long-term 30-year bond surged 3-1/2 basis points to 1.865 percent and the yield on short-term 2-year gained 1-1/2 basis points to 0.817 percent.