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Asia Roundup: Aussie consolidates on mixed employment data, greenback steadies after upbeat U.S. economic data, Asian shares off 9-month peak – Thursday, April 18th, 2019

Market Roundup

  • Japan's Aso to travel to U.S. April 25 for meeting with Mnuchin – source
     
  • State media says new tactical weapons test overseen by N.Korean leader
     
  • White House, Justice Department officials discussed Mueller report ahead of release -NYT
     
  • Japan April manufacturing contraction slows but export slump deepens – Flash PMI
     
  • Fed may need to buy more bonds than before crisis to manage U.S. rates -official
     
  • Fed's Bullard says economic data should improve, yield curve steepen in coming months
     
  • Fed's policy stance will be favourable for China's capital flows – FX regulator
     
  • Indonesian “quick counts” underline Widodo poll win, markets rally
     
  • Australia Mar Employment, 25.7k, 12.0k f'cast, 4.6k prev
     
  • Australia Mar Unemployment Rate, 5.0%, 5.0% f'cast, 4.9% prev
     

Economic Data Ahead

  • (0200 ET/0600 GMT) Germany Mar Producer Prices YY, 2.7% f'cast, 2.6% prev
     
  • (0315 ET/0715 GMT) France Apr Markit Mfg Flash PMI, 50.0 f'cast, 49.7 prev
     
  • (0315 ET/0715 GMT) France Apr Markit Service Flash PMI, 49.8 f'cast, 49.1 prev
     
  • (0330 ET/0730 GMT) Germany Apr Markit Mfg Flash PMI, 45.0 f'cast, 44.1 prev
     
  • (0330 ET/0730 GMT) Germany Apr Markit Service Flash PMI, 55.1 f'cast, 55.4 prev
     
  • (0400 ET/0800 GMT) Italy Apr Consumer Confidence, 111.2 f'cast, 111.2 prev
     
  • (0400 ET/0800 GMT) EZ Apr Markit Mfg Flash PMI, 47.9 f'cast, 47.5 prev
     
  • (0400 ET/0800 GMT) EZ Apr Markit Service Flash PMI, 53.2 f'cast, 53.3 prev
     
  • (0400 ET/0800 GMT) EZ Apr Markit Comp Flash PMI, 51.8 f'cast, 51.6 prev
     
  • (0430 ET/0830 GMT) Great Britain Mar Retail Sales YY, 4.6% f'cast, 4.0% prev
     
  • (0500 ET/0900 GMT) Italy Feb Industrial Orders YY NSA, -1.2% prev
     

Key Events Ahead

  • (1210 ET/1610 GMT) Atlanta Fed's Raphael Bostic participates in converstion before the Economic Roundtable in Jacksonville, Florida

FX Beat

DXY: The dollar index held firm after the U.S. trade deficit fell to an eight-month low in February as imports from China plunged. Investors now eye signs of progress in U.S.-China trade negotiations.  The greenback against a basket of currencies traded 0.05 percent up at 97.05, having touched a low of 96.75 on Friday, its lowest since Mar. 27. FxWirePro's Hourly Dollar Strength Index stood at 27.24 (Neutral) by 0400 GMT.

EUR/USD: The euro steadied as investors attention shifted to the Purchasing Managers' Indexes (PMIs) for the manufacturing and service sectors in Europe, due later in that day that could provide the next indication of strength for the European economy. On Wednesday, the major rose to a 3-week peak after data showed the European Union's trade surplus in goods with the United States increased in the first two months of 2019. The European currency traded 0.05 percent up at 1.1294, having touched a high of 1.1323 on Wednesday, its highest since Mar. 26. FxWirePro's Hourly Euro Strength Index stood at 1.98 (Neutral) by 0400 GMT. Investors’ attention will remain on a series of data from Eurozone economies and EZ Markit flash PMI's, ahead of the U.S. retail sales, unemployment benefit claims, business inventories, Markit prelim PMI's and Fed Bostic's speech. Immediate resistance is located at 1.1331 (Mar. 25 High), a break above targets 1.1361 (Mar. 19 High). On the downside, support is seen at 1.1255 (Apr. 9 Low), a break below could drag it till 1.1213 (Mar. 28 Low).

USD/JPY: The dollar declined, retreating from a 4-month peak recorded in the previous session after an official of the New York Fed stated that the central bank may need to buy more government bonds than it did before the 2008 financial crisis and conduct other money-market operations to implement its current approach to managing U.S. interest rates. The major was trading 0.1 percent down at 111.90, having hit a high of 112.16 on Wednesday, its highest since Dec. 20. FxWirePro's Hourly Yen Strength Index stood at 143.79 (Highly Bullish) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. retail sales, unemployment benefit claims, business inventories, Markit prelim PMI's and Fed Bostic's speech. Immediate resistance is located at 112.60 (Dec. 20 High), a break above targets 113.24 (Dec. 5 High). On the downside, support is seen at 111.20 (Apr. 3 Low), a break below could take it lower at 110.53 (Mar. 20 Low).

GBP/USD: Sterling rose after falling to a 1-week low in the previous session after a Reuters poll showed the chances that Brexit will be cancelled are now greater than the chances Britain will leave the European Union without a deal. The major traded 0.05 percent up at 1.3044, having hit a low of 1.3028 on Wednesday; it’s lowest since Apr. 8. FxWirePro's Hourly Sterling Strength Index stood at -46.87 (Neutral) 0400 GMT. Investors’ attention will remain on the UK retail sales, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3121 (Apr. 5 High), a break above could take it near 1.3149 (Apr. 1 High). On the downside, support is seen at 1.3003 (Mar. 21 Low), a break below targets 1.2976 (Mar. 29 Low). Against the euro, the pound was trading flat at 86.58 pence, having hit a low of 86.80 on Wednesday, it’s lowest since Mar. 22.

AUD/USD: The Australian dollar consolidated after domestic data showed new jobs surpassed expectations in March but unemployment ticked up as more people went looking for work. The economy created a total 25,700 new jobs in March, surging past expectations for a rise of 12,000, while the unemployment rate rose to 5.0 percent in March from an eight-year trough of 4.9 percent the previous month as the participation rate climbed to 65.7 percent. The Aussie trades flat at 0.7179, having hit a high of 0.7205 on Wednesday; it’s highest since Feb. 21. FxWirePro's Hourly Aussie Strength Index stood at 70.81 (Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7145 (10-DMA), a break below targets 0.7070 (Mar. 29 Low). On the upside, resistance is located at 0.7235 (Jan. 11 High), a break above could take it near 0.7284 (Feb. 1 High).

NZD/USD: The New Zealand dollar plunged, hovering towards a 3-1/2 month low hit in the prior session, as oil prices slipped after U.S. government data overnight showed inventories drew down less than an industry report had suggested. The Kiwi trades 0.1 percent down at 0.6721, having touched a low of 0.6665, its lowest level Jan. 3. FxWirePro's Hourly Kiwi Strength Index was at -42.98 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6758 (Apr. 9 High), a break above could take it near 0.6799 (Apr. 4 High). On the downside, support is seen at 0.6652 (Jan. 2 Low), a break below could drag it below 0.6585 (Jan. 3 Low).

Equities Recap

Asian shares slumped from a 9-month peak, following losses on the Wall Street, while investors awaited business surveys in Europe and Japan.

MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.2 percent.

Tokyo's Nikkei declined 0.7 percent to 22,114.01 points, Australia's S&P/ASX 200 index eased 0.1 percent to 6,251.40 points and South Korea's KOSPI plunged 1.3 percent to 2,216.51 points.

Shanghai composite index fell 0.2 percent to 3,257.46 points, while CSI 300 index traded 0.2 percent down at 4,077.48 points.

Hong Kong’s Hang Seng traded 0.5 percent lower at 29,969.87 points. Taiwan shares shed 0.6 percent to 10,932.81 points

Commodities Recap

Crude oil prices declined, retreating from a 5-month high touched in the previous session as the impact of ample U.S. production offset a surprise drop in U.S. inventories. International benchmark Brent crude was trading 0.1 percent lower at $71.52 per barrel by 0405 GMT, having hit a high of $72.25 on Wednesday, its highest since Nov. 8. U.S. West Texas Intermediate was trading 0.05 percent down at $63.73 a barrel, after rising as high as $64.77 last week, its highest since the Nov. 1.

Gold prices plunged to their lowest this year, and were poised for a fourth straight weekly decline, as recent economic data drove investors towards riskier assets. Spot gold was trading 0.1 percent down at $1,272.29 per ounce by 0408 GMT, having touched a low of $1,271.53, its lowest since Dec. 27. U.S. gold futures dipped 0.2 percent lower to $1,274.50 an ounce.

Treasuries Recap

The 10-year German bund yield hit a 1-month high of 0.102 percent overnight, in a sharp rebound from a 2-1/2-year low of minus 0.094 percent set late last month.

The Canadian government bond prices were lower across the yield curve, with the two-year down 4.5 Canadian cents to yield 1.658 percent and the 10-year falling 14 Canadian cents to yield 1.799 perecnt. The gap between Canada's two-year yield and its U.S. equivalent narrowed by 3.4 basis points to a spread of 74.6 basis points in favor of the U.S. bond.


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