News

Asia Roundup: Antipodeans surge, dollar rallies against yen on upbeat Chinese factory activity, Asia shares advance – Monday, December 2nd, 2019

Market Roundup

  • Oil rises over 1% on hopes for deeper OPEC cuts
     
  • Gold slips on firm dollar
     
  • China's factory activity surprises with fastest expansion in three years – Caixin PMI
     

Economic Data Ahead

  • (0345 ET/0845 GMT) Italy Markit manufacturing PMI
     
  • (0350 ET/0850 GMT) France Markit manufacturing PMI
     
  • (0355 ET/0855 GMT) Germany Markit manufacturing PMI
     
  • (0400 ET/0900 GMT) Euro Zone  Markit manufacturing PMI
     
  • (0430 ET/0930 GMT) United Kingdom manufacturing PMI
     

Key Events Ahead

  • (0900 ET/1400 GMT) European Central Bank's President Christine Lagarde

FX Beat

DXY: The dollar index held firm after rising to a 1-1/2 month peak in the previous session, as data released last week showed U.S. economic growth picked up slightly in the third quarter, rather than slowing as initially reported. The greenback against a basket of currencies traded up at 98.32, having touched a high of 98.54 on Friday, its highest since October 15.  

EUR/USD: The euro declined as members of the European Central Bank discussed the potential for a new definition of the inflation target, which now stands at below, but close to 2 percent. The European currency traded 0.05 percent down at 1.1018, having touched a low of 1.0981 on Friday, its lowest since October 10. Investors’ attention will remain on a series of data from the eurozone economies, EZ Markit manufacturing PMI and ECB President Christine Lagarde's speech, ahead of the U.S. manufacturing PMI from both ISM and Markit and construction spending. Immediate resistance is located at 1.1035 (10-DMA), a break above targets 1.1046 (21-DMA). On the downside, support is seen at 1.1003, a break below could drag it below 1.0966.

USD/JPY: The dollar rallied to a 6-month peak, as investors cheered an unexpected rebound in factory activity during November in China. The Caixin survey also showed total new orders and factory production at buoyant levels. The major was trading 0.1 percent up at 109.63, having hit a high of 109.72 earlier, its highest since May 30. Investors’ will continue to track the broad-based market sentiment,  ahead of the U.S. manufacturing PMI from both ISM and Markit and construction spending. Immediate resistance is located at 109.83, a break above targets 110.19. On the downside, support is seen at 109.29 (5-DMA), a break below could take it near at 109.00.

GBP/USD: Sterling consolidated above the 1.2900 handle, as investors expect little movement in the run-up to the UK general election on December 12. The major traded 0.1 percent down at 1.2916, having hit a high of 1.2951 on Thursday, it’s highest since November 21. Investors’ attention will remain on the development surrounding the general elections, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2942, a break above could take it near 1.2970. On the downside, support is seen at 1.2881 (21-DMA), a break below targets 1.2823. Against the euro, the pound was trading 0.2 percent down at 85.28 pence, having hit a high of 84.99 on Thursday, it’s highest since May 8.

AUD/USD: The Australian dollar rebounded from a 1-1/2 month low on signs of economic growth following reports of an expanding Chinese factory sector. China’s factory activity showed surprising signs of improvement in November, with growth picking up to a near 3-year high. The Aussie trades 0.2 percent up at 0.6774, having hit a low of 0.6754 on Friday, it’s lowest since October 17. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6740, a break below targets 0.6715. On the upside, resistance is located at 0.6787 (10-DMA), a break above could take it near 0.6834.

NZD/USD: The New Zealand dollar rallied to a 1-month peak as China’s factory activity showed surprising signs of improvement in November. The Caixin/Markit manufacturing Purchasing Managers’ Index rose to 51.8 in November from 51.7 in the previous month, marking the fastest expansion since December 2016. The Kiwi trades 0.5 percent up at 0.6452, having touched a high of 0.6453 earlier, its highest level since November 21. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6465, a break above could take it near 0.6498. On the downside, support is seen at 0.6415 (10-DMA), a break below could drag it below 0.6394 (21-DMA).

Equities Recap

Asian shares rallied, supported by upbeat China manufacturing surveys and hopes that China and the United States will agree a preliminary trade deal.

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

Tokyo's Nikkei rallied 1.01 percent to 23,529.50 points, Australia's S&P/ASX 200 index surged 0.2 percent to 6,862.30 points and South Korea's KOSPI gained 0.2 percent to 2,091.92 points.

Shanghai composite index rose 0.1 percent to 2,874.96 points, while CSI 300 index traded 0.2 percent up at 3,835.39 points.

Hong Kong’s Hang Seng traded 0.4 percent higher at 26,445.65 points. Taiwan shares added 0.1 percent to 11,502.83 points

Commodities Recap

Crude oil prices surged by more than 1 percent as signs of rising manufacturing activity in China pointed to increasing fuel demand, and hints that OPEC may deepen output cuts at its meeting this week.  International benchmark Brent crude was trading 0.9 percent down at $61.30 per barrel by 0600 GMT, having hit a low of $60.34 on Friday, its lowest since November 20. U.S. West Texas Intermediate was trading 1.6 percent down at $56.12 a barrel, after falling as low as $55.01 on Friday, its lowest since November 20.

Gold prices declined as investors turned to riskier assets on signs of economic growth following reports of an expanding Chinese factory sector. Spot gold eased 0.3 percent to $1,459.41 per ounce by 0603 GMT, having touched a high of $1466.44 on Friday, its highest since Nov. 22. Gold futures shed 0.5 percent to $1,465.30.

Treasuries Recap

The yields on 10-year Japanese government bonds rose to their highest in more than two weeks. The benchmark 10-year JGB futures fell 0.33 point to 152.83. The 10-year JGB yield rose 2.5 basis points to minus 0.060 percent, the highest yield since Nov. 14. The 20-year JGB yield rose 1 basis point to 0.260 percent. The 30-year JGB yield rose 1 basis point to 0.415 percent. In the middle of the yield curve, the five-year yield rose 1.5 basis points to minus 0.170 percent. At the short end, the two-year JGB yield rose 1 basis point to minus 0.170 percent.


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