News

Asia Roundup: Aussie off highs as economy struggles to grow, yen at 2-week peak against dollar as trade concerns linger, Asian shares slump – Wednesday, December 4th, 2019

Market Roundup

  • Australia’s economy struggles last quarter
     
  • Oil rises following a drop in U.S. crude stocks
     
  • Yen, Swiss franc surge on renewed U.S.-China trade tension
     
  • Investor await RBNZ decision on lifting capital ratio
     

Economic Data Ahead

  • (0315 ET/0815 GMT) Spain Services PMI
     
  • (0345 ET/0845 GMT) Italy Markit Services PMI
     
  • (0345 ET/0845 GMT) Italy Composite PMI
     
  • (0350 ET/0850 GMT) France Markit Service PMI
     
  • (0350 ET/0850 GMT) France Markit Composite PMI
     
  • (0355 ET/0855 GMT) Germany Markit Service PMI
     
  • (0355 ET/0855 GMT) Germany Markit Composite PMI
     
  • (0400 ET/0900 GMT) Euro Zone  Markit Service PMI
     
  • (0400 ET/0900 GMT) Euro Zone  Markit Composite PMI
     
  • (0430 ET/0930 GMT) United Kingdom Markit Service PMI
     
  • (0430 ET/0930 GMT) United Kingdom Composite PMI
     

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index steadied near a 1-month low, amid heightening tensions with Beijing after U.S. Commerce Secretary Wilbur Ross rejected any deadlines on a trade deal with China. The greenback against a basket of currencies traded flat at 97.76, having touched a low of 97.64 on Tuesday, its lowest since November 5. 

EUR/USD: The euro eased after rising to a near 2-week peak in the previous session on data that showed prices at factory gates in the eurozone rose 0.1 percent month-on-month in October for a 1.9 percent year-on-year decline, weighed down by a 7.9 percent drop in energy prices from a year earlier. Additionally, U.S. President Donald Trump’s threat of more tariffs on a range of European goods further dented the bid tone around the major. The European currency traded 0.05 percent down at 1.1075, having touched a high of 1.1093 on Tuesday, its highest since November 21. Investors’ attention will remain on a series of data from the eurozone economies and EZ service PMI, ahead of the U.S. ADP employment change, service PMI from both Markit and ISM and Fed Quarles speech. Immediate resistance is located at 1.1097, a break above targets 1.1123. On the downside, support is seen at 1.1052, a break below could drag it below 1.1036 (10-DMA).

USD/JPY: The dollar declined to a near 2-week trough as risk sentiment weakened after U.S. President Donald Trump said a trade deal with China might have to wait until after the 2020 U.S. presidential election. Moreover, news that the Trump administration would impose tariffs on metal imports from Argentina and Brazil and likely impose more on a range of French goods continued to support safe-haven assets. The major was trading 0.1 percent down at 108.57, having hit a low of 108.48 earlier, its lowest since Nov 21. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change, service PMI from both Markit and ISM and Fed Quarles speech. Immediate resistance is located at 108.83, a break above targets 109.07. On the downside, support is seen at 108.36, a break below could take it near at 108.18.

GBP/USD: Sterling consolidated near a 1-1/2 month peak hit in the previous session after a survey by Kantar showed Prime Minister Boris Johnson’s Conservatives increased their lead slightly over Labour, ahead of a December 12 election. The major traded up at 1.2990, having hit a high of 1.3011 on Tuesday, it’s highest since October 21. Investors’ attention will remain on the development surrounding the general elections, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3047, a break above could take it near 1.3080. On the downside, support is seen at 1.2937 (5-DMA), a break below targets 1.2910 (10-DMA). Against the euro, the pound was trading flat at 85.25 pence, having hit a high of 84.99 on Thursday, it’s highest since May 8.

AUD/USD: The Australian dollar plunged from an over 3-week peak recorded in the previous session after data showed gross domestic product rose 0.4 percent in the September quarter, missing forecasts of 0.5 percent and down from a revised 0.6 percent the previous quarter. The Aussie trades 0.4 percent down at 0.6822, having hit a high of 0.6862 on Tuesday, it’s highest since November 11. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6803, a break below targets 0.6782. On the upside, resistance is located at 0.6865, a break above could take it near 0.6882.

NZD/USD: The New Zealand dollar slumped after rising to a 4-month peak in the previous session, as investors await the Reserve Bank of New Zealand's decision on lifting capital ratio. New Zealand’s central bank is expected to announce tougher bank capital ratio requirements on Thursday, a move that could tighten credit conditions and bolster the country’s financial system. The Kiwi trades 0.1 percent down at 0.6513, having touched a high of 0.6533 on Tuesday, its highest level since August 7. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6544, a break above could take it near 0.6577. On the downside, support is seen at 0.6480, a break below could drag it below 0.6437.

Equities Recap

Asian shares slumped as hopes for a quick preliminary agreement eased after U.S. President Donald Trump said a trade deal with China might have to wait until after the 2020 presidential election.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4 percent.

Tokyo's Nikkei declined 1.1 percent to 23,137.16 points, Australia's S&P/ASX 200 index plunged 1.6 percent to 6,606.50 points and South Korea's KOSPI fell 0.7 percent to 2,070.24 points.

Shanghai composite index eased 0.3 percent to 2,874.03 points, while CSI 300 index traded 0.2 percent down at 3,842.33 points.

Hong Kong’s Hang Seng traded 1.1 percent lower at 26,113.67 points. Taiwan shares shed 0.2 percent to 11,510.47 points

Commodities Recap

Crude oil prices surged, extending gains for the third straight session, ahead of a meeting of OPEC and its allies to discuss whether to extend production curbs to support the market, while industry data showing that U.S. crude stockpiles declined more than expected further supported the upside. International benchmark Brent crude was trading 0.5 percent up at $61.28 per barrel by 0442 GMT, having hit a low of $60.29 on Tuesday, its lowest since November 20. U.S. West Texas Intermediate was trading 0.4 percent up at $56.47 a barrel, after falling as low as $55.01 on Friday, its lowest since November 20.

Gold prices surged, hovering towards a near 1-month peak hit in the previous session, after Washington dashed hopes for a quick preliminary trade deal with Beijing. Spot gold was trading 0.1 percent up at $1,479.19 per ounce by 0446 GMT, having touched a high of $1481.65 on Tuesday, its highest since Nov. 7. U.S. gold futures were down 0.1 percent at $1,483.10.

Treasuries Recap

The Japanese government bonds bounced back from 7-1/2-month lows, with the benchmark 10-year JGB futures rising as high as 0.52 point in early trade. In the cash bond market, the 10-year JGB yield fell 1.5 basis points to minus 0.040 percent, off the 7 1/2-month high of minus 0.020 percent, while the 20-year JGB yield fell 1.5 basis points to 0.275 percent. The 30-year JGB yield fell 1.5 basis points to 0.425 percent. The five-year yield fell 1.5 basis points to minus 0.150 percent after hitting a 7 1/2-month high of minus 0.135 percent on Tuesday.


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