News

Asia Roundup: Dollar slumps against yen as investors eye Fed policy meeting outcome, U.S. stimulus talks; Asian shares nudge lower – Wednesday, July 29th, 2020

Market Roundup

  • Oil eases on demand concerns
  • Gold slips as investors book profit

Economic Data Ahead

  • No Major Economic Data Releases

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index eased as investors await the Federal Reserve meeting outcome, which is expected to sound reassuringly accommodative at its policy review later in the day and perhaps open the door to a higher tolerance for inflation. The greenback against a basket of currencies traded 0.2 percent down at 93.56, having touched a low of 93.48 on Monday, its lowest since June 2018.

EUR/USD: The euro steadied after easing from a near 2-year peak in the previous session after a Reuters poll showed Euro zone economic growth next year will be slightly stronger than previously expected following European Union leaders deal on 750 billion euros to support economies ravaged by the coronavirus. The European currency traded 0.2 percent higher at 1.1741, having touched a high of 1.1781 on Monday, its highest since September 2018. Investors’ attention will remain on a series of data from Eurozone economies, ahead of the U.S. wholesale inventories, good trade balance, pending home sales, Fed interest rate decision, monetary policy statement and FOMC press conference. Immediate resistance is located at 1.1781, a break above targets 1.1815. On the downside, support is seen at 1.1657 (5-DMA), a break below could drag it below 1.1626.

USD/JPY: The dollar slumped to a near 5-month low as the United States continued to see a rise in coronavirus cases, while the Federal Reserve is expected to maintain very loose monetary policies. The continued spread of coronavirus is hampering the U.S. economic recovery, while investors await to see if the Fed indicates that it will increase its purchases of longer-dated debt. The major was trading 0.1 percent down at 105.01, having hit a low of 104.93 earlier, its lowest since March 13. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. wholesale inventories, good trade balance, pending home sales, Fed interest rate decision, monetary policy statement and FOMC press conference. Immediate resistance is located at 105.59, a break above targets 105.96. On the downside, support is seen at 104.63, a break below could take it near at 104.09.

GBP/USD: Sterling held firm near a 4-1/2 month peak amid broad based U.S. dollar weakness. However, concerns about the lack of progress of Brexit negotiations prevented the British pound from pushing above the $1.3000 handle. The major traded flat at 1.2927, having hit a high of 1.2952 on Tuesday, it’s highest since March 11. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2976, a break above could take it near 1.3043. On the downside, support is seen at 1.2881, a break below targets 1.2815 (5-DMA). Against the euro, the pound was trading 0.3 percent down at 90.84 pence, having hit a high of 90.84 earlier, it’s highest since July 21.

AUD/USD: The Australian dollar surged, extending gains for the fourth straight session as the greenback eased after data showed U.S. consumer confidence fell by more than expected this month. The Aussie trades 0.3 percent up at 0.7173, having hit a high of 0.7177 on Tuesday, it’s highest since July 22. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7198, a break above could take it near 0.7239. On the downside, support is seen at 0.7129 (5-DMA), a break below targets 0.7090.

Equities Recap

Asian shares nudged lower as growing worries about the U.S. economy had investors looking to Congress and the Federal Reserve for a renewed commitment to endless stimulus.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2 percent.

Tokyo’s Nikkei fell 1.2 percent to 22,397.11 points, Australia’s S&P/ASX 200 index fell 0.2 percent to 6,006.40 points. South Korea’s KOSPI surged 0.3 percent to 2,263.16 points.

Shanghai composite index rose 2.0 percent to 3,292.46 points, while CSI 300 index traded 2.4 percent up at 4,676.39 points.

Hong Kong’s Hang Seng traded 0.4 percent higher at 24,866.32 points. Taiwan shares shed 0.4 percent to 12,540.97 points.

Commodities Recap

Crude oil prices declined, extending previous session losses as the raging COVID-19 pandemic ignited concerns about falling fuel demand causing an oversupplied market, although an industry report showing crude inventories in the United States fell against expectations limited downside. International benchmark Brent crude was trading 0.2 percent down at $43.21 per barrel by 0521 GMT, having hit a low of $42.37 on Monday, its lowest since July 20. U.S. West Texas Intermediate was trading 0.4 percent lower at $40.97 a barrel, after falling as low as $40.51 on Monday, its lowest since July 20.

Gold prices declined as investors booked profits after prices hit a record high in the last session, ahead of the U.S. Federal Reserve’s monetary policy decision. Spot gold was trading 0.3 percent down at $1,952.85 per ounce by 0542 GMT, having hit an all time high of $1,981.35 on Tuesday. U.S. gold futures rose 0.2 percent to $1,948.50.

Treasuries Recap

The U.S. Treasury yields edged lower, with the benchmark 10-year note yield trading at 0.579 percent.


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