Asia roundup: Aussie edges down as unemployment rate rises, Euro eases from 3-year peak after ECB officials’ comments, Asian shares hit record peak – Thursday, January 18th, 2018
- Australia employment +34,700 s/adj in Dec (vs Nov +63,600, forecast of +9,000).
- China’s Dec new home prices m/m +0.4% (vs Nov +0.3%).
- China’s Dec new home prices y/y +5.3% (vs Nov +5.1%).
- China economy seen growing 6.7 pct y/y in Q4, vs 6.8 pct in Q3.
- US TIC report – Japan Nov US Treasury holdings $1.084 trln, Oct 1.094 trln.
- Trump considers big ‘fine’ over China intellectual property theft.
- China says capital flows stable, 2-way yuan swings becoming the norm.
- Trump says terminating NAFTA would yield the ‘best deal’ in renegotiations.
- Fed’s Mester says fiscal policy assumption may be ‘too low’.
- S. Korea considers shutting down domestic cryptocurrency exchanges.
Economic Data Ahead
- No major economic events scheduled.
Key Events Ahead
- (0930 ET/1430 GMT) ECB’s Benoit Coeure participates in ‘A post-crisis agenda for the euro area and Germany: which way forward?’, a joint conference by the IMF and Bundesbank on “Germany – Current Economic Policy Debates” in Frankfurt.
- (1230 ET/1730 GMT) Bank of France’s Francois Villeroy de Galhau gives an annual start-of-year address to the financial sector in Paris.
- (1805 ET/2305 GMT) Federal Reserve Bank of Cleveland’s Loretta Mester speaks on monetary policy at the Council for Economic Education’s Economists on the Economy in New York.
- N/A IMF’s Christine Lagarde, ECB’s Benoit Coeure and Bundesbank’s Jens Weidmann speak at a conference in Frankfurt.
DXY: The dollar index slumped to a fresh 3-year low as central banks of other major economies begin to move toward tighter monetary policy amid a more synchronized global recovery. The greenback against a basket of currencies traded 0.2 percent down at 90.77, having touched a low of 90.11 earlier, its lowest since January 2015. FxWirePro’s Hourly Dollar Strength Index stood at -85.43 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro eased after rising to a fresh 3-year peak in the previous session, as concerns highlighted by European Central Bank officials this week dampened the currency’s momentum. The European currency traded flat at 1.2189, having touched a high of 1.2322 the day before, its highest since Dec. 2014. FxWirePro’s Hourly Euro Strength Index stood at -83.53 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on ECB’s Coeure’s speech, ahead of U.S. housing starts, building permits, and unemployment benefit claims report. Immediate resistance is located at 1.2300, a break above targets 1.2370. On the downside, support is seen at 1.2120 (50.0% retracement of 1.1916 and 1.2322), a break below could drag it lower 1.2072 (38.2% retracement).
USD/JPY: The dollar rallied to a near 1-week high as the two-year Treasury yield hovered near a nine-year high on Wednesday on expectations the Federal Reserve will continue to tighten monetary policy this year. The major was trading 0.1 percent up at 111.33, having hit a low of 110.19 the day before, its lowest since Sept 15. FxWirePro’s Hourly Yen Strength Index stood at -130.34 (Highly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. housing starts, building permits, and unemployment benefit claims report for further momentum. Immediate resistance is located at 111.78 (50.0% retracement of 110.19 and 113.38), a break above targets 112.16 (61.8% retracement). On the downside, support is seen at 110.19 (Previous Session Low), a break below could take it lower 110.00.
GBP/USD: Sterling slightly eased from its highest levels since Britain’s vote to leave the European Union in 2016 as traders took profits and awaited the latest developments in Brexit negotiations. The major traded flat at 1.3824, having hit a high of 1.3941 the day before, it’s highest since June 2016. FxWirePro’s Hourly Sterling Strength Index stood at 101.69 (Highly Bullish) by 0500 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3950, a break above could take it near 1.4000. On the downside, support is seen at 1.3757 (61.8% retracement of 1.3458 and 1.3941), a break below targets 1.3700 (50.80 retracement). Against the euro, the pound was trading 0.2 percent down at 88.25 pence, having hit a high of 88.08 pence earlier, it’s highest since Dec. 19.
AUD/USD: The Australian dollar eased from multi-month highs after data showed that Australia’s unemployment rate edged up to 5.5 percent from 5.4 percent, despite the participation rate rising to its highest since January 2011 at 65.7 percent. The Aussie trades 0.1 percent down at 0.7964, having hit a high of 0.8022 the day before; it’s highest since Sept. 21. FxWirePro’s Hourly Aussie Strength Index stood at 111.68 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7916 (50.0% retracement of 0.7807 and 0.8022), a break below targets 0.7891 (38.2% retracement). On the upside, resistance is located at 0.8050, a break above could take it near 0.8100.
NZD/USD: The New Zealand dollar steadied just below a near 4-month peak, supported by upbeat Chinese house price index, which rose to 5.3 percent in December from previous 5.1 percent. The Kiwi trades 0.2 percent up at 0.7288, having touched a high of 0.7331 on Wednesday, its highest level since Sept. 25. FxWirePro’s Hourly Kiwi Strength Index was at 161.33 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7320, a break above could take it near 0.7360. On the downside, support is seen at 0.7221 (10-DMA), a break below could drag it lower 0.7133 (Jan 10 Low).
Asian shares rallied to record highs as a rally by Wall Street supported bullish investor sentiment, while the euro eased from three-year highs as comments by European Central Bank officials tempered its recent rally.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.
Tokyo’s Nikkei gained 0.7 percent to 24,031.67 points, Australia’s S&P/ASX 200 index surged 0.1 percent to 6,022.80 points and South Korea’s KOSPI climbed 0.4 percent to 2,524.78 points.
Shanghai composite index rose 0.3 percent to 3,453.28 points, while CSI300 index was trading 0.1 percent up at 4,253.16 points.
Hong Kong’s Hang Seng was trading 0.1 percent higher at 32,021.73 points. Taiwan shares added 1.0 percent to 11,115.84 points.
Crude oil prices rose, extending previous session’s gains on a report showing declines in U.S. crude inventories, however, prices stayed below three-year highs as fuel supplies remain ample. International benchmark Brent crude was trading 0.2 percent up at $69.59 per barrel by 0410 GMT, having hit a high of $70.33 on Monday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.3 percent up at $64.22 a barrel, after rising as high as $64.86 on Monday, its highest since Dec. 2014.
Gold prices declined, extending losses from the day before to hit their lowest in nearly a week, as the U.S. dollar rebounded from a 3-year low touched on Wednesday. Spot gold traded flat at $1,325.94 an ounce by 0415 GMT, after touching its strongest since Sept. 11 at $1,344.47 on Monday. U.S. gold futures lost 1 percent to $1,324.70 an ounce.
The 10-year U.S Treasury yield stood at 2.588 percent higher by 0.011 bps, while 5-year yield was 0.009 bps up at 2.402 percent.
The yields on 10-year JGBs stalled near 3-month high after Japan’s industrial production for the month of November missed market expectations, coming in at 0.5 percent m/m, compared to expectations of and from 0.6 percent m/m in October. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 0.08 percent, the yield on the long-term 30-year note rose nearly 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.12 percent.
The Australian government bonds plunged after employment data showed continues growth last year for the first time in four decades. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 3 basis points to 2.818 percent (highest since October 27), the yield on the long-term 30-year note trade flat at 3.448 percent and the yield on short-term 3-year up 3-1/2 basis points to 2.218 percent.
The Canadian government bond prices were lower across much of the yield curve in sympathy with U.S. Treasuries. The two-year was down 2 Canadian cents to yield 1.784 percent and the 10-year declined 22 Canadian cents to yield 2.199 percent. The gap between the two-year yield and its U.S. counterpart widened by 1.7 basis points to a spread of -26.2 basis points, its widest since Dec. 18.
Source: FXWire Media Round Ups