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Home » Blogs » Asia roundup: antipodeans at multi-month lows on risk off trade, Dollar index rallies amid turkey’s currency crises, Asian shares plunge – Monday, August 13th, 2018

Asia roundup: antipodeans at multi-month lows on risk off trade, Dollar index rallies amid turkey’s currency crises, Asian shares plunge – Monday, August 13th, 2018

Asia roundup: antipodeans at multi-month lows on risk off trade, Dollar index rallies amid turkey’s currency crises, Asian shares plunge – Monday, August 13th, 2018

Market Roundup

  • Turkey says has action plan to ease market concerns; lira firms from record low
  • Turkey’s Erdogan says lira weakness a plot, cannot be explained by logic
  • China’s July new loans rise to 1.45 trillion yuan, above forecasts – CBIRC
  • Germany says Trump’s tariffs, sanctions destroy jobs and growth
  • Russia’s Lavrov says Putin-Trump meeting possible to improve relations – RIA
  • Russia says will ditch U.S. securities amid sanctions -RIA
  • North, South Korea begin talks before possible Pyongyang summit

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy’s July Consumer price index

Key Events Ahead

  • No significant events scheduled

FX Beat

DXY: The dollar index rallied to multi-month peaks, as a renewed rout in the Turkish lira triggered a cascading effect on the financial markets. The greenback against a basket of currencies trades 0.1 percent up at 96.34, having touched a high of 96.51 earlier, its highest since July 2017. FxWirePro’s Hourly Dollar Strength Index stood at 88.84 (Slightly Bullish) by 0500 GMT.

EUR/USD: The euro slumped to a 13-month low on speculation the Eurozone banking sector’s vulnerability to the crisis in Turkey could force the European Central Bank to adopt a dovish stance. On Friday, the European Central Bank expressed concerns about banks in Spain, Italy and France and their exposure to Turkey. The European currency traded 0.3 percent down at 1.1380, having touched a low of 1.1365, its lowest since July 2017. FxWirePro’s Hourly Euro Strength Index stood at -147.75 (Highly Bearish) by 0500 GMT. Investors’ attention will remain on the economic data from the Eurozone economies, amid a lack of significant data from the U.S. docket. Immediate resistance is located at 1.1427 (23.6% retracement of 1.6282 and 1.1365), a break above targets 1.1497 (50% retracement). On the downside, support is seen at 1.1350, a break below could drag it till 1.1310.

USD/JPY: The dollar tumbled to a 6-week low against the Japanese yen on growing worries over Turkish President Tayyip Erdogan’s increasing control over the economy and a deepening diplomatic rift with the United States. The major was trading 0.5 percent down at 110.28, having hit a low of 110.11 earlier, its lowest since June 28. FxWirePro’s Hourly Yen Strength Index stood at 155.75 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 110.88 (38.2% retracement of 112.15 and 110.11), a break above targets 111.31 (10-DMA). On the downside, support is seen at 109.96 (June 28 Low), a break below could take it lower 109.36 (June 25 Low).

GBP/USD: Sterling plunged, hovering towards an over 1-year low touched in the previous session, as concerns that Britain could leave the European Union without a trade deal and a stronger dollar weighed heavily on the British pound. The major traded 0.1 percent down at 1.2752, having hit a low of 1.2722 on Friday; it’s lowest since June. 2017. FxWirePro’s Hourly Sterling Strength Index stood at -14.86 (Neutral) 0500 GMT. Immediate resistance is located at 1.2830 (23.6% retracement of 1.3173 and 1.2722), a break above could take it near 1.2948 (50% retracement). On the downside, support is seen at 1.2700, a break below targets 1.2665. Against the euro, the pound was trading 0.1 percent up at 89.25 pence, having hit a high of 89.13 earlier, it’s highest since August 6.

AUD/USD: The Australian dollar declined to 1-1/2 year lows below the 0.7300 handle as investors rushed into perceived safe-haven currencies following a tumble in the Turkish lira. Moreover, Reserve Bank of Australia’s dovish SOMP on concerns about increasing U.S.-China trade risks dented investor sentiment. The Aussie trades 0.3 percent down at 0.7277, having hit a low of 0.7263 earlier; it’s lowest since Jan. 2017. FxWirePro’s Hourly Aussie Strength Index stood at -163.47 (Highly Bearish) by 0500 GMT. Immediate support is seen at 0.7250, a break below targets 0.7215. On the upside, resistance is located at 0.7309 (23.6% retracement of 0.7453 and 0.7263), a break above could take it near 0.7336 (38.2% retracement).

NZD/USD: The New Zealand dollar fell to a fresh 2-1/2 year low amid prevailing risk-off sentiment in the market. Investors are likely to remain bearish as the Reserve Bank of New Zealand last week committed to keep rates at record lows through to 2020 but signalled the possibility of further easing in policy if economic growth disappointed. The Kiwi trades 0.05 percent down at 0.6570, having touched a low of 0.6561, its lowest level since March 2016. FxWirePro’s Hourly Kiwi Strength Index was at -135.97 (Highly Bearish) by 0500 GMT. Immediate resistance is located at 0.6606 (2.6% retracement of 0.6763 and 0.6561), a break above could take it near 0.6681 (5-DMA). On the downside, support is seen at 0.6555, a break below could drag it below 0.6500.

 

Equities Recap

Asian shares tumbled amid intensifying global trade tensions after the Turkish President Erdogan opposed the measures to ease the economic and currency crisis.

MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 1.3 percent.

Tokyo’s Nikkei plunged 1.9 percent to 21,857.43 points, Australia’s S&P/ASX 200 index eased 0.4 percent to 6,252.20 points, and South Korea’s KOSPI declined 1.6 percent to 2,247.50 points.

Shanghai composite index fell 0.3 percent to 2,787.10 points, while CSI300 index traded 0.4 percent down at 3,392.56 points.

Hong Kong’s Hang Seng traded 1.2 percent lower at 28,025.72 points. Taiwan shares shed 2.2 percent to 10,748.92 points.

 

Commodities Recap

Crude oil prices declined as rising trade tensions dented the outlook for fuel demand growth especially in Asia, however U.S. sanctions against Iran limited losses.  International benchmark Brent crude was trading 0.1 percent down at $72.52 per barrel by 0446 GMT, having hit a low of $71.39 on Friday, its lowest since June 18. U.S. West Texas Intermediate was trading 0.4 percent lower at $67.50 a barrel, after falling as low as $66.18 on Friday, its lowest since June 22.

Gold prices eased in early trade as the U.S. dollar held firm near a 13-month peak against a basket of currencies amid global trade war tensions. Spot gold declined 0.3 percent to $1,207.76 an ounce by 0450 GMT, having hit its lowest since July 2017 at $1,204.06 this month. U.S. gold futures were down about 0.2 percent at around $1,216.80 an ounce.

 

Treasuries Recap

The Japanese government bonds gained during Asian session as falls in the Turkish lira spurred demand for safe-haven assets, following a political deadlock in the country. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1/2 basis point to 0.100 percent, the yield on the long-term 30-year note fell 1 basis point to 0.837 percent and the yield on short-term 2-year traded tad lower at -0.115 percent.

The Australian government bonds rallied across the board on the first trading day amid the ongoing political crisis in Turkey, pushing investors towards safe-haven assets. The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3-1/2 basis points to 2.575 percent, the yield on the long-term 30-year Note also dipped 2-1/2 basis points to 3.063 percent and the yield on short-term 2-year slumped 2 basis points to 2.003 percent.

The New Zealand bonds closed higher after investors flooded into safe-haven instruments, following a decline in the Turkish lira as markets remain worried over the political tiff the country is experiencing with the United States. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.60 percent, the yield on the long-term 20-year note fell 1-1/2 basis points to 2.93 percent and the yield on short-term 1-year also closed 1/2 basis point lower at 1.72 percent.

Source: FXWire Media Round Ups

 

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