• Asia roundup: Aussie off 6-week low on better-than-expected inflation data, greenback consolidates near 2-month peak as investors await FED decision, Asian shares at 6-week trough - Wednesday, July 31st, 2019

    Source: FxWire Pro - Media Round Ups / 31 Jul 2019 08:46:53   Europe/London

    Market Roundup

    • Gold subdued as investors focus on Fed decision
       
    • Oil gains after U.S. stockpile decline
       
    • Euro steadies around last week’s 26-month low vs dollar
       
    • Yen gains vs dollar after BoJ meeting
       
    • Australia dollar snaps losing streak on inflation data
       

    Economic Data Ahead

    • (0355 ET/0755 GMT) German Unemployment rate s.a July
       
    • (0355 ET/0755 GMT) German Unemployment change July
       
    • (0400 ET/0800 GMT) Italy's prelim consumer price index YoY July
       
    • (0400 ET/0800 GMT) Italy's prelim consumer price index MoM July
       
    • (0500 ET/0900 GMT) EZ prelim Gross Domestic Product s.a.. YoY Q2 
       
    • (0500 ET/0900 GMT) EZ prelim Gross Domestic Product s.a.. MoM Q2
       
    • (0500 ET/0900 GMT) EZ unemployment rate June
       
    • (0500 ET/0900 GMT) EZ prelim consumer price index YoY July
       
    • (0500 ET/0900 GMT) EZ prelim consumer price index- Core YoY July

    Key Events Ahead

    • No Significant Events Scheduled

    FX Beat

    DXY: The dollar index slightly eased after rising to a 2-month peak in the previous session as investors awaited to see whether the Federal Reserve would signal the start of an interest rate-cutting cycle. The greenback against a basket of currencies traded 0.05 percent down at 98.02, having touched a high of 98.21 on Tuesday, its highest since May 30.

    EUR/USD: The euro consolidated near a 5-day peak, as investors remained cautious amid expectations that the European Central Bank may turn out to be more aggressive than the Fed in easing monetary policy. The European currency traded 0.05 percent down at 1.1156, having touched a low of 1.1101 on Thursday, its lowest since May 2017. Investors’ attention will remain on Eurozone economic sentiment indicator and German unemployment rate, and Eurozone prelim gross domestic product and unemployment, ahead of the U.S. ADP employment change and Fed interest rate decision. Immediate resistance is located at 1.1171 (23.6% retracement of 1.1281 and 1.1101), a break above targets 1.1213 (61.8% retracement). On the downside, support is seen at 1.1101 (July  25 Low), a break below could drag it below 1.1070.

    USD/JPY: The dollar plunged, extending previous session losses, as investors are convinced the Federal Reserve will cut the key benchmark rate by 25 basis points to between 2 percent and 2.25 percent later in the day. The major was trading 0.05 percent down at 108.54, having hit a high of 108.94 on Tuesday, its highest since July 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change and Fed interest rate decision. Immediate resistance is located at 109.08 (Jan. 8 High), a break above targets 109.54 (Jan. 29 High). On the downside, support is seen at 108.28 (61.8% retracement of 107.21 and 108.94), a break below could take it lower at 108.08 (50% retracement).

    GBP/USD: Sterling steadied, halting a 3-day losing streak ahead of Prime Minister Boris Johnson's Northern Ireland visit. On Tuesday, PM Boris promised to lead Britain out of the European Union on October 31 no matter what, as Ireland warned that the EU bloc would not be renegotiating the thrice defeated deal. The major traded 0.1 percent up at 1.2161, having hit a low of 1.2118 on Tuesday, it’s lowest since March 2017. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2274 (38.2% retracement of 1.2522 and 1.2118), a break above could take it near 1.2322 (50% retracement). On the downside, support is seen at 1.2108 (March 14, 2017, Low), a break below targets 1.2037 (Jan 11, 2017, Low). Against the euro, the pound was trading 0.1 percent up at 91.72 pence, having hit a low of 91.90 on Tuesday, it’s lowest since Sept 2017.

    AUD/USD: The Australian dollar rebounded after falling to a 6- week low after domestic data showed consumer prices rose 1.6 percent in the year to June, a fraction above forecasts. Earlier in the day, the major plunged as underlying inflation remained low at 1.5 percent and well short of the Reserve Bank of Australia's target range of 2-3 percent, cementing the case for recent cuts in interest rates. The Aussie trades 0.3 percent up at 0.6893, having hit a low of 0.6862 earlier, it’s lowest since June 19. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6855 (June 19 Low), a break below targets 0.6831 (June 18 Low). On the upside, resistance is located at 0.6914 (23.6% retracement of 0.7082 and 0.6862), a break above could take it near 0.6972 (50% retracement).

    NZD/USD: The New Zealand dollar plunged to a 21-day low, amid reinforced expectations the Reserve Bank of New Zealand would cut rates by a quarter-point to 1.25 percent at its policy meeting on Aug. 7, and likely move again by December. The Kiwi trades 0.2 percent down at 0.6599, having touched a low of 0.6586 earlier, its lowest level July 10. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6636 (23.6% retracement of 0.6790 and 0.6586), a break above could take it near 0.6713 (61.8% retracement). On the downside, support is seen at 0.6565 (July 10 Low), a break below could drag it below 0.6513 (July 19 Low).

    Equities Recap

    Asian shares tumbled to a 6-week trough, weighed down by fresh trade war concerns following threats from President Donald Trump to Beijing.

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

    Tokyo's Nikkei declined 0.9 percent to 21,521.53 points, Australia's S&P/ASX 200 index fell 0.5 percent to 6,812.60 points and South Korea's KOSPI plunged 0.4 percent to 2,030.67 points.

    Shanghai composite index eased 0.7 percent to 2,931.55 points, while CSI 300 index traded 0.9 percent down at 3,833.81 points.

    Hong Kong’s Hang Seng traded 1.3 percent lower at 27,777.75 points. Taiwan shares shed 0.1 percent to 10,823.81 points.

    Commodities Recap

    Crude oil prices surged for a fourth straight session, boosted by a bigger-than-expected drop in U.S. inventories and as investors awaited a widely expected cut in interest rates by the Federal Reserve.  International benchmark Brent crude was trading 0.4 percent higher at $65.19 per barrel by 0500 GMT, having hit a high of $65.25 earlier, its highest since July 17. U.S. West Texas Intermediate was trading 0.2 percent up at $58.43 a barrel, after rising as high as $58.50 earlier, its highest since the July 16.

    Gold prices declined as the dollar held firm ahead of the outcome of the Federal Reserve’s meeting later in the day when policymakers are expected to cut interest rates. Spot gold was 0.1 percent down at $1,429.60 per ounce by 0510 GMT, having touched a low of $1,410.77 on Thursday, its lowest since July 17. U.S. gold futures edged 0.1 percent lower to $1,440.50 an ounce.

    Treasuries Recap

    The Japanese government bond prices edged higher, supported by the prospect of major central banks embarking on a monetary policy easing cycle. The benchmark 10-year JGB yield eased half a basis point to minus 0.160 percent. The 30-year yield declined 1 basis point to 0.350 percent.

    The Australian government bonds remained nearly flat during Asian trading session after the country’s consumer price inflation (CPI) for the second quarter of this year edged tad higher, compared to market expectations as well as the previous quarter. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.202 percent, the yield on the long-term 30-year bond plunged remained nearly flat at 1.864 percent and the yield on short-term 2-year also remained steady at 0.859 percent.

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