• Asia roundup: Kiwi eases as Westpac says RBNZ likely to cut rates twice this year, Euro near 2-month low ahead of ECB monetary policy decision, Asian shares surge - Thursday, July 25th, 2019

    Source: FxWire Pro - Media Round Ups / 25 Jul 2019 03:02:10   America/New_York

    Market Roundup

    • Westpac Bank: RBNZ expected to cut rates twice this year
       
    • Euro near two-month lows before ECB decision
       
    • Australia government reviews RBA inflation target, changes to be minor
       
    • RBA Governor Philip Lowe: central bank strongly committed to return inflation to the target range
       
    • Oil steadies amid global demand worries
       
    • Gold eases on profit-taking

    Economic Data Ahead

    • (0400 ET/0800 GMT) German IFO - Expectations July
       
    • (0400 ET/0800 GMT) German IFO - Current Assessment July
       
    • (0400 ET/0800 GMT) German IFO - Business Climate July
       
    • (0400 ET/0800 GMT) Italy Trade Balance non-EU June
       
    • (0600 ET/1000 GMT) UK CBI Distributive Trades Survey- Realized MoM July
       
    • (0745 ET/1145 GMT) ECB Interest Rate Decision
       
    • (0745 ET/1145 GMT) ECB Deposit Rate Decision
       

    Key Events Ahead

    • (0830 ET/1230 GMT) European Central Bank President Mario Draghi's presser

    FX Beat

    DXY: The dollar index steadied near a 2-month peak, ahead of monetary policy meetings at the European Central Bank today and the Federal Reserve next week. The greenback against a basket of currencies traded flat at 97.70, having touched a high of 97.81 earlier, its highest since May 31.

    EUR/USD: The euro slumped, extending losses for the fifth straight session, as markets remained cautious ahead of a European Central Bank meeting that could signal monetary easing as the eurozone economy continues to struggle. Moreover, the selling pressure intensified after data released yesterday showed German manufacturing sector contracted at the fastest pace in seven years, while French business growth unexpectedly slowed. The European currency traded 0.05 percent down at 1.1134, having touched a low of 1.1126 on Thursday, its lowest since May 31. Investors’ attention will remain on the German IFO survey and ECB's monetary policy decision, ahead of the U.S. unemployment benefit claims, preliminary wholesale inventories, good trade balance, and durable goods. Immediate resistance is located at 1.1164 (23.6% retracement of 1.1281 and 1.1126), a break above targets 1.1205 (50.0% retracement). On the downside, support is seen at 1.1116 (May 30 Low), a break below could drag it below 1.1100.

    USD/JPY: The dollar eased, extending prior session losses after data showed the United States manufacturing activity slowed to a 10-year low in early July with production volumes and purchases declining. However, a White House statement that top U.S. negotiators will meet their Chinese counterparts in Shanghai starting July 30 limited the downside. The major was trading 0.1 percent down at 108.09, having hit a high of 108.29 on Tuesday, its highest since July 17. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims, preliminary wholesale inventories, good trade balance, and durable goods. Immediate resistance is located at 108.53 (July 1 High), a break above targets 108.96 (July 9 High). On the downside, support is seen at 107.76 (July 5 Low), a break below could take it lower at 107.21 (July 19 Low).

    GBP/USD: Sterling consolidated within narrow ranges as investors turned cautious after Boris Johnson vowed in his first speech as prime minister to lead Britain out of the European Union on Oct. 31 with no ifs or buts and warned there would be a no-deal Brexit if the bloc refused to negotiate. The major traded flat at 1.2480, having hit a low of 1.2417 on Tuesday, it’s lowest since July 17. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2520 (July 16 High), a break above could take it near 1.2578 (July 12 High). On the downside, support is seen at 1.2417 (July 23 Low), a break below targets 1.2396 (July 16 Low). Against the euro, the pound was trading flat 89.24 pence, having hit a high of 89.05 on Wednesday, it’s highest since June 21.

    AUD/USD: The Australian dollar plunged to a 2-week low after the Reserve Bank of Australia’s Governor Philip Lowe stated that the central bank was strongly committed to returning inflation to the target range, as the government considers a review of the monetary policy framework. The Australian Financial Review reported that the country’s newly re-elected Liberal-National government is reviewing the RBA’s long-term inflation target of 2 percent -3 percent, but any changes are expected to be minor. The Aussie trades 0.2 percent down at 0.6966, having hit a low of 0.6965 earlier, it’s lowest since July 11. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6953 (July 11 Low), a break below targets 0.6910 (July 10 Low). On the upside, resistance is located at 0.7001 (21-DMA), a break above could take it near 0.7047 (July 4 High).

    NZD/USD: The New Zealand dollar eased, hovering towards a 1-1/2 week low hit in the previous session, after Westpac Bank in a research note forecast the Reserve Bank of New Zealand to cut the official cash rate by 25 basis points from its current record low of 1.25 percent in August, as previously projected, and added the prediction of a second rate cut in November. The Kiwi trades 0.1 percent down at 0.6696, having touched a low of 0.6691 on Wednesday, its lowest level July 15. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6738 (July 16 High), a break above could take it near 0.6823 (Mar. 29 High). On the downside, support is seen at 0.6664 (July 1 Low), a break below could drag it below 0.6619 (July 8 Low).

    Equities Recap

    Asian shares surged as investors await the meeting between the top U.S. and Chinese negotiators next week for progress in their trade dispute.

    MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.1 percent.

    Tokyo's Nikkei rallied 0.2 percent to 21,756.55 points, Australia's S&P/ASX 200 index surged 0.6 percent to 6,818.00 points and South Korea's KOSPI slumped 0.5 percent to 2,071.30 points.

    Shanghai composite index rose 0.2 percent to 2,927.91 points, while CSI 300 index traded 0.4 percent up at 3,835.45 points.

    Hong Kong’s Hang Seng traded 0.3 percent higher at 28,597.07 points. Taiwan shares shed 0.05 percent to 10,941.41 points.

    Commodities Recap

    Crude oil prices rose after falling in the previous session as more signs of slowing global growth added to demand concerns, with Middle East tensions supporting prices. International benchmark Brent crude was trading 0.3 percent higher at $63.28 per barrel by 0453 GMT, having hit a high of $64.64 on Wednesday, its highest since July 17. U.S. West Texas Intermediate was trading 0.3 percent up at $56.03 a barrel, after rising as high as $57.62 on Wednesday, its highest since the July 17.

    Gold prices eased, reversing some of its previous session gains as the greenback hovered near multi-week highs, ahead of major central bank meetings this month. Spot gold was trading 0.2 percent down at $1,422.20 per ounce by 0459 GMT, having touched a high of $1,452.80 on Friday, its highest since May, 2013. U.S. gold futures were down 0.1 percent at $1,422.90.

    Treasuries Recap

    The Japanese government bond prices rose, with the 10-year JGB futures rising 0.05 point to 153.73. The 10-year JGB yield fell 0.5 basis point to minus 0.155 percent, while the short end of the curve, 2-year JGB yields fell 0.5 basis point to minus 0.210 percent. The 5-year JGB yield fell 0.5 basis point to minus 0.24 percent. At the long end, the 20-year JGB yield fell 1 basis point to 0.210 percent, while the 40-year JGB yield declined 1 basis point to 0.390 percent.

    The Australian government bond yields plunged during Asian session on rising hopes of a Fed rate cut at its monetary policy meeting next week amid increasing risks of an economic slowdown, deepened by the ongoing U.S.-China trade war. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 5 basis points to 1.241 percent, the yield on the long-term 30-year bond suffered 3-1/2 basis points to 1.895 percent and the yield on short-term 2-year slumped 3 basis points to 0.879 percent.

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