Asia roundup: Yen gains against Dollar as BOJ stands pat, greenback at 2-month peak ahead of FED policy outcome, Asian shares surge - Tuesday, July 30th, 2019
Source: FxWire Pro - Media Round Ups / 31 Jul 2019 03:46:48 America/New_York
- BOJ hints at more easing if inflation sputters
- Pound pressured by fresh Brexit fears
- Dollar hits 2-month high ahead of Fed policy meeting
Economic Data Ahead
- (0300 ET/0700 GMT) Switzerland KOF leading indicator July
- (0500 ET/0900 GMT) Eurozone Economic Sentiment Indicator July
- (0800 ET/1200 GMT) German prelim consumer price index July
Key Events Ahead
- No significant event scheduled
DXY: The dollar rallied to a 2-month peak, as the Fed is expected to cut rates by 25 basis points to 2.00 percent - 2.25 percent on Wednesday after recent upbeat U.S. economic data pared expectations for aggressive rate cuts. The greenback against a basket of currencies traded 0.1 percent up at 98.16, having touched a high of 98.21 earlier, its highest since May 30.
EUR/USD: The euro declined, reversing some of its previous session gains, amid growing concern that not all European Central Bank policymakers will agree on the timing of new stimulus. Moreover, uncertainty about a possible Italian snap general election continued to weigh on sentiment. The European currency traded 0.05 percent down at 1.1138, 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 consumer price index, ahead of the U.S. personal consumption expenditure- price index, consumer confidence and pending home sales. 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 from a 20-day peak, as investors turned cautious ahead of an expected 25 basis point cut by the Federal Reserve, its first time in more than a decade this week amid growing global uncertainties and trade pressures. The Bank of Japan maintained its short-term interest rate target at -0.1 percent and pledged to guide 10-year government bond yields around 0 percent but signalled its readiness to expand stimulus without hesitation if a global slowdown dented the country’s economic recovery. The major was trading 0.2 percent down at 108.62, having hit a high of 108.94 on Monday, its highest since July 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. personal consumption expenditure- price index, consumer confidence and pending home sales. 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 tumbled to a 28-month low below the 1.2200 handle as investors turned cautious amid growing risk of a no-deal Brexit and the chance that new British Prime Minister Boris Johnson will call an early election. The major traded 0.7 percent down at 1.2130, having hit a low of 1.2118 earlier, 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 1.2273 (38.2% retracement of 1.2522 and 1.2118), a break above could take it near 1.2321 (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 0.7 percent down at 91.80 pence, having hit a low of 91.90 earlier, it’s lowest since Sept 2017.
AUD/USD: The Australian dollar slumped, extending losses for the eighth straight session after U.S. President Donald Trump offered a pessimistic view of reaching a trade deal with China, saying Beijing may not sign one before the November 2020 U.S. presidential election. However, Beijing hopes Washington would stick to its commitment to create positive conditions for the trade talks this week. The Aussie trades 0.05 percent down at 0.6898, having hit a low of 0.6894 earlier, it’s lowest since June 20. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6878 (June 20 Low), a break below targets 0.6831 (June 18 Low). On the upside, resistance is located at 0.6937 (23.6% retracement of 0.7082 and 0.6894), a break above could take it near 0.6988 (50% retracement).
NZD/USD: The New Zealand dollar consolidated near a 20-day low, as U.S. and Chinese trade negotiators meet in Shanghai this week for their first in-person talks since a G20 truce last month, but expectations are low for a breakthrough. The Kiwi trades 0.05 percent down at 0.6624, having touched a low of 0.6616 on Monday, 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 0.6657 (23.6% retracement of 0.6790 and 0.6616), a break above could take it near 0.6703 (50% retracement). On the downside, support is seen at 0.6602 (July 5 Low), a break below could drag it below 0.6565 (July 10 Low).
Asian shares gained, as investors awaited an expected U.S. interest rate cut this week, while the pound plunged to a 28-month low amid heightened concerns about a no-deal Brexit.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent.
Tokyo's Nikkei rallied 0.4 percent to 21,709.31 points, Australia's S&P/ASX 200 index rose 0.3 percent to 6,845.10 points and South Korea's KOSPI gained 0.5 percent to 2,039.81 points.
Shanghai composite index rose 0.4 percent to 2,952.19 points, while CSI 300 index traded 0.5 percent up at 3,871.12 points.
Hong Kong’s Hang Seng traded 0.3 percent higher at 28,186.07 points. Taiwan shares shed 0.5 percent to 10,830.90 points.
Crude oil prices surged, extending overnight gains amid widespread expectations the U.S. Federal Reserve will cut interest rates for the first time in more than a decade this week. International benchmark Brent crude was trading 0.3 percent higher at $64.02 per barrel by 0447 GMT, having hit a high of $64.64 last week, its highest since July 17. U.S. West Texas Intermediate was trading 0.2 percent up at $57.15 a barrel, after rising as high as $57.62 last week, its highest since the July 17.
Gold prices declined as the dollar held firm near multi-month highs, while investors awaited the outcome of a two-day U.S. Federal Reserve policy meeting, where the central bank is widely expected to cut interest rates. Spot gold was trading 0.1 percent down to $1,425.14 per ounce by 0501 GMT, having touched a low of $1,410.77 on Thursday, its lowest since July 17. U.S. gold futures gained 0.2 percent to $1,422.50 an ounce.
The Japanese government bond prices barely moved after the Bank of Japan kept its monetary policy on hold as expected. The Benchmark 10-year JGB futures rose 0.03 point to 153.72. The 10-year JGBs traded flat at minus 0.150 percent, while the 20-year bonds were untraded. The 30-year JGB yield was flat at 0.365 percent. At the shorter end, the five-year JGB yield fell 0.5 basis point to minus 0.240 percent.
The Australian government bonds jumped during Asian session of the second trading day of the week amid a muted session that barely witnessed data of any major economic significance as investors wait to watch the country’s consumer price inflation (CPI) for the second quarter of this year, scheduled to be released on July 31 by 07:00GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, remained tad lower at 1.208 percent, the yield on the long-term 30-year bond plunged slipped nearly 1 basis point to 1.870 percent and the yield on short-term 2-year hovered around 0.853 percent.© FxWire Pro 2019. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.
- BOJ hints at more easing if inflation sputters