Asia Roundup: Aussie Hovers Near 3-Month High, Dollar Rises Against Yen Following US japan Summit, Asian Shares Gain on Trump’s

​Market Roundup

• CFTC IMM CTA data – Specs cut net long USD bets for 5th week, lowest since mid-October, JPY net shorts lowest since early December, MXN shorts too.
• US President Trump commits to Japan security, did not discuss currency issues, no request for bilateral trade deal, to begin bilateral dialogue
• Japan EcoMin Ishihara – No change to view economy in moderate recovery, jobs-wages improving, recoveries overseas contributed, economic stimulus impact likely from Q2 this year, China-EU-Brexit risks
• Japan Q4 GDP +0.2% q/q, +1.0% AR, +0.3% and +1.1% eyed, private consumption unch q/q, CAPEX +0.9%, both as eyed, housing investment +0.2%, external demand contribution +0.2%, +0.3% eyed, domestic zero, GDP 4th straight qtr of expansion, exports best since Q4 ’14 but private consumption stops rising for first time in four quarters, housing investment too.
• North Korea fires missile into Sea of Japan, South Korea responds with threat to ‘punish’ Pyongyang – Financial Times, various media.
• China SAFE Pan – No return to old capital controls – China Business News.
• Moody’s – China’s onshore bond market reforms fuel issuance, investment.
• FOMC ViceChair Fischer – Significant uncertainty about US fiscal policy under Trump, Dodd-Frank as whole won’t be repealed
• UK Commons Lidington – Strong message sent to Lords on Brexit bill
• EC Pres Juncker – Britain may divide EU over Brexit talks
• Greece says bailout deal close, Juncker says it’s on shaky ground
• EU Dombrovskis – Greece, lenders risk EZ instability if talks drag on
• Tsipras warns IMF and Germany over bailout talks – Financial Times.
• IMF Lagarde worried about European elections
• Germany’s Social Democrats narrow gap with Merkel’s conservatives
• France’s Fillon faces further legal process in fake work probe, centrist Macron now likely winner
• Italy’s Renzi set to trigger leadership race at ruling party meet
• Dutch far-rightist Wilders – Others will soon forget pledge not to work with him
• Swiss voters soundly reject corporate tax overhaul
• New Zealand Jan electronic card retail sales +2.7% m/m, +5.6% y/y.

Economic Data Ahead
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• (0200 ET/0700 GMT) Sweden Jan unemployment; last 7.8%.

Key Events Ahead
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• (0500 ET/1000 GMT) Italy E2.25-2.75/0.5-1.0/2-2.5 bln 0.005/0.7/0.65% 2019/20/23 BTP sales.
• (0500 ET/1000 GMT) Italy E1.5-2.25 bln total 5.0/2.7% 2039 and 2047 BTP auctions.
• (0515 ET/1015 GMT) Slovakia E300 mln 10-month treasury bill auction.
• (0530 ET/1030 GMT) Germany E2 bln 6-month Bubill auction.
• (0850 ET/1350 GMT) France E3.3-3.7/1.2-1.6/1.1-1.5 bln 3/6/12-month BTF note auctions.
• N/A US President Trump, Canada PM Trudeau summit in Washington, DC.

FX Beat

DXY: The dollar rose across the board as the closely watched two-day U.S.-Japan summit held over the weekend was seen to have ended smoothly. The greenback against a basket of currencies traded 0.2 percent up at 100.90, having hit a high of 101.02 earlier in the session, it’s strongest since Jan. 30. FxWirePro’s Hourly Dollar Strength Index stood at 23.25 (Neutral) by 0500 GMT.

EUR/USD: The euro slumped, extending losses for the third consecutive session, as the U.S. Treasury yields remained firmer across the time horizon amid risk-on market sentiment. On Friday, the major hit a 3-1/2-week low as the greenback strengthened on the US. President Trump and Japan PM Shinzo Abe meet talks, amid political uncertainty in the Eurozone. The European currency edged down 0.2 percent to 1.0617, hovering towards from a low of 1.0607 hit on Friday, it’s lowest since Jan. 19. FxWirePro’s Hourly Euro Strength Index stood at -46.87 (Neutral) by 0400 GMT. Investors’ will continue to track overall market sentiment, in absence of macro fundamental drivers from both the continents. Immediate resistance is located at 1.0659 (23.6% retracement of 1.0828 and 1.0607), a break above targets 1.0692 (38.2 % retrace)/ 1.0706 (20-DMA). On the downside, support is seen at 1.0606 (Trendline), a break below could drag it lower 1.0600.

USD/JPY: The dollar rallied to a 2-week high above the 114.00 handle following a smooth meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe that saw no mention of currency policy. Moreover, higher treasury yields and weak Japanese Q4 prelim GDP report, which came in at 0.2 percent q/q against 0.3 percent expected added to the losses in the Japanese yen. The major trades 0.6 percent higher at 113.89, having hit a high of 114.16 earlier, it’s highest since Jan 3. FxWirePro’s Hourly Yen Strength Index stood at -40.50 (Neutral) by 0400 GMT. Investors’ will take cues from the broader market sentiment amid a lack of relevant data from the U.S. docket. Immediate resistance is located at 114.16 (Session High), a break above targets 114.42 (Jan 23 High). On the downside, support is seen at 113.38 (20-DMA), a break below could take it near 113.04 (Jan 26 Low).

GBP/USD: Sterling edged up after declining to a 3-day low in the previous session following news that UK’s Liberal Democrats were looking to detail two amendments of the Brexit bill in the House of Lords. The major trades 0.1 percent higher at 1.2495, having hit a high of 1.2582 on Thursday, it’s strongest since Feb. 2. FxWirePro’s Hourly Sterling Strength Index stood at 22.65 (Neutral) by 0400 GMT. With the UK docket absolutely data empty, investors’ focus will remain on developments surrounding Brexit bill. Immediate resistance is located at 1.2520 (10-DMA), a break above could take it near 1.2582 (Previous Week High). On the downside, support is seen at 1.2427 (Feb 6 Low), a break below targets 1.2400. Against the euro, the pound trades 0.2 percent up at 85.00 pence, having hit a high of 84.93 earlier, it’s strongest since Feb. 1.

AUD/USD: The Australian dollar eased but stayed near a 3-month high as the greenback strengthened on the back of rising Treasury yields, with the market pricing in a 100 percent Fed rate hike as soon as June and a 20 percent chance in March. The major has gained more than 6.5 percent this year following a rise in iron ore and on an upbeat assessment of the economy by the RBA. The Aussie fell 0.1 percent to 0.7664, after rising 0.7 percent to 0.7689 on Friday. FxWirePro’s Hourly Aussie Strength Index stood at 45.99 (Neutral) by 0400 GMT. Investors will continue to digest warnings from the IMF that was urging the RBA to slash rates to avoid a low-growth trap. Immediate support is seen at 0.7645 (5-DMA), a break below could drag it near 0.7605 (Feb 7 Low). On the upside, resistance is located at 0.7700, a break above targets 0.7730.

NZD/USD: The New Zealand dollar rose above the 0.7200 handle, having hit a 2-week low in the previous session after the Reserve Bank of New Zealand signaled it will keep rates at record lows for two years. The Kiwi slumped 1.5 percent last week, recording its worst performance since the week of Dec.16 after the central bank cited growing global uncertainty for its downbeat outlook. The major trades 0.1 percent up at 0.7208, having hit a low of 0.7173 on Thursday, it’s weakest since Nov. 23. FxWirePro’s Hourly Kiwi Strength Index was at -126.93 (Highly Bearish) by 0400 GMT. Immediate resistance is located at 0.7220 (23.6 % retracement of 0.7375 and 0.7173), a break above could take it near 0.7241 (21-DMA). On the downside, support is seen at 0.7158 (Jan 23 Low) a break below could drag it lower 0.7150.

Equities Recap

Asian shares rose, strengthened by renewed optimism over Trump’s tax reform plans, while the dollar rose against the yen on relief over U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe meeting.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.

Tokyo’s Nikkei rose 0.54 percent to 19,483.80 points, Australia’s S&P/ASX 200 index gained 0.64 percent to 5,757.40 points and South Korea’s KOSPI was trading 0.07 percent up at 2,076.46 points.

Shanghai composite index climbed 0.6 percent to 3,215.44 points, while CSI300 index was trading 0.66 percent up at 3,435.93 points.

Hong Kong’s Hang Seng was trading 0.53 percent higher at 23,699.47 points. Taiwan shares added 0.5 percent at 9,710.32 points.

Commodities Recap

Crude oil prices edged down on signs that global fuel markets remained oversupplied despite OPEC-led crude production cuts. International benchmark Brent crude was trading 0.1 percent lower at $56.60 per barrel by 0350 GMT, pulling away from a high of $56.85 hit on Friday, its strongest since Jan. 6. U.S. West Texas Intermediate crude fell 0.1 percent at $53.76 a barrel, after rising as high as $54.10 last week, its highest since Jan. 6.

Gold prices eased, reversing most of its previous session gains, as the dollar boosted against the yen following a smooth meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe. Spot gold declined 0.3 percent, to $1,229.00 per ounce at 0355 GMT, having hit its lowest since Jan. 6 at $1,221.46 on Friday. U.S. gold futures fell 0.4 percent to $1,231

Treasuries Recap

The 10-year U.S treasury yield stood at 2.4251 percent higher by 0.016 bps, while 5-year yield was up by 0.016 bps at 1.9031 percent.

The Australian government bonds declined on the first day of the trading week, tracking weakness in U.S. Treasuries and as investors wait to watch the Federal Reserve Chair Janet Yellen’s testimony scheduled to be held on Tuesday. The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.71 percent, the yield on 15-year note also jumped nearly 1 basis point to 3.15 percent and the yield on medium-term 6-year rebounded 1 basis point to 2.35 percent.

The New Zealand government bonds closed modestly higher as investors covered previous short positions after witnessing long winning streak in the previous week. Also, investors remain cautious ahead of the Federal Reserve Chair Janet Yellen’s testimony scheduled to be held on February 14. The yield on the benchmark 10-year bond fell 1 basis point to 3.23 percent at the time of closing, the yield on 7-year note also slid nearly 1 basis point to 2.83 percent and the yield on short-term 2-year note traded 1/2 basis point lower at 2.20 percent.
The material has been provided by InstaForex Company – www.instaforex.com

Source:: Asia Roundup: Aussie Hovers Near 3-Month High, Dollar Rises Against Yen Following US japan Summit, Asian Shares Gain on Trump’s