Posted at 12 October 2020 / Categories Market Roundups
Market Roundup
Economic Data Ahead
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FX Beat
DXY: The dollar index held firm after tumbling to near a 3-week low on hopes that a deal for new U.S. stimulus would be reached. With November 3 election only weeks away, investors speculate that Democrat Joe Biden is more likely to win the U.S. presidency and offer a larger economic package. The greenback against a basket of currencies traded flat at 93.07, having touched a low of 93.01 earlier, its lowest since September 21.
EUR/USD: The euro declined, retreating from 3-week peak hit in the prior session, as investors continued to digest outgoing European Central Bank Executive Board member Yves Mersch comments, citing making joint euro zone debt issuance a permanent tool in the bloc’s crisis fighting armoury would require changes to the European Union’s cornerstone treaty. The European currency traded 0.1 percent down at 1.1822, having touched a high of 1.1830 on Friday, its highest since September 21. Investors’ attention will remain on ECB official's speeches, as U.S. markets remain shut on account Columbus Day. Immediate resistance is located at 1.1848, a break above targets 1.1870. On the downside, support is seen at 1.1781, a break below could drag it below 1.1758 (21-DMA).
USD/JPY: The dollar slumped to a 1-week low as risk sentiment weakened after a new $1.8 trillion economic stimulus proposal from the Trump administration drew criticism from congressional Democrats and Republicans, diminishing hopes for a coronavirus relief deal before the November 3 election. U.S. House Speaker Nancy Pelosi, in a weekly letter to Democratic colleagues, stated that the Trump administration’s proposal lacked a strategic plan to crush the virus and gave President Donald Trump too much discretion to decide how funds were allocated. The major was trading 0.1 percent down at 105.44, having hit a low of 105.43 earlier, its lowest since October 5. Investors’ will continue to track the broad-based market sentiment amid subdued trading as U.S. markets remain closed on account Columbus Day. Immediate resistance is located at 106.01, a break above targets 106.24. On the downside, support is seen at 105.26, a break below could take it near at 105.09.
GBP/USD: Sterling rallied to a near 1-month peak amid growing optimism over Brexit negotiations ahead of a European Union summit this week. British Prime Minister Boris Johnson set a deadline of the October 15 EU summit for a deal with the union. The major traded 0.05 percent higher up at 1.3046, having hit a high of 1.3050 earlier, it’s highest since September 8. Immediate resistance is located at 1.3080, a break above could take it near 1.3121. On the downside, support is seen at 1.2978, a break below targets 1.2946 (10-DMA). Against the euro, the pound was trading 0.1 percent higher at 90.57 pence, having hit a high of 90.56 earlier in the session, it’s highest since October 5.
AUD/USD: The Australian dollar eased from a 3-week peak hit in the prior session, as risk appetite weakened and the yuan dropped after China’s central bank took a measure seen as aimed at curbing its strength. The People’s Bank of China said it will lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading. The Aussie trades 0.2 percent down at 0.7228, having hit a high of 0.7243 on Friday, it’s highest since September 21. Immediate resistance is located at 0.7253, a break above could take it near 0.7282. On the downside, support is seen at 0.7179, a break below targets 0.7151 (10-DMA).
NZD/USD: The New Zealand dollar dropped after rising to a 3-week high in the previous session, as investors continue to expect negative interest rates following dovish statements last week from the Reserve Bank of New Zealand. The Kiwi traded 0.05 percent lower at 0.6663, having touched a high of 0.6673 on Friday, its highest level since September 22. Immediate resistance is located at 0.6690, a break above could take it near 0.6720. On the downside, support is seen at 0.6633, a break below could drag it below 0.6606 (10-DMA).
Equities Recap
Asian shares rallied as investors bet on a steady recovery for the Chinese economy, although caution over the U.S. stimulus limited upside.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1 percent.
Tokyo's Nikkei eased 0.3 percent to 23,558.69 points, Australia's S&P/ASX 200 index rallied 0.5 percent to 6,132.00 points. South Korea's KOSPI surged 0.5 percent to 2,402.85 points.
Shanghai composite index rose 2.25 percent to 3,345.60 points, while CSI 300 index traded 2.5 percent up at 4,799.97 points.
Hong Kong’s Hang Seng traded 2.2 percent higher at 24,644.31 points. Taiwan shares added 0.5 percent to 12,955.91 points.
Commodities Recap
Crude oil prices declined, extending losses for the second straight session as U.S. producers began restoring output after Hurricane Delta weakened, while a strike that had affected production in Norway came to an end. International benchmark Brent crude was trading 0.8 percent down at $42.46 per barrel by 0512 GMT, having hit a high of $43.54 on Friday, its highest since September 18. U.S. West Texas Intermediate was trading 0.8 percent lower at $40.22 a barrel, after rising as high as $41.44 on Friday, its highest since September 18.
Gold prices eased after rising to a 3-week high earlier in the day as the dollar firmed, although hopes for a new U.S. coronavirus aid package limited the precious metal’s losses. Spot gold eased 0.1 percent to $1,928.81 per ounce by 0532 GMT, having hit a high of $1933.29 earlier, its highest since September 21. U.S. gold futures were up 0.5 percent at $1,935.05.
Treasuries Recap
The short end of Australian government bond futures were slightly lower, with the 3-year bond contract down 1 tick at 99.815. The 10-year contract was 1 tick higher at 99.15.
The New Zealand government bonds eased, sending yields close to 3 basis points higher along the long end of the curve.