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Asia Roundup: Antipodeans poised for monthly decline, dollar eases against yen despite upbeat Chinese manufacturing PMI, markets assess Trump-Biden debate - Wednesday, September 30th, 2020

Market Roundup

  • China manufacturing PMI rose to 51.5 in September from 51.0 in August.
     
  • Oil eases on demand worries
     
  • Gold climbs to near 1-week high on stimulus optimism
     

Economic Data Ahead

  • (0455 ET/0855 GMT) Germany Unemployment Rate s.a.(Sep)    
     
  • (0455 ET/0855 GMT) Germany Unemployment Change(Sep)      
     
  • (0500 ET/0900 GMT) Italy  Consumer Price Index (YoY)(Sep) PREL      
           
  • (0500 ET/0900 GMT) Italy Consumer Price Index (EU Norm) (MoM)(Sep) PREL   
     
  • (0500 ET/0900 GMT) Italy Consumer Price Index (MoM)(Sep) PREL          
     
  • (0500 ET/0900 GMT) Italy Consumer Price Index (EU Norm) (YoY)(Sep) PREL 
     

Key Events Ahead

  • (0320 ET/0720 GMT) ECB's President Lagarde speech
     
  • (0545 ET/0945 GMT) ECB's Mersch speech 
     

FX Beat

DXY: The dollar index rebounded from a 1-week low, boosted by the progress made around a U.S. fiscal stimulus packaged to cushion the coronavirus blow. The dollar was also supported by data showing U.S. consumer confidence rebounded more than expected in September as households’ views of the labour market improved. The greenback against a basket of currencies traded 0.1 percent up at 93.97, having touched a low of 93.79 earlier, its lowest since September 22.

EUR/USD: The euro eased after rising to a 1-week peak earlier in the session on data that showed Euro zone economic sentiment improved more than expected in September, due to a rise in optimism in the services sector despite concerns about a second wave of the COVID-19 pandemic. The European currency traded 0.1 percent down at 1.1735, having touched a high of 1.1755 earlier, its highest since September 22. Investors’ attention will remain on series of economic data from the Eurozone economies and ECB's President Lagarde speech, ahead of the U.S. ADP employment change figures, gross domestic product, personal consumption expenditures prices, Chicago purchasing managers index, pending home sales and Fed official speech. Immediate resistance is located at 1.1779, a break above targets 1.1800. On the downside, support is seen at 1.1711, a break below could drag it below 1.1687.

USD/JPY: The dollar declined from a 2-week peak hit earlier in the session, as traders assessed a fierce first debate between Republican President Donald Trump and Democratic rival Joe Biden. The two White House contenders battled fiercely over Trump’s leadership on the coronavirus pandemic, the economy and the integrity of November’s election in a chaotic first debate on Tuesday. The major was trading 0.1 percent down at 105.48, having hit a high of 105.80 earlier, its highest since September 15. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change figures, gross domestic product, personal consumption expenditures prices, Chicago purchasing managers index, pending home sales and Fed offiicial speech. Immediate resistance is located at 106.01, a break above targets 106.30. On the downside, support is seen at 105.24, a break below could take it near at 104.92.

GBP/USD: Sterling dropped, halting a 4-day rally, after Bank of England Governor Andrew Bailey warned the economic recovery may not be as strong going forward and did not entirely rule out using sub-zero interest rates if needed. Bailey in an online speech to Queen’s University Belfast stated that Britain’s economic activity was probably about 7-10 percent weaker than before the coronavirus pandemic in the July-September period. The major traded 0.1 percent down at 1.2838, having hit a high of 1.2929 on Monday, it’s highest since September 21. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2905, a break above could take it near 1.2928. On the downside, support is seen at 1.2799, a break below targets 1.2776 (5-DMA). Against the euro, the pound was trading 0.2 percent down at 91.39 pence, having hit a high of 90.25 on Monday, it’s highest since September 8.

AUD/USD: The Australian dollar slumped and was poised for its first monthly loss since March, as expectations of further monetary policy easing and fears of a slower global economic recovery hurt risk appetite. The pair has fallen 3.5 percent so far this month on growing expectations of a rate cut to 0.1 percent later this year from 0.25 percent now. The Aussie trades 0.3 percent down at 0.7103, having hit a high of 0.7149 earlier, it’s highest since July 23. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7175 (50% retracement of 0.7345 and 0.7005), a break above could take it near 0.7215 (61.8% retracement). On the downside, support is seen at 0.7073, a break below targets 0.7043.

NZD/USD: The New Zealand dollar tumbled from a 1-week peak and was down 2.1 percent for the month as the Reserve Bank of New Zealand is expected to take interest rates to negative territory and adopt measures to keep the currency weaker. Investors seem to have ignored upbeat Chinese economic data, showing the manufacturing Purchasing Manager’s Index rose to 51.5 in September from 51.0 in August. The Kiwi traded 0.05 percent lower at 0.6580, having touched a high of 0.6612 earlier, its highest level since September 23. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6621 (38.2% retracement of 0.6797 and 0.6511), a break above could take it near 0.6655 (50% retracement). On the downside, support is seen at 0.6552 (5-DMA), a break below could drag it below 0.6511.

Equities Recap

Asian shares surged, as risk sentiment improved after data showed China’s factory activity expanded at a faster pace in September.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.

Tokyo's Nikkei declined 1.5 percent to 23,185.12 points, Australia's S&P/ASX 200 index eased 2.3 percent to 5,815.90 points. South Korea's KOSPI gained 0.9 percent to 2,327.89 points.

Shanghai composite index rose 0.05 percent to 3,225.57 points, while CSI 300 index traded 0.1 percent up at 4,597.88 points.

Hong Kong’s Hang Seng traded 0.8 percent higher at 23,464.25 points. Taiwan shares added 0.4 percent to 12,515.61 points.

Commodities Recap

Crude oil prices steadied after tumbling to a 2-week low in the prior session on rising concerns about fuel demand as the coronavirus pandemic worsens. International benchmark Brent crude was trading 0.7 percent up at $41.07 per barrel by 0438 GMT, having hit a low of $40.39 on Tuesday, its lowest since September 15. U.S. West Texas Intermediate was trading 0.7 percent lower at $38.86 a barrel, after falling as low as $38.44 on Tuesday, its lowest since September 16.

Gold prices declined after rising to its highest in nearly a week earlier in the session as investors awaited key takeaways from the first U.S. presidential debate, while optimism over hopes of a U.S. coronavirus aid deal limited losses. Spot gold was trading 0.3 percent down at $1,890.70 per ounce by 0450 GMT, having hit a high of $1899.18 earlier, its highest since September 23.  U.S. gold futures were down 0.4 percent at $1,896.40.

Treasuries Recap

The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.645 percent and the 30-year yield at 1.415 percent.

The Australian government bond futures slipped, with the 3-year bond contract down 1.5 ticks at 99.78. The 10-year contract dipped 2 ticks to 99.150.

The New Zealand government bonds eased, sending yields about 3-5 basis points higher across the long-end of the curve.

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