Market Roundup
- RBA's Kent says 'a lot more to be done' as end of Libor nears
- New Zealand Posts Trade Deficit At NZ$1.242 Billion In September
- Gold steadies as investors seek clarity on Brexit
- Oil slips after U.S. inventory build
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index surged as the recent U.S. economic data continued to support further wagers by the market that the Fed will cut its interest rate again at the end of October, making for a third consecutive rate cut. The greenback against a basket of currencies traded 0.05 percent up at 97.57, having touched a low of 97.14 on Friday, its lowest since August 9.
EUR/USD: The euro tumbled, extending losses for the third straight session, after the European Commission sent a letter to Italian authorities, asking for clarification over their 2020 draft budgets. Italy’s draft 2020 budget assumes a rise in its structural deficit of 0.1 percent of GDP. The European currency traded down at 1.1122, having touched a high of 1.1179 on Monday, its highest since August 14. Investors’ attention will remain on data out of Eurozone economies and EZ prelim consumer confidence, ahead of the U.S. housing price index. Immediate resistance is located at 1.1150, a break above targets 1.1190. On the downside, support is seen at 1.1101, a break below could drag it below 1.1070 (10-DMA).
USD/JPY: The dollar plunged to a 1-week low as the U.S. Treasury yields declined and risk sentiment weakened after UK lawmakers voted against Prime Minister Boris Johnson’s extremely tight timetable to approve his deal for Britain to exit the European Union. The major was trading 0.1 percent down at 108.34, having hit a low of 108.24 earlier, its lowest since October 15. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing price index. Immediate resistance is located at 108.99 (July 31 High), a break above targets 109.31 (August 1 High). On the downside, support is seen at 108.03 (October 14), a break below could take it near at 107.65.
GBP/USD: Sterling eased, extending losses below the 1.2900 handle, after British lawmakers on Tuesday rejected the government’s proposed timetable for passing legislation to ratify its deal to exit the European Union. The major traded 0.1 percent low at 1.2986, having hit a low of 1.2860 earlier, it’s lowest since October 18. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2960, a break above could take it near 1.3102. On the downside, support is seen at 1.2800, a break below targets 1.2748. Against the euro, the pound was trading 0.05 percent down at 86.24 pence, having hit a high of 85.74 on Thursday, it’s highest since May 8.
AUD/USD: The Australian dollar slumped to a 5-day low after Reserve Bank of Australia assistant governor Christopher Kent warned the ill-preparedness of the local market for a post-Libor world could wreak havoc on Australia's financial system. The Aussie trades 0.2 percent down at 0.6843, having hit a high of 0.6882 on Tuesday, it’s highest since September 16. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6830, a break below targets 0.6811. On the upside, resistance is located at 0.6894, a break above could take it near 0.6918.
NZD/USD: The New Zealand dollar declined below the 0.6400 handle, after data showed NZ's merchandise trade deficit came in at $-5.21 billion in September, following the $-5.55 billion deficit in August (YoY), while MoM data registered $-1,242M deficit versus $-1,112M forecast. The Kiwi trades 0.1 percent down at 0.6398, having touched a high of 0.6435 on Tuesday, its highest level since September 12. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6450 (September 12High), a break above could take it near 0.6471 (August 13 High). On the downside, support is seen at 0.6366 (5-DMA), a break below could drag it below 0.6326.
Equities Recap
Asian shares slumped, weighed down by losses in the tech sector and after the British parliament rejected Prime Minister Boris Johnson’s timetable to fast-track legislation to take Britain out of the European Union.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.5 percent.
Tokyo's Nikkei gained 0.2 percent to 22,582.71 points, Australia's S&P/ASX 200 index rose 0.05 percent to 6,673.10 points and South Korea's KOSPI plunged 0.4 percent to 2,080.24 points.
Shanghai composite index declined 0.1 percent to 2,951.14 points, while CSI 300 index traded 0.3 percent down at 3,885.47 points.
Hong Kong’s Hang Seng traded 0.8 percent lower at 26,566.34 points. Taiwan shares shed 0.4 percent to 11,222.35 points.
Commodities Recap
Crude oil priced declined after U.S. industry data showed a bigger-than-expected build in crude stockpiles, although possible deeper production cuts coming from OPEC and its allies limited downside. International benchmark Brent crude was trading 0.3 percent down at $59.40 per barrel by 0429 GMT, having hit a high of $60.26 last week, its highest since October 14. U.S. West Texas Intermediate was trading 0.3 percent lower at $54.04 a barrel, after rising as high as $54.60 last week, its highest since October 14.
Gold prices steadied as investors awaited more clarity on the Brexit issue and the U.S.-China trade war. Spot gold was trading 0.1 percent up at $1,489.43 per ounce by 0441 GMT, having touched a low of $1,480.73 on Tuesday, its lowest since October 16. U.S. gold futures rose 0.3 percent to $1,492.20 per ounce.
Treasuries Recap
The Japanese government bond prices were largely unchanged. The benchmark 10-year JGB futures rose 0.07 point to 154.14. The key 10-year cash JGB yield was flat at minus 0.140 percent. In the super-long zone, the 20-year yield rose 1 basis point to 0.260 percent and the 30-year yield added half a basis point to 0.420 percent. At the shorter end of the curve, the two-year yield fell 0.5 basis point to minus 0.250 percent and the five-year yield was flat at minus 0.270 percent.
The Australian government bonds traded tad higher during Asian session Wednesday tracking a similar movement in the U.S. Treasuries following news on Brexit until the final exit on October 31 and China trade uncertainties. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 2-1/2 basis points to 1.176 percent, the yield on the long-term 30-year bond surged 2 basis points to 1.763 percent while the yield on short-term 2-year traded flat at 0.802 percent.
