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Asia Roundup: Kiwi slumps as CPI misses expectations, dollar steadies following U.S. presidential debate, Asian shares consolidate - Friday, October 23rd, 2020

Market Roundup

  • Oil eases on higher U.S. gasoline inventories
     
  • Gold up on U.S. stimulus optimism
     

Economic Data Ahead

  • (0400 ET/0800 GMT) EZ Markit Manufacturing PMI(Oct) PREL 
       
  • (0400 ET/0800 GMT) EZ Markit Services PMI(Oct) PREL 
     
  • (0400 ET/0800 GMT) EZ Markit PMI Composite(Oct) PREL 
               
  • (0430 ET/0830 GMT) UK Markit Manufacturing PMI(Oct) PREL 
      
  • (0430 ET/0830 GMT) UK Markit Services PMI(Oct) PREL 
     

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index rose as a measured U.S. presidential debate left investors in a cautious mood. Markets focus now shifts to the Nov. 3 U.S. presidential election after President Donald Trump and Democratic challenger Joe Biden offered sharply contrasting views on the pandemic at Thursday’s final presidential debate. The greenback against a basket of currencies traded 0.1 percent up at 93.06, having touched a low of 92.47 on Wednesday, its lowest since September 2.

EUR/USD: The euro declined, extending previous session losses, after a latest Reuters poll of economists showed, the coronavirus resurgence is seen derailing the Eurozone’s economic recovery, with weak growth and inflation outlooks. The European currency traded 0.2 percent lower at 1.1796, having touched a high of 1.1880 on Wednesday, its highest since September 16. Investors’ attention will remain on a series of economic data from the Eurozone economies, and EZ Markit prelim PMI's, ahead of the U.S. Markit PMI's. Immediate resistance is located at 1.1840, a break above targets 1.1880. On the downside, support is seen at 1.1778, a break below could drag it below 1.1754.

USD/JPY: The dollar slumped, reversing some of its previous session gains, as President Donald Trump adopted a more restrained tone than in the first debate, though exchanges again focused around the handling of the COVID-19 pandemic and personal slights. Persistent hopes that Congress might pass a stimulus package before the election and confidence that spending follows anyway, no matter who gets elected. The major was trading 0.1 percent down at 104.66, having hit a low of 104.34 on Wednesday, its lowest since September 21. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Markit PMI's. Immediate resistance is located at 105.14 (5-DMA), a break above targets 105.26 (10-DMA). On the downside, support is seen at 104.45, a break below could take it near at 104.08.       

GBP/USD: Sterling eased, extending previous session losses, on uncertainty over Brexit outlook, although it is up 1.2 percent this week, supported by hopes that Britain and the European Union can eventually reach some sort of trade deal. The major traded 0.2 percent lower at 1.3054, having hit a high of 1.3152 on Wednesday, it’s highest since September 7. Investors’ attention will remain on the geopolitical developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3121, a break above could take it near 1.3143. On the downside, support is seen at 1.3031, a break below targets 1.3003 (5-DMA). Against the euro, the pound was trading eased 0.05 percent at 90.33 pence, having hit a high of 90.11 on Wednesday, it’s highest since October 14.

AUD/USD: The Australian dollar plunged, halting a 2-day rally, as the Reserve Bank of Australia made it very clear recently that they are going to be loosening monetary policy at the November meeting. The Aussie trades 0.1 percent down at 0.7108, having hit a high of 0.7139 earlier, it’s highest since October 15. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.7160, a break above could take it near 0.7186. On the downside, support is seen at 0.7084, a break below targets 0.7047.

NZD/USD: The New Zealand dollar slumped from a 1-month high recorded in the prior session, after data showed CPI data missed expectations. New Zealand CPI on a quarterly basis rose 0.7 percent in Q3, below expectations of 0.9 percent gain but above previous reading of -0.5 percent, while CPI on yearly basis rose 1.4 percent in Q3, below expectations of 1.7 percent and previous reading of 1.5 percent. The Kiwi traded 0.2 percent lower at 0.6663, having touched a high of 0.6688 on Thursday, its highest level since September 21. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6700, a break above could take it near 0.6720. On the downside, support is seen at 0.6635, a break below could drag it below 0.6600.

Equities Recap

Asian shares consolidated within narrow ranges as investors tightened positions with less than two weeks to go before the U.S. presidential election and awaited a breakthrough in stimulus talks in Washington.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded flat.

Tokyo's Nikkei rose 0.2 percent to 23,516.59 points, Australia's S&P/ASX 200 index declined 0.1 percent to 6,167.00 points. South Korea's KOSPI surged 0.2 percent to 2,360.81 points.

Shanghai composite index fell 0.9 percent to 3,283.17 points, while CSI 300 index traded 1.03 percent down at 4,728.78 points.

Hong Kong’s Hang Seng traded 0.2 percent higher at 24,834.29 points. Taiwan shares shed 0.1 percent to 12,898.82 points.

Commodities Recap

Crude oil prices eased as higher U.S. gasoline inventories signalled a deteriorating demand outlook as coronavirus cases soar, although the possibility of an economic stimulus package in the United States limited downside. International benchmark Brent crude was trading 0.3 percent down at $42.27 per barrel by 0551 GMT, having hit a low of $41.43 on Wednesday, its lowest since October 12. U.S. West Texas Intermediate was trading 0.4 percent lower at $40.42 a barrel, after falling as low as $39.74 on Thursday, its lowest since October 15.

Gold prices steadied on hopes that a U.S. stimulus package would eventually be passed, boosting the metal’s appeal as an inflation hedge, although a stronger dollar limited upside. Spot gold gained 0.05 percent to $1,904.68 per ounce by 0554 GMT, having hit a high of $1931.40 on Wednesday, its highest since October 12. U.S. gold futures rose 0.2 percent to $1,907.50 per ounce.

Treasuries Recap

The U.S. Treasury yields eased, with the benchmark 10-year note yield trading at 0.844 percent and the 30-year yield at 1.664 percent.

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