Markets cheered the renewed optimism induced by the US-China trade progress, boosting the appetite for the risk assets across the financial markets in Asia. Across the fx space, broad-based US dollar weakness remained the underlying theme, as weaker US fundamentals and risk-on trades weighed negatively. Meanwhile, the Antipodeans tracked the gains in the Chinese Yuan, oil and gold prices. The Kiwi emerged the top gainer this session, as the sentiment around the New Zealand dollar was further boosted by upbeat New Zealand January services PMI report. The Yen bulls stood resilient to the risk-on flows, keeping the USD/JPY range-bound around the 110.50 levels.
The Asian equity markets picked-up strength and rallied near 2%, led by the sharp gains in the Chinese stocks. Meanwhile, both crude benchmarks traded firmer, with WTI hovering near 3-month tops while Brent oil traded near 66.50 levels. Gold prices on Comex are on thier way to test the YTD highs of 1326 amid softer dollar and dovish Fedspeak.
Main Topics in Asia
Key Focus Ahead
We have a quiet start to a busy week ahead, with no first-tier macro news from both the Eurozone and UK docket while the risk trends amid US-China developments will continue to drive the sentiment across the fx board. Low volumes and minimal volatility may prevail in the day ahead, as both the US and Canadian markets are closed today in observance of their respective holidays.
However, Germany’s central bank, the Bundesbank, monthly economic assessment report will be eyed at 1100 GMT, given the recent weakness in the Eurozone economy.
Essentially, EUR/USD created a long-legged doji candle, which is widely considered a sign of bearish exhaustion/indecision. A bullish trend reversal, however, would be confirmed only if the spot closes tomorrow above 1.1307 (high of Friday's doji candle).
GBP/USD trades around 1.2920 ahead of London open on Monday. 1.2930 and 1.2980 can act as immediate resistances with 1.2840 likely being nearby rest.
Gold is fast closing on a year-to-date high of $1,326 reached on Jan. 31 and may break higher toward $1,354 (100-month moving average) if trade optimism continues to hurt the US dollar.
RBA minutes to reveal some of the downside risks – ANZ
Analysts at Australia and New Zealand Banking Group (ANZ) offer a brief preview of what to expect from Tuesday’s Reserve Bank of Australia (RBA) minutes release of its February monetary policy meeting.
The economic calendar looks a tad quieter next week in comparison to this week, although this does not necessarily mean less volatility, as Chinese and US official continue their trade negotiations in Washington.