Heading South

Asian Equities Turn Red, Euro Picture Improves

Asian indices finished lower today as trade worries resurface and Hong Kong protests regarding the China extradition bill, weighing on traders sentiment.  The Nikkei225 finished 0.35 percent lower to 21,129 the Hang Seng benchmark in Hong Kong, finished 2.00 percent lower at 27,237. The Shanghai Composite finished 0.54 percent lower to 2,910, while in Singapore, the FTSE Straits Times index finished 0.36 percent lower to 3,198. Australian equities ended the day 2.6 points lower to 6543.7, ending its five-session winning streak. Despite the negative day, ASX still remains at the best levels since late 2007.

European session started lower today amid renewed worries about trade relations between the US and China. DAX30 is giving up 0.29 percent to 12,105, CAC40 is 0.43 percent lower at 5,385 while the FTSE MIB in Milan is trading 0.77 percent lower at 20,446. The London Stock Exchange is 0,35 percent lower to 7,4373 as the Brexit uncertainty continues.

XAUUSD Hourly (H1) Chart

In commodities markets, crude oil gives up over a dollar and trades at 52.32. Oil is down almost 18% from the high in late April, wiping out about half of its rally earlier this year, due to increased global trade worries. Brent oil also trades lower to $61,21 per barrel as major oil producers have yet to agree on adjustments on output. Gold trading is higher, adding over 10 dollars to 1,335, as sellers look exhausted below 1330. The precious metal broke above the 50 and 100-hour moving averages in the Asian session, turning the short term technical picture to bullish. Gold will find support at 1300 round figure and then at 1295 the 100-day moving average while more bids will emerge at 50-day moving average at 1287. On the upside, resistance stands at 1344, the high from the previous week.   

In cryptocurrencies market, bitcoin (BTCUSD) continues the consolidation below the 8,000, mark, the daily low for BTC was at 7,808, and the daily high at 8,072. Immediate support for BTC stands now at $7,411 the low from the previous week, on the upside strong resistance now stands at 8,000 round figure. Ethereum (ETHUSD) trades flat to 246, with capitalization now to 26 billion. On the upside, the immediate resistance stands at 287, the recent high, while the support stands at 200 round figure, Litecoin (LTCUSD) is the outperformer today adding 10 dollars to 137. The crypto market cap holds above $254.0B.

On the Lookout: Australia’s Westpac-Melbourne Institute Index of Consumer Sentiment dipped 0.6% to 100.7 in June from 101.3 in May.  China’s consumer price index (CPI) in May rose 2.7% from a year ago, the highest since February 2018. Meanwhile, the producer price inflation (PPI) rose 0.6% in May as expected by economists. Fitch credit rating affirms Hong Kong at ‘AA+’, outlook ‘Stable’.

Traders await the European Central Bank President Draghi scheduled to speak at 08:15GMT, and the US Consumer Price Index (CPI) data for the month of May scheduled at 12:30GMT, both events will affect the EURUSD price.

Trading Perspective: In fx markets, USD trades flat at 96.55 on speculation over Fed rate cut, while the Aussie dollar trades lower to 0.6950 despite positive news from Chinese CPI data. Kiwi also trades lower to 0.6582 level as New Zealand has cut its budget surplus forecast for 2019/20 to NZD1.3bn.

GBPUSD is trading marginally higher today trapped in the tight trading range at 1.2730 as the bearish momentum for Cable is still intact amid growing concerns over Brexit. The pair hit the daily low at 1.2712 and the daily high at 1.2732. Major support now stands at 1.26 recent low. On the upside, immediate resistance now stands at 1.2723, the high from yesterday. Pound shows persistent weakness amid UK political uncertainty and also on the back of global risk aversion, so any uptick can match excess offers.

In Sterling futures markets, the open interest shrunk by just 432 contracts on Tuesday, volume reversed two consecutive daily increases and dropped by around 32.8K contracts.

EURUSD started the day higher breaking above the yesterday high and is trading at 1.1335. On the upside, the immediate resistance stands at 1.1340 the high from Asian session, while more offers will emerge at 1.1367 the 200-day moving average. Support stands at 1.1273 the 100-day moving average, while more bids will emerge at 1.12 round figure. Euro gets a lift from rising speculations of a rate cut by the Fed at some point later in the year.

In euro futures markets, the open interest shrunk by nearly 2K contracts on Tuesday, volume increased by around 227K contracts, the largest single-day build since early March.

trade worries
EURUSD Daily Chart

USDJPY trades 0.16 percent lower to 108,34, today the pair hit the low at 108.27 and the high at 108.55. The pair will find support at 107.84 recent low. On the upside, immediate resistance for the pair now stands at 108.71, the high from yesterday. The USD price dynamics will continue to drive the pair’s momentum as traders focus shifts to FED next move.

In Yen futures markets, open interest increased by around 5.9K contracts on Tuesday, volume followed suit, rising by around 5.8K contracts.

USDCAD makes an attempt higher and trading as of writing at 1.3286 as the retreat in crude oil prices, Canada’s main export item, seems to have added further weakness in the Canadian Dollar (CAD). The pair will find immediate support at the 200-day moving average around 1.3250 while extra support stands at 1.3200 round figure. On the upside, immediate resistance stands at the 1.33 zone before an attempt to 1.3348 where the 100-day moving average stands.