Asian stocks advanced in the first trading day of the week as traders spy a possible light at the end of the tunnel in talks between the UK and EU and China’s suggestion of an official state visit by President Xi linked to a trade deal will see the meeting take place in late April, a delay to the much-anticipated March finish. In Japan, the Nikkei225 main index rose 0.66 percent to 21,584, and the Hang Seng benchmark in Hong Kong finished 1.37 percent higher at 29,409. The Shanghai Composite finished 2.47 percent higher at 3,096, while stocks in Australia are in a fairly subdued start to the new trading week, with the market dipping in and out of negative territory, before finishing higher. The ASX 200 closed up 15 points or 0.3% to 6,190. This week, the Aussie benchmark index fell 0.5%, and that is the first weekly loss in a month.
In commodities markets Light Crude Oil keeps the positive momentum close to four-month high, trading at 58.48, Brent oil also trading higher at $67.33/barrel just shy from highs at 68 supported by global production cuts and supply disruptions in Venezuela. Gold started the week flat at 1303. XAUUSD may find support at $1297 where the 50-day moving average crosses, ahead of testing 100-day simple moving average down to $1293.
Positive start for equities in early European trading with investors watching the developments surrounding Brexit, DAX30 is adding up 0.06 percent to 11,692, CAC40 is 0.13 percent higher at 5,412 while FTSE100 in London is 0.62 higher at 7,273. Any delay to the Brexit process will now need to be agreed by the other 27 EU members, with talks about possible conditions for an extension to be held before this week’s EU summit.
On the Lookout: The BOJ left monetary policy unchanged the previous week but moved to downgrade its assessment of the country’s outlook on exports, output as well as its take on the global economy.
Germany’s Ifo institute the previous week slashed its growth forecast of the economy this for 2019 to 0.6 percent. The think tank previously still saw the German economy expanding by 1.1% in January 2019. However, Ifo analysts predict the weakness as being short-lived and expect a rebound to 1.8% growth in 2020.
In the economic calendar today the only data due being the January trade balance for the Euro Area and the March NAHB housing market index reading in the US. Tomorrow The possibility of UK PM May bringing a 3rd version of the Brexit Withdrawal Agreement to Parliament will likely be the highlight. We’ll also get the January/February employment report in the UK, Q4 labour costs for the Euro Area and the March ZEW survey for Germany in the morning. In the US calendar for Tuesday, final January durable and capital goods orders revisions, and January factory orders are due. Late evening, we’ll get BoJ minutes from the January meeting.
Trading Perspective: The Aussie dollar is trading rallied and broke the 0.71 resistance zone supported by positive Sino US trade news. The Kiwi is also higher to daily highs at 0.6872. The US dollar index lost the 96 figure after last week failed attempt at 96.25.
GBPUSD rejected at 1.33 in the early European session and is trading at 1.3250; the bull trend is still intact even the high volatility scaring the traders as are closely watching the developments around Brexit votes and rumors. The technical picture is bullish for GBPUSD and a second attempt today at 1.33 looks possible. On the downside, major support will be found at 1.2990 where the 50 and 200-day moving averages are crossing. On the flip side, major resistance can be found at 1.3382 the yearly high.
In Pound futures markets, traders trimmed their open interest positions by around 2.6K contracts on Friday, the second consecutive drop. In the same direction, volume decreased for the third session in a row, this time by nearly 132.9K contracts.
EURUSD keeps the bullish tone making two-week high at 1.1350. The pair will find immediate resistance at the 50-day moving average at 1.1363 and is looking to break above in order to establish a new bullish trend targeting 1.14. The low from the previous Thursday session at 1.1277 provides solid support if the pair manages to break the 1.13 round figure. In Forex, options expire today, and we have at the 1.1250 strike 1.4bn of EURUSD cut at 10:00 Eastern Time.
On the EU political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist and right-wing option among voters.
In Euro future markets, open interest rose by around 7.1K contracts on Friday from Thursday’s final 535,858 contracts. On the other hand, volume shrunk significantly by around 186.3k contracts, recording the second drop in a row.
USDJPY is down 8 pips to 111.54 started the week from the high at 111.62. Resistance for the pair stands at 112 round figure while support can be found at the low from the previous week at 111.27.
In Yen futures markets, open interest and volume decreased by around 4.4K contracts and 76.3K contracts, respectively, Friday from the previous day.