Asian investors hit the buy button today amid positive news and short covering. Nikkei225 rose 2.15% rebounding from 18 month lows as Sino-USA trade tensions ease, in Hong Kong, the Hang Seng Index rallied 1.6%. The chief financial officer of Huawei Technologies Co.’s was granted bail on Tuesday, and U.S. President Trump said he would intervene in the case if it would help win a trade deal with China. Meanwhile in its latest report, S&P Global Ratings, warned that the global economy is expected to see a necessary slowdown in 2019.
Asian Development Bank released an update of its Asian Development Outlook on Wednesday, with the key highlights found below (courtesy Reuters).
“ADB maintained its 2018 and 2019 economic growth estimates for the region at 6.0 percent and 5.8 percent, respectively. The ADB also kept its 6.6 percent and 6.3 percent growth projections for China as well as its 7.3 percent and 7.6 percent growth expectations for India for both years.
The 2019 growth outlook for Central Asia was raised to 4.3%, from the September projection of 4.2 percent, the ADB said, but the forecasts for Southeast Asia and South Asia for next year were lowered to 5.1 percent and 7.1 percent, respectively.
Easing commodity prices and central bank policy actions could cause the pace of inflation in developing Asia to settle at 2.6 percent this year and to 2.7 percent in 2019, down from its 2.8 forecast in September for both years.”
European stock markets open the session in positive territory with investors keeping an eye on Brexit news frontier. DAX30 gains 0.70% to 10855, in Paris CAC40 is trading 0.90% higher at 4852 and FTSE100 is up 0.68% at 6856. In early morning we learned that the Conservative Party will hold a no-confidence vote at around 18:00 GMT. At least 48 Tory MP’s sent letters to the 1922 Committee expressing no confidence in the PM.
EURUSD is consolidating at the low range of 1.13 after rejected yesterday for one more at the 1.14 level. The ECB in today’s meeting is expected to end its asset purchasing program and present its economic assessment of the Eurozone. Expect the range between 1.1300-1.1430 top remain intact in the current environment. The short term technical bias is bearish as the pair trades below the 50h and 100h moving averages targeting the first support area at 1.1270 area.
GBPUSD rebounded today after hitting 20 month lows at 1.2477 yesterday on news that May leadership challenge has been triggered. GBP/USD sentiment remains fragile with more volatility in the coming hours. First resistance the pair will face at the 50h moving average at 1.2568 level, a break above will force prices to neutral area around 1.27.
USD/JPY in choppy trading today after yesterday’s rally at 1.1350, is keeping the bullish bias, 1.14 has proved a strong resistance for the pair. Analysts at Morgan Stanley are warning that the Japanese Yen could be gearing up to stage a rally across the broader markets.
Citing ongoing risk aversion from Brexit, as well as a steady breakdown of global liquidity conditions dragging down risk assets. With sovereign bond yields also declining, which Morgan Stanley says will start to draw investors away from the USD ‘carry’ trade. With global market risks continuing to rise, and an unattractive USD carry, the Yen could see a broad-market gainer as market flows back out of the US Dollar.
Gold is trading slightly lower at $1243 as investors turning their attention to more risky assets. The retreat from recent highs at $1255 looks more like a correction and take profit and not as a trend reversal. Strong support for the precious metal is $1234 and on the upside resistance is previous week top at 1255.