Nikkei Closes Lower, NZDUSD Plummets to 0.6745

Japanese main stock index Nikkei 225 finished 0.59 percent lower at 20,751 on concerns over the Sino-US trade war while South Korea’s Kospi rose 0.3 percent to 2,209.76 and New Zealand’s NZX index finished 0.8 percent higher. Aussie stocks have extended its winning streak to four days, hitting fresh four-month highs with the ASX 200 adding 1.1 per cent to 6,026 thanks to gains across all sectors. NZDUSD took a hit on the chin after a weaker-than-expected New Zealand labor market data raised the odds of an RBNZ rate cut. The US Dollar index has now risen for the fifth straight session to reach 96.46, recovering almost all the losses suffered after the Federal Reserve dovish stance for more rate hikes. Brent oil futures lost 23 cents to $62.46, and U.S. crude lost 19 cents to $53.82 a barrel.

May had arrived at the European Council meeting hoping to win changes on the contentious backstop, designed to stop a hard border with Ireland in the event of no free trade deal with the EU, and bring back a deal she could get through parliament. FTSE in London started 0.10 percent lower to 7,173, DAX gives up 0.58% to 11,259 while CAC40 is also trading lower to 5,064.

On the Lookout: During the Asian trading session, it was reported that New Zealand’s unemployment rate rose to 4.3% in the last quarter of 2018, following an upwardly revised 4.0% in September and 4.4% in June. The reading sent the Kiwi down to 0.6745. The Reserve Bank of India unexpectedly cuts Repo rate by 25bps to 6.25%, sending Rupee higher.

Tonight, the big name on the agenda is the Bank of England (at 12:00 GMT) monthly decision on interest rates but it should be more of a non-event still as we don’t expect any changes on the interest rates policy. At 12:30 GMT, the Governor Mark Carney’s press conference will also grab attention for fresh hints on the UK’s inflation and growth outlook.

In US session calendar, traders are waiting for the weekly jobless claims and consumer credit change due at 13:30 GMT and 20:00 GMT respectively.


Trading Perspective: Greenback is trading higher across the board in Asian session amid fresh concerns over the US-China trade talks, Kiwi is the worst performer and Aussie remained on the offers and broke below the 0.7100 level amid RBA’s neutral switch and weaker fundamentals. The Canadian dollar also attracted fresh selling vs. USD, as the overnight oil-price recovery lost legs amid oversupply concerns.

EURUSD Daily Chart

EURUSD hits a 2-week low in the wake of a dismal reading on German industrial output. Euro now is looking very heavy as it broke below the key support 50-day moving average at 1.1382 and could slide further towards the support at 1.13 area on fading prospects of the ECB rate hike, next major support will be at yearly low at 1.1285. On the upside, the 1.1382 now has turned resistance while more supply will be met at the high from yesterday at 1.1415.

In Euro futures markets, investors added around 2.1K contracts to their open interest positions on Wednesday from Tuesday’s final 523,868 contracts. It was the second build in a row. Volume, instead, shrunk by more than 10.6K contracts, partially reverting the previous build.

GBPUSD is trading to two weeks low around 1.29 with traders eyes on the Bank of England “Super Thursday” scheduled at 12:00 GMT with analysts expecting a unanimous on-hold vote on rates. The pair is holding the key 1.29 handle for now, but the USD strength and Brexit uncertainty can force the price down to 1.28. On the upside, bulls will chase the 1.3026 figure to reverse the current bearish move.

Open interest in GBP futures markets rose by just 480 contracts on Wednesday vs. Tuesday’s final 196,616 contracts, as per advanced figures from CME Group. On the other hand, volume decreased by around 16.9K contracts.

USDJPY failed to benefit from a broadly firmer greenback and trading soft just below the 110 handle, a figure that rejected the pair twice the last trading days, if the pair manages to break above might accelerate the rally further towards $110.63 supply zone. On the flipside, support will be met at the 50 hour M.A. around 109.78.

JPY futures markets noted open interest increased by the second session in a row, this time by 201 contracts on Wednesday from Tuesday’s final 192,789 contracts. In the same line, volume rose by around 17.7K contracts after five consecutive drops.

USDJPY Hourly (H1) Chart

Gold prices are also trading lower today as USD continues to gain altitude and neared the 1300 psychological support, a level which if breached will cancel the bullish momentum that holds well for the last two months. A visit back to 1312 will give the bulls the upper hand.