Asian Indices Mixed

Pound Retreats, Asian Stocks down

Asian indices finished lower today amid renewed geopolitical concerns including the conflict between India and Pakistan. The Shanghai Composite Index lost 0.3 percent as more weak data weighed on investor’s sentiment. In Tokyo, the Nikkei225 dipped 0.87 percent to 21,385 while the Hang Seng benchmark in Hong Kong ended 0.11 lower to 28,725. Australian stocks managed to finish the day in positive territory after see-sawing in the earlier part of the session. The ASX 200 inched higher by 18 points or 0.3% to 6169. The index climbed 5.2% for the month to make it the best monthly performance since July 2016 when the index increased by 6.3%.

Median estimates from 24 analysts and fund managers polled by Reuters in the past week put the Nikkei at 22,300 by year-end, compared with 20,014.77 at the end of 2018 and Tuesday’s close of 21,449.39.

European indices started softly in early trading today with DAX down 0.46 percent at 11,487, CAC40 gives up 0.26 percent to 5,225 while FTSE in London is 0.61 percent lower to 7,107 pressured by a strong pound.

The greenback, as expressed by the US Dollar Index is trading 0.03 percent higher at 96.14 as Sino-US trade dispute remains in centre stage and drives the global sentiment. Chief Powell at his second testimony before the House Financial Services Committee on Wednesday added nothing new for investors.

On the Lookout: In data headlines, the Aussie Q4 Capex headline rallied 2.0% vs. 0.5% expected, and the China manufacturing PMI slumped for a third straight month in February.

Main risk event in Europe is the German preliminary CPI figures due at 13:00GMT.  

In the US session, the main event is likely to be the first estimate of the fourth quarter US GDP due at 13:30GMT. At the same time, the US weekly jobless claims, core PCE price index and the Canadian industrial figures will be reported. The US advance Q4 GDP growth is likely to decelerate to 2.3% from 3.4% growth booked in the previous quarter. Later in the American mid-morning, the US regional manufacturing PMI reports will be published ahead of New Zealand building permits and terms of trade index that will drop in at 2145 GMT.

We expect American economic growth to fall to 2.3% in the fourth quarter from 3.4% in the third. If accurate, this 3.025% annual expansion would be the first 3% average annualized expansion since 2004.

FOMC Vice Chairman Clarida is due to speak at 13:00GMT while FOMC member Bostic is scheduled to speak at 13:50GMT.

Trading Perspective: In forex markets, the AUDUSD had a mixed session with better than expected domestic capital expenditure figure for Q4. Currently, the pair is trading lower at 71.33. The Kiwi is trading in a tight range near 0.6845 underpinned by Fonterra’s payout revision news.

EURUSD Hourly (H1) Chart

EURUSD is trading slightly higher at 1.1378 around the 50 and 100-day moving averages, targeting the 1.14 area where yesterday found strong offers. A convincing break above can open the way for 1.15 and the yearly high. On the downside, protection can be found at the 100-hour moving average around 1.1360 which if broken might accelerate the slide further towards 1.1343 and the 200-hour moving average.

In Euro futures market, traders added 1.3K contracts to their open interest positions on Wednesday vs. Tuesday’s final 528,376 contracts. On the other hand, volume contracted by more than 48k contracts.

GBPUSD retreats from seven-month highs around 1.3322 breaking below the 1.33 mark, the technical picture is positive, and the correction drives the pair out of the overbought area. A break below the first support at 1.3261 should turn traders’ attention to lower levels as it may attract more sellers.  On the upside, a break above the yesterday high at 1.3350 will keep the rally alive.

In GBP futures markets, open interest rose by nearly 5.5K contracts on Wednesday from Tuesday’s final 202,965 contracts, according to flash data from CME Group. Volume, instead, shrunk after two consecutive advances by almost 64K contracts.

GBPUSD Hourly (H1) Chart