【11.18WenChuan Gold Daily Market】 Currencies off to cautious start, China-U.S. trade deal in focus
TOKYO (Reuters) - Major currencies were off to a cautious start on Monday as market players looked to whether Washington and Beijing can soon sign off on a deal to end their trade war that has been a drag on the global economic growth.
Chinese state media Xinhua said on Sunday the two countries had “constructive talks” on trade in a high-level phone call on Saturday, but it gave no further details.
Against the yen, the dollar was traded at 108.75 yen JPY=, recovering from 108.235 touched on Thursday as rising hopes of a U.S.-China trade deal undercut the yen.
The currency faces a resistance around 109.00, where it has its 200-day moving average. A break-through there could open the way for a retest of its five-month high around 109.50 touched earlier this month.
Rising risk appetite was mildly positive for the euro, which stood at $1.10505 EUR=, bouncing back from one-month low of $1.0989 set on Thursday.
That helped to push down the dollar index =USD to 97.980, near its lowest levels since Nov. 7.
“Currencies will be driven by headlines related to the U.S.-China trade issues. Markets are expecting some sort of answer to that soon,” said Yukio Ishizuki, senior strategist at Daiwa Securities.
The “phase one” deal was originally expected to be signed on the sideline of Asian-Pacific countries’ summit scheduled last weekend before the host nation Chile canceled the event due to domestic riots.
The tariff war between the United States and China has already taken its toll on the world’s manufacturing sector.
Data from the U.S. Federal Reserve on Friday showed the U.S. manufacturing downturn deepened in October, with output at factories tumbling 0.6%, the most since May 2018, after dropping 0.5% in September.
U.S. retail sales rebounded moderately in October but consumers did cut back on purchases of big-ticket household items like furniture and on discretionary spending.
Still, hopes of a U.S.-China deal have kept investor optimism afloat, with U.S. stock prices hitting a record high on Friday.
Elsewhere, sterling was extending its slow recovery to reach its highest levels in two weeks, trading at $1.2919 GBP=D4, up 0.12% so far on the day.
Investors will keep an eye on developments in Hong Kong, where police trapped hundreds of protesters inside a major university, sealing off roads in the area after almost two straight days of standoffs that have raised fears of a bloody showdown with both sides refusing to back down.
The turmoil could hit Hong Kong share prices and could dent risk-sensitive currencies in the region, such as the Australian dollar.
The Aussie traded down slightly at $0.6815 AUD=D4.
Asian Stocks Trade Mixed; Treasuries Hold Gains: Markets Wrap
Stocks saw a muted open to the week in Asia as investors await fresh developments on the U.S.-China trade front. Treasuries stabilized after advancing last week.
Japanese equities were little changed, while Hong Kong opened higher, though that market tumbled last week and its resilience will be tested by continuing unrest in the city. Shares in Australia and South Korea dropped. U.S. futures edged lower after the S&P 500 Index on Friday reached another record in a sixth week of gains, the longest streak in two years. Ten-year Treasury yields are about 1.82%. The yuan dipped after the People’s Bank of China lowered its seven-day reverse repo rate.
White House economic adviser Larry Kudlow’s comment that U.S.-China talks were nearing final stages had given markets impetus Friday. The next day, U.S. and Chinese trade negotiators held “constructive discussions” in a phone call to address each side’s core concerns about a phase-one deal, according to the Chinese Commerce Ministry.
“We’re really in an an inflection point” for markets in the run-up to President Donald Trump’s next threatened tariff hike on Dec. 15, Robert Hormats, a vice chairman at Kissinger Associates, said on Bloomberg TV. “This has to be done relatively soon or else the danger of things getting worse in mid-December increases” and markets will be disrupted, he said.
Meantime, Hong Kong remains a focus as violent clashes between police and protesters showed no signs of abating. The pound gained after Conservative candidates pledged to vote for Prime Minister Boris Johnson’s Brexit deal if elected. On the energy front, Saudi Arabia set a valuation target for Aramco’s initial public offering well below Crown Prince Mohammed bin Salman’s goal of $2 trillion and pared back the size of the sale.
These are the main moves in markets:
The Topix index was flat as of 10:34 a.m. in Tokyo.
Australia’s S&P/ASX 200 Index dropped 0.6%.
Hong Kong’s Hang Seng Index added 0.5%.
South Korea’s Kospi index fell 0.3%.
Shanghai Composite Index lost 0.3%.
Futures on the S&P 500 Index dipped 0.1%. The index rose 0.8% Friday.
The yen was trading at 108.78 per dollar, little changed.
The offshore yuan was at 7.0164 per dollar, down 0.1%.
Bloomberg Dollar Spot Index was steady.
The euro was at $1.1057.
The British pound rose 0.2% to $1.2918.
The yield on 10-year Treasuries was little changed at 1.82%.
Australian 10-year yields were steady at 1.16%.
West Texas Intermediate crude was flat at $57.72 a barrel.
Gold slipped 0.1% to $1,466.31 an ounce.
Hour level: From the hourly line structure, the gold went out of the downtrend channel lasting nearly a week on Monday, and last Friday's re-entry into the retreat channel, short-term rebound and adjustment . Compared to last week's rebound in rising, Friday's scale is more like a small-scale relay adjustment, the rebound may not be over. Although there is chance to rebound technically, has not go through the 50%
Fibonacci sequence in the previous round. The gold rebound continues to focus on the 1474-77 and 1480-83 ranges. Below, the alternate initial support is in the 1460-56 range. Long and short signals are intertwined, and be wait and see, Radical investors and technology continue to short.
Daily line level: The gold daily line rebounded on a more neutral space. First, the rebound failed to return to the October sideways interval, unfit for the phase of rebound situation. Second, the rebound briefly broke through the 1460 mark and rebounded. Last week, it even returned to the top of 1470, forming a 2B buy signal with the low point of September.; third, as of the current failed to fall below the June and July range of support. Therefore, the we see gold as a short-term is still short, but the market outlook may be sorted out in the current neutral range until a breakthrough is achieved and the direction is redefined.
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