Australian Dollar Eyeing China PMI Data – Trade War on Back Burner?
- Aussie keeping eye on Chinese PMI
- China growth in focus for Australia
- RBA now has ‘more balanced’ view
The Australian Dollar will be keeping a close eye on China’s upcoming manufacturing PMI release. The data is scheduled to be published on February 28 at 01:00 GMT. Current forecasts are pegged at 49.4 with the previous at 49.5. The economy has only recently been outperforming relative to economists’ expectations, but not by a substantial margin and the outlook still remains uncertain.
In addition to concerns of slower growth and rising corporate default rates, the exact outcome of the trade negotiations remain unclear. Despite Trump tweeting on Sunday his plan to postpone the tariffs on $200 billion worth of Chinese goods, issues over technology and IP remain at the core. On the same day, China’s state-run agency Xinhua also announced that there may be greater friction as the two sides approach a deal.
The impact of the US-China trade dispute has weighed on RBA policymakers, with Governor Philip Lowe recently announcing that the central bank does not see ‘a strong case for near-term adjustment’. Other comments also revealed that the outlook is ‘more balanced’, signaling that the probability of a cut is now relatively equal to the possibility of a hike.
Looking ahead, Aussie traders will be watching China’s Caixin PMI report on Friday along with Fed Chairman Jerome Powell’s speech on economic challenges and the outlook for the US economy. If in his speech he hints that growth may be slower and downside risks are swelling, it could weigh on sentiment and push the cycle-sensitive Aussie down.
Since February 11 AUD/JPY has been trending higher and appears to be coming closer to the 79.899 resistance. This comes despite the setback on February 21 when a major Chinese port announced it was putting a ban on importing Australian coal. Assuming Chinese PMI data comes in higher than expected, depending on the magnitude, it could push the pair beyond 79.899.
However, waiting for confirmation above this line is key. It could very well dip below it the following day. For the time being, the trade war issue is on the back burner but will continue to linger in the background until a final non-ambiguous deal is reached. But even then, will it be sufficient enough to give investors an optimistic outlook for global growth in 2019?
Dollar, yen up slightly as India-Pakistan tensions mount
The dollar and the yen edged up slightly on Wednesday following a rise in regional tensions after Pakistan said it shot down two Indian aircraft, buoying safe-haven units such as the U.S. and Japanese currencies.
The dollar index against a basket of six major currencies was up 0.15 percent at 96.155, trimming some of the previous day’s losses.
The index had shed 0.4 percent overnight, when it stooped to 95.948, its lowest since Feb. 5. after Federal Chair Jerome Powell said that the U.S. central bank would remain “patient” on further interest rate hikes.
The euro slipped 0.1 percent to $1.1377 against the dollar, which tends to attract bids in times of political tensions and market turmoil due to its high liquidity.
The yen, another perceived safe haven, advanced to 110.38 per dollar from the previous day’s close of 110.585 and also rose against the euro.
Pakistan downed two Indian jets on Wednesday, a day after Indian warplanes struck inside Pakistan for the first time since a war in 1971, prompting leading powers to urge the nuclear- armed rivals to show restraint.
“So far market reaction in major currencies has been relatively limited as tensions between the two countries had already been high. Focus is on whether the conflict shows signs of escalating,” said Kyosuke Suzuki, director at Societe Generale in Tokyo.
Stock Market News
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.13%
U.S. stocks were lower after the close on Tuesday, as losses in the Basic Materials, Oil & Gas and Healthcare sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 0.13%, while the S&P 500 index lost 0.08%, and the NASDAQ Composite index declined 0.07%.
The best performers of the session on the Dow Jones Industrial Average were Cisco Systems Inc (NASDAQ:CSCO), which rose 0.77% or 0.39 points to trade at 51.18 at the close. Meanwhile, Nike Inc (NYSE:NKE) added 0.74% or 0.63 points to end at 85.80 and Microsoft Corporation (NASDAQ:MSFT) was up 0.69% or 0.77 points to 112.36 in late trade.
The worst performers of the session were Caterpillar Inc (NYSE:CAT), which fell 2.43% or 3.43 points to trade at 137.98 at the close. Home Depot Inc (NYSE:HD) declined 0.88% or 1.68 points to end at 188.30 and United Technologies Corporation (NYSE:UTX) was down 0.84% or 1.08 points to 127.19.
The top performers on the S&P 500 were AutoZone Inc (NYSE:AZO) which rose 5.10% to 935.00, JM Smucker Company (NYSE:SJM) which was up 4.98% to settle at 106.09 and Advance Auto Parts Inc (NYSE:AAP) which gained 3.30% to close at 162.92.
The worst performers were ONEOK Inc (NYSE:OKE) which was down 4.97% to 64.29 in late trade, Mosaic Co (NYSE:MOS) which lost 4.06% to settle at 31.44 and EQT Corporation (NYSE:EQT) which was down 3.89% to 19.04 at the close.
The top performers on the NASDAQ Composite were Midatech Pharma PLC (NASDAQ:MTP) which rose 325.33% to 0.510, Fronteo Inc (NASDAQ:FTEO) which was up 12.41% to settle at 11.23 and Genocea Biosciences Inc (NASDAQ:GNCA) which gained 31.62% to close at 0.880.
The worst performers were Silver Run Acquisition Corporation II (NASDAQ:AMR) which was down 63.28% to 0.34 in late trade, SunOpta Inc (NASDAQ:STKL) which lost 42.82% to settle at 2.31 and Aceto Corporation (NASDAQ:ACET) which was down 40.39% to 0.14 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1775 to 1232 and 104 ended unchanged; on the Nasdaq Stock Exchange, 1659 fell and 979 advanced, while 98 ended unchanged.
Shares in AutoZone Inc (NYSE:AZO) rose to all time highs; up 5.10% or 45.40 to 935.00. Shares in Cisco Systems Inc (NASDAQ:CSCO) rose to 5-year highs; up 0.77% or 0.39 to 51.18. Shares in Nike Inc (NYSE:NKE) rose to all time highs; up 0.74% or 0.63 to 85.80. Shares in Silver Run Acquisition Corporation II (NASDAQ:AMR) fell to all time lows; falling 63.28% or 0.58 to 0.34. Shares in SunOpta Inc (NASDAQ:STKL) fell to 5-year lows; losing 42.82% or 1.73 to 2.31. Shares in Aceto Corporation (NASDAQ:ACET) fell to all time lows; losing 40.39% or 0.10 to 0.14.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 1.74% to 15.17.
Gold Futures for April delivery was up 0.12% or 1.55 to $1331.05 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in April rose 0.90% or 0.50 to hit $55.98 a barrel, while the May Brent oil contract fell 0.03% or 0.02 to trade at $65.79 a barrel.
EUR/USD was up 0.04% to 1.1390, while USD/JPY fell 0.00% to 110.56.
The US Dollar Index Futures was down 0.35% at 95.933.
Tesla’s Musk must address SEC contempt bid as he calls agency ‘broken’
A federal judge on Tuesday ordered Tesla Inc Chief Executive Elon Musk to explain by March 11 why he should not be held in contempt for violating his fraud settlement with the U.S. Securities and Exchange Commission.
The order by U.S. District Judge Alison Nathan in Manhattan came hours after the billionaire criticized SEC oversight as “broken,” in the wake of the regulator’s request on Monday night that he be held in contempt.
Lawyers for Tesla and Musk did not immediately respond to requests for comment. Tesla did not immediately respond to similar requests. The SEC declined to comment.
Analysts said the renewal of the public battle between Musk and the top U.S. securities regulator will be an overhang on Tesla’s stock, which has lost about one-quarter of its value since peaking in August.
“Another boxing match with the SEC is the last thing investors wanted to see,” wrote Daniel Ives, an analyst at Wedbush Securities who has an “outperform” rating on Tesla.
He called the latest incident “a wild card that could potentially bring this tornado of uncertainty back into the Tesla story until resolved.”
Tesla shares closed 0.3 percent lower at $297.86 on the Nasdaq. They had fallen as much as 3.3 percent earlier.
Samsung Announces Galaxy S10 Crypto Partners, Bitcoin and Ethereum Support
The new Galaxy S10 series smartphones by South Korean tech giant Samsung will apparently have wallet functions for Ethereum (ETH), Bitcoin (BTC) and two other tokens. A Samsung official spoke about the phone’s new features at the Mobile World Congress in Barcelona, Spain on Feb. 25.
In its presentation, Samsung revealed various crypto and blockchain related projects featured on the smartphone, including support for Bitcoin, Ethereum, COSMEE token (COSM) and Enjin’s token (ENJ). COSMEE is a blockchain-enabled mobile beauty decentralized app (DApp) where users can earn and spend COSM tokens. Enjin is a cryptocurrency wallet which will reportedly be installed in the new Galaxy S10.
COSMEE claims to have been selected by Samsung as the first partner DApp supported by its upcoming smartphone, while Enji can reportedly be used to send and receive ERC-20 tokens and ERC-1155 crypto game assets.
Varying reports have surfaced regarding blockchain and crypto integration in Samsung’s new phones. In December 2018, Samsung dismissed the idea of an integrated crypto wallet as “rumour and speculation.” In January, leaked photographs of the new smartphone suggested that the Galaxy S10 would support an Ethereum wallet.
Earlier today, blockchain-centric smartphone Exodus, developed by consumer electronics giant HTC, announced that it has partnered with Opera Browser and added support for multiple DApps. The company announced support for Etheremon and Decentraland DApps, and the smartphone now reportedly supports a Taiwanese DApp called Numbers.
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