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ASIAN INDICES WEAKER , CRUDE OIL AND DOLLAR SLIP , BONDS YIELD MUTED

Writer's picture: fxmethodsfxmethods
  • On Wednesday , Asian Indices lower as the China -U.S. trade talks produced nothing but a stream of conflicting messages, while concerns about a glut of supply saw oil prices suffer their biggest spill in seven weeks.

  • Hopes for progress on the U.S.-China dispute had risen on Tuesday when Bloomberg reported that the previous talks that failed in May were being considered as a benchmark on what U.S. tariffs on China would be rolled back.

  • Figures from the American Petroleum Institute out late Tuesday showed a far larger rise in crude stocks than expected. That followed reports Russia was unlikely to deepen its cuts to crude output. Brent crude futures stood as on draft at $60.97 a barrel , after sliding 2.6% overnight, while U.S. crude recouped a single cent to $55.48.

  • Investors are now awaiting minutes of the Federal Reserve's last policy meeting where it cut interest rates and signaled a pause for the time being.We see the FOMC now on hold until March, 2020. The market has all but given up on the prospect of an easing in December, which is now priced at just 0.8%. A move in March is put at a probability of around 42%.

  • It was noticeable that fixed income markets rallied despite equity markets being stable, suggestive of a market that remains cautious about the growth outlook. Yields on U.S. 10-year Treasuries dropped to a two-week trough at 1.77%, with a marked flattening of the curve hinting at a possible return of recession fears.

  • The dip in yields nudged the dollar down on the safe-haven Japanese yen and it was last at 108.43 , though still within the 107.87 to 109.48 range of the last five weeks.

  • The dollar was steadier on a basket of currencies at 97.829.

  • The euro inched up to $1.1078, but faced chart resistance at $1.1090.

  • The People's Bank of China (PBOC) has set the Yuan reference rate at 7.0118 vs Tuesday's fix at 7.0030. 

  • The risk-off tone helped Gold firm 0.1% to $1,474.14 per ounce .

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