• Asian stock markets along with the US futures bounce back at the beginning of the week
  • Chinese researcher deems China is unlikely to dump US bonds
  • NZ dollar leads the gains, the Australian dollar trades a bit higher following construction PMI

It has been a calm beginning to the new trading week across currencies, and a positive one for stocks all around the globe. Asian stocks are climbing with the Hang Seng (CHNComp on xStation5) being the leader of gains (+1.3% at the time of writing) in the aftermath of a bounce seen in the US futures. Do notice that stocks in China could be responding with a delay due to holiday taking place at the end of the past week. Over the weekend, there were a few speeches of Federal Reserve officials who did not take markets off guard though. Chair Jerome Powell backed further gradual rate hikes underlining that the labour market may be not excessively tight as wage growth remains dormant. He also expressed hopes that 12-month inflation readings should move up notably this spring, and price growth would pick up to unwelcome levels once the Fed waits too long. These remarks might be considered a bit more hawkish albeit it does not change the outlook for the greenback for this year as hikes scheduled for 2018 seem to be already priced in. In terms of a trade war it’s worth mentioning some comments coming from a senior researcher at Chinese Academy of Social Sciences who said that China is unlikely to dump US treasuries as foreign reserves and trade are two different issues and therefore they should be taken separately. Apart from soybean (a 25% tariff was already announced but there has been no precise time when it takes effect) US bonds are the most powerful weapon in the Chinese toolbox to fight back as China is the biggest foreign holder of the US debt.

link do file download linkThe Hang Seng (CHNComp) is moving close to its important trend line with a local support placed at 11800 points. Do notice that many other indices such as DAX or SP500 have found themselves at their pivotal technical levels therefore the upcoming several days could be critical for their nearest future. Source: xStation5

Currencies have been quite muted thus far except the NZ dollar being traded 55% higher in the morning. However, there have been no reports standing behind such a move as the Asian session brought solely a reading of Australian construction PMI/AIG. It came in at 57.2 making a rise compared to 56 registered in February but even so the Australian dollar has barely responded as it’s rising just 0.1% against the greenback. A technical view may suggest that the NZ dollar may have room to develop the ongoing rally as the closest resistance might be localized at 0.74.

link do file download linkThe NZDUSD is gaining momentum in early trading continuing its bounce commenced from below 0.72. The most likely scenario may be an extended increase toward the nearest resistance where some sellers could lurk. Source: xStation5