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Asia Pacific Market Open Talking Points

  • Euro leads losses in majors as Italy enters technical recession, sparks budget fears
  • New Zealand Dollar climbs with S&P 500. US-China trade deal delay hurts Dow
  • AUD/USD eyes China Caixin PMIs, ASX 200 bearish reversal threat increases

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The Euro was the worst performing major on Thursday as Italy entered a technical recession. In addition to the complications that this presents, it could also add further pressure to EUR/USD down the road if this reignites budget disputes with Brussels.

Meanwhile the pro-risk Australian and New Zealand Dollars continued to benefit from rising stocks and the aftermath of a relatively dovish Fed. The S&P 500 soared about 0.86%, supported by upbeat earnings reports from General Electric and Facebook.

All was not well on Wall Street though, the Dow Jones ended 0.06% lower after gapping to the downside. This may have been due to US-China trade talks being extended. Before market open, President Donald Trump said that no final deal will be made until he meets with China’s President Xi Jinping.

This is expected to occur at some time in the “near future” and continues to prolong the wait to see if the trade war will come to an end. Still, Mr. Trump did say that the meetings are “going well with good intent and spirit on both sides”.

Asia Pacific stocks look to be set for a relatively quiet open, S&P 500 futures are little changed. China’s Caixin Manufacturing PMIs will cross the wires at 1:45 GMT. These offer a closer sense of how the private sector is faring amidst the ongoing trade war and may have knock-on effects for AUD/USD.

ASX 200 Technical Analysis

Since bottoming in December 2018, the ASX 200 seems to be struggling to make further upside progress in its uptrend which was initiated by an inverse head and shoulders pattern. Negative RSI divergence shows that upside momentum is fading and it can precede a turn lower. Near-term support is at 5,795.

ASX 200 Daily Chart

EUR/USD Down, US-China Trade Deal Pushed Back. ASX 200 May Fall

Chart created in TradingView

US Trading Session

EUR/USD Down, US-China Trade Deal Pushed Back. ASX 200 May Fall

Asia Pacific Trading Session

EUR/USD Down, US-China Trade Deal Pushed Back. ASX 200 May Fall

** All times listed in GMT. See the full economic calendar here

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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter