Wall Street has another sideways day overnight, except the Nasdaq, which rose modestly as the default market happy place trades on a slow news day. That has seen Asia once again content itself to range trade with the whole planet, seemingly treading water for the US inflation data tomorrow night. Except for China, regional investors appear to be once again reducing exposure ahead of the inflation data, with most of Asia ever so slightly lower today.
China’s benign inflation print and officials talking of coal price controls has lifted mainland markets. The Shanghai Composite is rising 0.40%, while the more tech-heavy CSI 300 has climbed just 0.30%. Hong Kong is trailing with the Hang Seng unchanged. The Nikkei 225 is down 0.25%, with the Kospi edging 0.15% lower. Singapore and Kuala Lumpur have fallen 0.25%, Taipei is down 0.40%, with Jakarta rising 0.40% today. In Australia, the All Ordinaries and ASX 200 are just 0.05% lower.
I expect the doldrums to continue, barring a headline surprise, ahead of the week’s main event in the US tomorrow.
Wax on, wax off, the US dollar rises
The US dollar rose overnight as the directionless range trading continued ahead of US inflation data tomorrow. Despite US yields falling, the dollar index claimed back all its previous day’s losses, rising 0.18% to 90.13 before easing to 90.09 in Asia. That leaves the index almost exactly mid-point of its near one-month range of 89.50 to 90.50, which sums up the market’s struggle for the next directional trade.
Both EUR/USD and GBP/USD fell 20 points higher to 1.2165 and 1.4145, respectively. Ultimately, EUR/USD is trading in a wider 1.2100 to 1.2250 range this past fortnight, while GBP/USD has clear support and resistance at 1.4100 and 1.4250. In the bigger picture, only failure of 1.2000 and 1.4000 respectively undermine the longer-term bullish outlook for both currencies.
Asian currencies are locked in neutral after the PBOC succeeded in putting a floor under yuan appreciation last week. USD/CNY is almost unchanged from yesterday at 6.3940, after another neutral fixing today. Until the PBOC signals comfort at more yuan appreciation, the broader Asian grouping will likely mark time around these levels.