Market Brief SP500 futures a whisker away from all time high

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• A lack of economic data made for a quiet start to the week in Asia, although there was a mild dose of risk-on following positive trade headlines. China are to raise penalties for firms which violate intellectual property rights, showing they may be a little more flexible regarding the US-China trade deal.
• This benefitted the New Zealand dollar and, with minor outflows from the yen, placed NZD/JPY as today’s strongest pair among majors and crosses.  
• The global times report that US and China are “very close to a trade deal. Yet Reuters report there’s no ‘phase two’ deal on the horizon (not that anyone was even speculating that mind…)
• Daily ranges are mostly around 30-40% of their 10-day ATR, although CHF/JPY is the exception with its range hitting 90% of its ATR.

Price Action:

• DXY: 97.68 support held and Friday’s range expansion suggests it could break to a new high.
• EUR/USD: The week closed with a small bearish hammer. Bears could look to fade into minor rallies beneath 1.1093, but we’d need to see a break below 1.10 to confirm the bearish hammer on the weekly chart.
• GBP/USD: Cable has failed to break 1.30 on three occasionally of late, so the near-term bias remains bearish whilst the USD remain firm.
• NZD/JPY: Its trading just below key resistance around 70, although this level has so far held this past month. We’d likely need to see phase one as good as confirmed to see this break materially higher though.
• USD/CHF: After briefly touching a 28-day high, its trading back within Friday’s range. Take note current levels have provided two drops of over 100 pips this past month, and with it being so close to parity there’s potential for some mean reversion.

Equity Brief:

• Key Asian stock markets have started the new week on a solid footing where markets are cheered by China’s initiative to thaw potential obstacles that hinder the signed off on the U.S-China Phase One trade deal before 15 Dec where additional 15% U.S. tariffs on China’s imports are set to kick in. On Sunday, China has reported that it will raise penalties on violations of intellectual property rights, a sore sticking point in the on-going trade talks.
• Also, Hong Kong has managed to see a relatively calm weekend, the first since the mass ant-government demonstration erupted in Jun as the city went to polls on Sunday for the local council district elections. Voters turnout has been high with a record of more than 71% that has saw the pro-democracy camp gained control most of the seats (333 of 452 as at 8am HKT) over the establishment candidates.
• Hong Kong’s Hang Seng Index (HSI) and South Korea’s Kospi 200 are the best performers so far with gains of 1.62% and 0.90% respectively. Hong Kong and China related property counters led the gainers where Wharf Real Estate Investment, Sun Hung Kai Properties and Country Garden Holdings have rallied by 5.73%, 3.52% and 3.30% respectively. Alibaba’s secondary listing will start trading tomorrow on the Hong Kong stock exchange.
• Larking around the corner, there could be a potential escalating diplomatic spat between Australia, Taiwan and China over an alleged Chinese spy, Wang Liqiang that has defected to Australia with detailed information on China’s espionage tactics that aim to influence and control the outcome of the political arena in Australia and Taiwan. China has rebuked such claims over the weekend and stated that Wang is a fraudster and a wanted criminal in China.
• The S&P 500 E-Mini futures have recorded a gain of 0.26% in today’s Asian session to print an intraday high of 3121, just 0.35% away from its current all-time high of 3132.

Economic Calendar

Matt Simpson and Kelvin Wong both contributed to this article

Data from Refinitiv. Index names may not reflect tradable instruments and not all markets are available in all regions.