Asian currencies and emerging market stocks rose on Monday as the dollar weakened and data on Chinese factory profits suggested the economy was stabilizing.
The South Korean won led gains among currencies as foreign investors bought South Korean stocks, while Chinese technology stocks led the stock market. The renminbi rose 0.2% against the US dollar, marking its biggest gain in a month.
China’s industrial profits rose for the first time in four months, and deflation in the manufacturing sector eased, boosting market sentiment. This indicates that policies to address overcapacity are starting to take effect ahead of a week-long holiday. As market focus shifts to US jobs data and the risk of a government shutdown, a weaker dollar has also provided support for major currencies.
Alex Loo, a macro strategist at TD Securities in Singapore, said, “The significant growth in industrial profits in August undoubtedly improved risk sentiment.” He added that this might help strengthen the renminbi in the future and boost Asian currencies.
The US dollar fell for a second consecutive day as traders focused on this week’s US employment data to seek clues on the Fed’s path of interest rate cuts. Previously, the Fed’s preferred inflation gauge on Friday was in line with expectations. SEB, a Swedish bank, said that if the government shutdown delays the release of the employment report and heightens uncertainty, the rally in Asian currencies could be short-lived.
“We must be cautious about Asian currencies in the coming days,” Eugenia Fabon Victorino, head of Asian strategy at SEB in Singapore, said. “As China is about to enter the Golden Week, the US dollar against Asian currencies will be affected by dollar volatility until Wednesday.”
Technical analysis:
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Gold: Our operation of buying after the pullback to the blue area after breaking through 3756 last Friday was very successful. Currently, the price has broken above 3800. We suggest reducing positions and setting protective stops. Meanwhile, keep an eye out for low-buying opportunities below 3780. Additionally, if there is a bullish engulfing pattern breakout in the short term, we recommend continuing to try. For detailed positions, please consult the plugin.
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The Nasdaq index: After sweeping through the liquidity at 24,300/24,400, it has rebounded to around 24,600. For today, we continue to maintain the strategy of buying at the low after sweeping through the liquidity. We suggest paying attention to the buying opportunity near 24,400 today, and you can try 1-2 times. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: There may be some short-term downward pressure on the price, especially after it breaks below the 65 mark. However, we suggest waiting for the demand zone in the 64-63.50 range before considering a buy attempt. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
20:00 Cleveland Fed President Loretta Mester participates in a policy panel discussion.
22:00 U.S. August NAR Pending Home Sales Index (Seasonally Adjusted)
22:30 US Dallas Fed Manufacturing Index for September
