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Asia morning update - markets adrift

The silence is deafening, and this vacuum of leads sets Asia markets adrift into Tuesday. Amid the rather empty data docket in Asia, the attention is geared towards the Fed minutes release on Wednesday.

Broadly flat to moderate changes are expected across Asia markets on Tuesday having little new to chew on with North America mostly away at the start of the week. US market’s absence for Presidents’ Day yielded the lack of fresh data after last week’s mixed readings. Meanwhile on the macro end, headlines continue to shape the optimism for a US-China resolution to come. The exhaustion of this key theme would however leave Asia markets to its own means into the Tuesday session as the wait for both the key Fed minutes and Washington trade talks continue.

Notably, this morning saw the release of the Reserve Bank of Australia’s February meeting minutes, emphasizing the relatively dovish stance that gave equities a slight boost. The outlining of ‘significant uncertainties’ and the case for interest rates to move in either direction falls in line with the market’s shift towards an increasing likelihood for a cut to rates. The defection towards a more accommodative stance in line with the Fed had once again been more evident here. Consequently, the ASX 200 saw a slight pop, last seen up 0.34% as with the AUD/USD that softened about 0.2% to $0.7115 when last check. Look to the rest of wage inflation and employment data this week for a big week for Aussie releases.

To recap the market action for the local market, the Straits Times Index edged higher on Monday from the US-China trade hopes but remains in waiting for a breakout. Several notable events including the release of DBS’ earnings and the mildly expansionary budget had broadly fallen in line expectations as the STI traded higher alongside the rest of the Asia region. Once again the emphasis falls on the same macro themes of monetary policy and trade as the STI holds right below the 3278.6 resistance.

On FX, developments had concentrated Europe as political noises emerged again from the UK, though the reactions had been slight. The notable departure by seven MPs from the main opposition Labour Party once again presented the divisiveness of the UK government, all while Prime Minister Theresa May continues to push her Brexit plan in the countdown. That said, within the greater chaos in the form of Brexit, this new development had perhaps present little material differences. GBP/USD can be seen trading flat at around $1.292 through from Monday’s session, likewise with EUR/USD that had kept its head above the $1.130 handle after the greenback softened from last Friday. While Asia markets struggle to find data points to look at in the day, the UK’s employment figures and German ZEW survey would be ones for the pairs to anchor. The EUR/USD pair that had survived the plight of a steeper downturn last week would have the readings to contend with.

Yesterday: S&P 500 +1.08% (Friday); DJIA +1.74% (Friday); DAX -0.01%; FTSE -0.24%

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