Asia Morning: Nothing Mickey Mouse About Disney

Wall Street steadied the equities ship overnight after another negative session in Asia, led higher by Walt Disney, which signed up an impressive 10 million subscribers to its new Disney+ streaming service in its first 24 hours. Its effect was to lift Wall Street, which was wobbling slightly after Federal Reserve Chairman Powell said in testimony on the Hill, that rates were appropriate and the economy was ticking over nicely.

More pointedly, Mr Powell noted basically along the lines, that monetary policy in the current low-interest-rate environment, was limited in its effectiveness. Nor could we expect much fiscal help from the US Government either, which makes complete sense when they are running trillion-dollar budget deficits. These remarks have been a favourite soapbox speech of mine all year. It should have sent shivers through the markets, as well as the halls of power in Europe, Japan, and any other number of countries where interest rates are at record lows. Thankfully, global financial markets are entirely target fixated on the progress of the US-China trade talks, and Mr Powell’s refreshing honesty was mostly ignored.

The trade talks themselves had a quiet night on the gossip front, with passing remarks that President Trump’s tariff bazooka is not trained solely on China. This isn’t news as an election year rapidly arrives. Talk of disagreements on tariff rollback schedules, and requirements for China to buy minimum fixed quotas of US agricultural products, were enough to stop the global trade FOMO rally, but not enough to erode its foundations. If we are still in an impasse by next week, patience may start wearing thin though.

The US House of Representative impeachment hearings of President Trump are now public, with a stream of negative testimony, but a lack of any hard evidence in writing. Readers wondering why the Trump-peachment hearings have had no discernible effect on global markets, and only on the President’s Twitter account, can consider two points. Firstly, the economy is performing well despite the President’s efforts and despite taking all the credit for it, as any good politician should. Secondly, both houses must vote to impeach the President. The Senate is Republican-controlled, and in its present form, the impeachment process has no chance of progressing out of the House of Representatives. Impeachment is a non-story from the financial markets view unless a smoking gun appears, and we have to dust off the covers and discover who this Mike Pence chap is.

Turning to Asia, Australian Employment disappointed this morning, printing at -19,000 versus an expected gain of 15,000 jobs. The Australian Dollar has moved slightly lower, but the fall-out is contained by the fact that this is a very volatile monthly data series. It merely confirms what everyone has known for quite a while, that the non-mining economy is in poor shape and that the Aussie battler is doing it hard. They will be doing is harder still in time to come as the recent RBA cuts relight the fires of the Sydney and Melbourne property markets while having no discernable effect on the real economy.

Asia’s highlight is China’s Industrial Production and Retail Sales data due at 1000 SGT. Industrial Production is expected to rise by 5.40% and Retail Sales by 7.90%. Being the other side of the US-China trade war, the Chinese data could potentially have a substantial impact on markets today. Asia has been very circumspect this week, with a series of negative days even as the US continues to rally. The official data is unlikely to surprise. Still, a strong miss lower could see Asian investors across the region running for the exit doors, already held ajar by the deteriorating situation in Hong Kong.

Overall the risks continue to rise that a meaningful pullback in the global recovery trade could occur, fuelled by a lack of progress on trade talks, and in Asia’s case, additional concerns over the impasse in Hong Kong.


Wall Street unwound Asia’s negativity overnight, but couldn’t really push on to new highs as negative rumours emanating from the trade talks remained high. Still, actual concrete detail remained scarce to non-existent.

The Dow Jones rose 0.33%, buoyed by a five per cent rally in Disney shares, but the S&P 500 and Nasdaq closed almost flat.

Japan’s Annualised Preliminary GDP disappointed this morning, printing a measly 0.20% (0.80% exp), but the Nikkei is still slightly higher by 0.20% in early trade. The ASX 200 has shaken of weak employment data also to rise by 0.20%. Around the region the Shanghai Comp, STI and Hang Seng are all near flat, with only the Kospi moving, increasing 0.50%.

Asia is clearly waiting for the China data and further developments from Hong Kong.


The dollar fell against haven currencies such as the Yen and CHF overnight on trade concerns but maintained much of its gains against other developed market currencies. The Dollar Index rose 0.04% to 98.35.

The Kiwi held onto most of its gains overnight post the RBNZ holding rates steady, remaining at 0.6400. It implies that the street is still short the NZD with the possibility of more short squeezes to come. The AUD fell on weak employment data this morning, down 0.50% to 0.6805. The China Retail Sales and Industrial Production numbers will likely dictate the fate of both antipodean currencies as both have a high-beta to Chinese trade. Weak data will probably send AUD lower and stop Kiwi’s rally in its tracks.

Against regional currencies, the dollar continues to tread water and is almost unchanged. Local currencies have a lot of good trade news built into them now and are vulnerable to disappointments on that front. For now, Asia FX markets continue their wait and see strategy though.


Oil reversed its losses from the Asian session to rise slightly overnight as API Crude Inventory data showed a slump to -0.50 million barrels versus a 4.26 million barrel rise last week. Brent crude rose 0.80% to $62.50, and WTI rallied 1.0%, on a spot basis, to $57.50 a barrel.

The rally overnight took both contracts to the top of their recent ranges with resistance on Brent crude at $63.00 a barrel and WTI at $58.00 a barrel. The technical picture shows both contracts continuing to track quietly higher within their up-channels but with some sideways price action in recent days. Oil, like equities, likely needs some positive concrete news to emerge from the trade talks to regain momentum. With so much positivity built into prices, both remain vulnerable to a change in sentiment.


Some potential impasses in the US-China trade talks benefited gold overnight, which rose 0.50% to $1463.50, nearly 20 dollars higher than the lows from earlier this week.

Gold has very strong technical resistance now at $1480.00 an ounce, which will be a formidable barrier. As ever, the reasons behind gold’s move higher are factors not its own; instead, the buying has been driven by risk hedging as markets impatience grows on trade progress.

Further bad news will be good news for gold but does not change the fact that the market appears structurally long though, limiting gains. Some concrete trade progress will leave gold vulnerable to a considerable downside correction still.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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