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Positive US data sees US yields and the USD rise, trade deal digested! (Friday, January 17, 2020)

Asian markets continued higher on Friday after global stock indexes and Wall Street posted more records, with strong corporate earnings and upbeat U.S. economic data adding to optimism after China and the U.S. signed a partial trade deal. But investors will be closely watching key Chinese economic data for clues on whether a marked slowdown in the world's second-largest economy is starting to bottom out. China is expected to post its weakest annual growth rate in 29 years -- 6.1% -- due to anemic domestic demand and the damaging trade war with the United States. Data in the last few months have pointed to an improvement in Chinese manufacturing and business confidence as trade tensions eased, but analysts are not sure if the gains can be sustained and Beijing is widely expected to roll out more stimulus measures. In early trade before Chinese markets opened, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.19%, taking gains for the month to 3.4%.Australian shares were up 0.49% after setting four consecutive record closing highs in previous days. Japan's Nikkei added 0.55%.

MSCI's global share index inched up 0.05%, just off new record highs set earlier in the session. But analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the U.S-China trade truce gives way to uncertainty over the next steps in trade talks.

While the Phase 1 deal is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.

In the U.S. on Thursday, a combination of upbeat earnings from Morgan Stanley, rising U.S. retail sales, a strong labour market and robust manufacturing data helped to lift Wall Street to record highs. The Dow rose 0.92% to 29,297.64, the S&P 500 gained 0.84% to 3,316.81 and the Nasdaq Composite added 1.06% to 9,357.13.

The U.S. data also supported the dollar, which held steady on Friday. The greenback was up 0.05% against the yen at 110.19. While the euro inched 0.02% higher to buy $1.1137.The dollar index, which tracks the greenback against a basket of six major rivals, was flat at 97.320.

The rally in equities was mirrored in U.S. benchmark 10-year Treasury notes, which saw yields tick up to 1.8214% from their close on Thursday at 1.809%. Yields rise as prices fall. U.S. West Texas Intermediate crude futures were 0.17% higher at $58.62 per barrel, while gold shed 0.07% to $1,551.50 per ounce on the spot market.