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Asia Roundup: Antipodeans steady near 1-month highs, dollar gains ahead of Trump's news conference, Asian shares touch 2-month peak – Wednesday, January 11th, 2017

Market Roundup

  • DoubleLine’s Gundlach – Trouble for equity markets if Treasury 10 yield hits 3% – Reuters.
     
  • Senior BoJ official – Central banks have considerable impact on yields
     
  • Japan end-Dec foreign reserves $1.2169 trln, end-Nov $1.2193 trln.
     
  • ANZ prices Y114 bln 7/10-year samurais, MUFJ and Mizuho leads.
     
  • Banks forced to cover tracks of China’s FX regulator – Reuters.
     
  • France Pres-candidate Macron – Euro may not exist in ten years – Reuters.
     
  • Australia Sept-Nov qtr job vacancies +2.1% over previous three months, +8.9% over same period last year, highest since mid-‘11.
     
  • New Zealand Dec job ads +1.6% m/m, 16th monthly rise, +18.8% y/y, best in five years.

Economic Data Ahead

  • (0300 ET/0800 GMT) Spain Nov industrial output, +1.0% y/y forecast; last +0.5%.
     
  • (0430 ET/0930 GMT) Great Britain Nov ind output, +0.8% m/m, +0.6% y/y forecast; last -1.3%, -1.1%.
     
  • (0430 ET/0930 GMT) Great Britain Nov mfg output, +0.5% m/m, +0.4% y/y forecast; last -0.9%, -0.4%.
     
  • (0430 ET/0930 GMT) Great Britain Nov construction output, +0.3% m/m, +2.0% y/y forecast; last -0.6%, +0.7%.
     
  • (0430 ET/0930 GMT) Great Britain Nov trade balance, GBP11.2 bln deficit forecast; last GBP9.71 bln deficit.
     
  • (0430 ET/0930 GMT) Great Britain Nov – non-EU, GBP 3.0 bln deficit forecast; last GBP1.60 bln deficit.

Key Events Ahead

  • N/A   ECB General Council meeting, Portugal ’27 benchmark syndication.
     
  • N/A   BoE Gov Carney, BoE FPC Brazier at Treasury Committee hearing.
     
  • (0500 ET/1000 GMT) Italy E7 bln 12-month BOT, Greece E625 mln 13-week bill auctions.
     
  • (0530 ET/1030 GMT) Germany E5 bln 0.25% 2027 Bund auction.
     
  • (1100 ET/1600 GMT) French FinMin Sapin, Greek FinMin Tsakalotos meeting.
     
  • (1100 ET/1600 GMT) US Pres Trump holds first press conference.
     
  • (1120 ET/1620 GMT) NY Fed Dudley at New York symposium.
     

FX Beat

DXY: The dollar gained across the board, as investors await the U.S. President-elect Donald Trump's news conference scheduled later in the day. The greenback against a basket of currencies traded 0.04 percent up at 102.07, having hit a low of 101.51 the previous day. FxWirePro's Hourly Dollar Strength Index stood at 56.84 (Bullish) by 1100 GMT.

EUR/USD: The euro slightly edged down, extending losses for the second consecutive session, as the dollar strengthened ahead of President-elect Donald Trump's first news conference since the U.S. elections. On Tuesday, the major rose to an 11 day high, however, it eased to close down at 1.0553. The European currency trades 0.1 percent lower at 1.0544, having touched a peak of 1.0627 in the previous session, its highest since Dec 30. FxWirePro's Hourly Euro Strength Index stood at -55.51 (Bearish) by 0400 GMT. Investors’ attention remains on President-Elect Donald Trump's first news conference, amid a lack of relevant data from the Eurozone docket. Immediate resistance is located at 1.0600, a break above targets 1.0650. On the downside, support is seen at 1.0516 (10-DMA), a break below could drag it till 1.0500.

USD/JPY: The dollar rose, reversing almost all of its previous session losses, as investors await the U.S. President Elect Donald Trump's news conference, in which he is expected to reveal more about his plans for the economy. Additionally, Trump’s remarks on China are likely to influence the broader market sentiment and the demand for the Japanese safe-haven Yen.  The major trades 0.3 percent higher at 116.08, hovering away from a low of 115.07 hit on Friday, its lowest since Dec. 14. Investors will continue to track overall market sentiment, ahead of the U.S. President Elect Donald Trump's news conference for further momentum on the pair. FxWirePro's Hourly Yen Strength Index stood at 133.09 (Highly Bullish) by 0400 GMT. Immediate resistance is located at 116.41 (9-EMA), a break above targets 117.00. On the downside, support is seen at 115.50, a break below could take it near 115.07 (Jan 6 Low).

GBP/USD: Sterling declined, giving up most of its previous day gains, as the greenback picked up significant strength across the board. Moreover, Prime Minister May’s comments pointing towards a Hard Brexit scenario continued to drag the British pound. Sterling trades 0.13 percent down at 1.2160, drifting towards a low of 1.2107 hit in the previous session, its lowest since Oct. 25. FxWirePro's Hourly Sterling Strength Index stood at -113.27 (Highly Bearish) by 0400 GMT. Investors now eye the UK's trade balance, manufacturing, and industrial production data, ahead of highly influential Trump’s new conference scheduled later today. Immediate resistance is located at 1.2200, a break above could take it near 1.2241 (9-EMA). On the downside, support is seen at 1.2100, a break below targets 1.2000. Against the euro, the pound trades 0.1 percent down at 86.77 pence, having hit a low of 87.63 the previous day, its lowest since Nov. 10.

AUD/USD: The Australian dollar advanced, extending previous session gains, as a renewed risk-on sentiment triggered a fresh bout of buying interest in the Aussie. Moreover, a bounce in oil and gold prices also provided a further support to the major. However, upside remains capped as the greenback rose across the board ahead of Donald Trump’s first news conference. The major trades 0.14 percent up at 0.7376, having hit a high of 0.7384 on Tuesday, it’s highest since Dec. 15. FxWirePro's Hourly Aussie Strength Index stood at 125.74 (Highly Bullish) by 0500 GMT. Investors will continue to track USD price action, ahead of the U.S. President Elect Trumps's news conference. Immediate support is seen at 0.7323 (7-EMA), a break below could drag it till 0.7300. On the upside, resistance is located at 0.7400, a break above targets 0.7430.

NZD/USD: The New Zealand dollar eased, after rising to a 4-week high in the previous session, as the U.S. dollar traded broadly higher ahead of Trump’s first news conference post his U.S. presidential elections victory. However, overnight rebound in commodities’ prices and higher Asian equities kept the demand for the Kiwi intact.  The major trades flat at 0.6990, having hit a high of 0.7047 on Tuesday, it’s strongest since Dec. 16. FxWirePro's Hourly Kiwi Strength Index was at 38.08 (Neutral) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of Trump's news conference due later in the day. Immediate resistance is located at 0.7050 (Dec 16 High), a break above could take it till 0.7100. On the downside, support is seen at 0.6952 (21-DMA), a break below could drag it lower0.6950.

Equities Recap

Asian shares rose to a 2-month high as investors await President-elect Donald Trump's news conference due later in the day for hints on his policies on international trade, currencies, tax and fiscal spending.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent to 2-month highs.

Tokyo's Nikkei advanced 0.4 percent to 19,379.33 points, Australia's S&P/ASX 200 index rose 0.11 percent to 5,767.20 points and South Korea's KOSPI was trading 1.58 percent up at 2,077.84 points.

Shanghai composite index declined 0.5 percent to 3,144.25 points, while CSI300 index was trading 0.52 percent lower at 3,340.99 points.

Hong Kong’s Hang Seng was trading 0.57 percent higher at 22,879.52 points. Taiwan shares ended flat at 9,345.74 points.

Commodities Recap

Crude oil prices edged up after declining in the previous session, supported by reports of Saudi supply cuts to Asia, however, a lack of detail of these reductions and signs of rising supplies from other producers prevented prices from rising further. International benchmark Brent crude was trading 0.25 percent higher at $53.73 per barrel by 0412 GMT, having touched a low of $53.57 earlier in the session, its weakest since Dec. 15. U.S. West Texas Intermediate crude rose 0.36 percent at $50.94 a barrel, after falling as low as $50.69 on Tuesday.

Gold prices stood firm, after hitting a near 6-week high in the session before, as economic and political uncertainty strengthened safe-haven buying. Spot gold was little changed at $1,187.05 an ounce by 0417 GMT, having reached its highest level since Nov. 30 at $1,190.45 on Tuesday. U.S. gold futures gained 0.1 percent to $1,187.20 per ounce.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.3831 percent higher by 0.004 bps, while 5-year yield was up by 0.003 bps at 1.8824 percent.

The Australian government bonds slumped as investors cashed in profits ahead of the United States President-elect Donald Trump’s speech later in the day. Also, market participants moved away from safe-haven buying amid weakness in the U.S. Treasuries. Further, sell-off in bonds was driven by a slight recovery in energy prices. The yield on the benchmark 10-year Treasury note rose nearly 2 basis points to 2.75 percent, the yield on 15-year note also climbed close to 2 basis points to 3.18 percent and the yield on short-term 2-year bounced 1 basis point to 1.88 percent.

The New Zealand government bonds remained modestly weak at the time of closing amid a relatively subdued trading session. Also, investors are curiously eyeing the United States President-elect Donald Trump’s speech later in the day for further guidance in the debt market. In intraday trading, the yield on the benchmark 10-year bond rose 1 basis point to 3.22 percent, the yield on 7-year note also climbed 1 basis point to 2.86 percent and the yield on the short-term 2-year note moved 1/2 basis point higher to 2.24 percent.

Canadian government bond prices were mixed across the yield curve, falling marginally at the short and long ends but rising in the middle. The 2-year price slipped half a Canadian cent to yield 0.755 percent, while the 5-year added 3 cents to yield 1.092 percent and the 30-year issue slipped 2 cents to yield 2.281 percent.


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