Asia Roundup: Antipodeans off highs, dollar near 6-month lows as U.S. political concerns linger, Asian shares volatile – Friday, May 19th, 2017

Market Roundup

  • Trump denies asking Comey to drop probe, decries 'witch hunt'
  • China's Xi says willing to put S. Korea ties back on track
  • China, ASEAN agree on framework for S. China Sea code of conduct
  • PBOC skips daily OMO, injects net 160 bln yuan for the week
  • PBOC extends 25 bln yuan currency swap with NZ
  • China sets yuan midpoint at 6.8786/dlr, weakens at the fastest pace in 3-mnths
  • Greece approves more austerity to unlock bailout funds, debt relief
  • Investors pulled $6 bln from domestic-focused stock funds -Lipper
  • Non-domestic stock funds pulled in $4.8 bln, while taxable bond funds gathered $4.4 bln
  • EM stock funds absorbed $1.5 bln, bond counterparts took in $559 mln
  • Foreign CB US debt holdings +$12.363 bln to $3.234 trln May 17 week, Treasuries +$16.568 bln to $2.922 trln, agencies -$4.527 mln to $250.786 bln

Economic Data Ahead

  • (0400 ET/0800 GMT) Eurozone Mar Current Account NSA (EUR), last 27.90 bln
  • (0400 ET/0800 GMT) Eurozone Mar Current Account SA (EUR), last 37.90 bln
  • (1000 ET/1400 GMT) Eurozone May Consumer Confidence Flash, -3.0 eyed; last -3.6

Key Events Ahead

  • N/A ECB's Peter Praet will participate at the ECB/European Commission joint conference
  • N/A EU Foreign Affairs Council meeting in Brussels
  • (0800 ET/1200 GMT) ECB's Benoit Coeure will participate in a conference on the world economy
  • (0800 ET/1200 GMT) ECB VP Vitor Constancio speaks on “Banking union and capital markets union”

FX Beat

DXY: The dollar declined versus its major peers as ongoing political turbulence around U.S. President Donald Trump continued to hurt market sentiment. The greenback against a basket of currencies traded 0.1 percent down at 97.80, having hit a low of 97.33 on Wednesday, it’s lowest since Nov. 9. FxWirePro's Hourly Dollar Strength Index stood at -91.42 (Slightly Bearish) by 0500 GMT.

EUR/USD: The euro edged up after declining from a 6-month high in the previous session as the greenback eased on political uncertainty in the US, fading Fed June rate hike bets. The European currency traded 0.1 percent up 1.1112, having touched a high of 1.1171 on Thursday, its highest since Nov. 9. FxWirePro's Hourly Euro Strength Index stood at 79.29 (Slightly Bullish) by 0400 GMT.  Investors’ attention will remain on Eurozone's current account figures and consumer confidence data, ahead of Fed Bullard's speech. Immediate resistance is located at 1.1200, a break above targets 1.1250. On the downside, support is seen at 1.1099 (78.6% retracement of 1.0839 and 1.1171), a break below could drag it near 1.1044 (61.8% retrace)/1.1005.

USD/JPY: The dollar skidded after rebounding from a 3-week low the prior day as concerns that political turmoil in the U.S. could delay efforts by President Donald Trump to implement his economic stimulus plans weighed on market sentiment. The major traded 0.1 percent down at 111.38, having touched a low of 110.23 on Thursday, its lowest since Apr 25. FxWirePro's Hourly Yen Strength Index stood at 32.76 (Neutral) by 0400 GMT. Investors’ will continue to track sentiment around the U.S. Treasuries, ahead of Federal Reserve Bank of St. Louis President James Bullard's speech. Immediate resistance is located at 111.81 (38.2% retracement of 114.36 and 110.54), a break above targets 112.29 (50.0% retrace). On the downside, support is seen at 111.00, a break below could take it near 110.23 (Previous Session Low).

GBP/USD: Sterling gained after falling from a near 8-month peak touched in the previous session as better-than-expected British retail sales data eased concerns about the broader economy outlook this year. Sterling trades 0.1 percent up at 1.2955, having hit a high of 1.3047 the prior day, its strongest since Sept. 29. FxWirePro's Hourly Sterling Strength Index stood at 8.33 (Neutral) by 0400 GMT. Investors’ attention will remain on UK CBI Industrial Trends Survey, amid a lack of U.S fundamental drivers. Immediate resistance is located at 1.2990 (May 17 High), a break above could take it over 1.3047 (Previous Session High). On the downside, support is seen at 1.2921 (5-DMA), a break below targets 1.2900. Against the euro, the pound traded flat at 85.77 pence, having hit a 1-1/2 month low of 86.14 on Wednesday.

AUD/USD: The Australian dollar steadied after easing from a 2-week high hit on Thursday as sentiment towards the U.S. dollar weakened amid a turnaround in risk conditions. The Aussie trades 0.06 percent up at 0.7422, having hit a high of 0.7466 the day before, it’s strongest since May. 3. FxWirePro's Hourly Aussie Strength Index stood at 9.86 (Neutral) by 0400 GMT. Investors will continue to track sentiments around the commodity bloc, as the U.S economic calendar remains absolutely data empty. Immediate support is seen at 0.7397 (50.0 retracement of 0.7328 and 0.7466), a break below targets 0.7360 (23.6% retrace). On the upside, resistance is located at 0.7466 (Previous Session High), a break above could take it near 0.7500.

NZD/USD: The New Zealand dollar declined, extending losses for the second consecutive session, as divergent monetary policy outlooks between the Fed and the RBNZ weighed on market sentiment. The Kiwi trades 0.2 percent down at 0.6885, having retreated from a high of 0.6949 on Thursday, its strongest since May 10. FxWirePro's Hourly Kiwi Strength Index was at -74.90 (Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of Fed Bullard's speech. Immediate resistance is located at 0.6913 (21-DMA), a break above could take it near 0.6950 (May 10 High). On the downside, support is seen at 0.6868 (38.2 retracements of 0.6817 and 0.6949), a break below could drag it till 0.6848 (23.6% retrace).

Equities Recap

Asian stocks traded in a volatile market, while the dollar gave up some of the overnight gains amid ongoing political turmoil around U.S. President Donald Trump.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.1 percent and was poised for a weekly loss of 0.5 percent.

Tokyo's Nikkei rose 0.24 percent to 19,600.41 points, Australia's S&P/ASX 200 index declined 0.2 percent to 5,725.40 points and South Korea's KOSPI added 0.2 percent to 2,292.36 points.

Shanghai composite index edged down 0.03 percent to 3,089.16 points, while CSI300 index was trading 0.04 percent up at 3,400.10 points.

Hong Kong’s Hang Seng was trading 0.4 percent higher at 25,237.65 points. Taiwan shares shed 0.06 percent to 9,963.78 points.

Commodities Recap

Crude oil prices rose to a 4-month high on growing optimism that producing countries will extend output cuts to curb a persistent glut in crude. International benchmark Brent crude was trading 0.7 percent up at $52.83 per barrel by 0415 GMT, having hit a high of $52.96 earlier, its strongest since Apr. 21. U.S. West Texas Intermediate gained 0.7 percent to $49.70 a barrel, after rising as high as $49.85, its highest since Apr. 26.

Gold prices rebounded and were on track for their biggest weekly gain since mid-April as the dollar weakened and equity stocks eased amid the ongoing political turmoil in the United States. Spot gold rose 0.1 percent to $1,248.01 per ounce by 0419 GMT, after declining 1.1 percent on Thursday. U.S. gold futures were down 0.2 percent at $1,250.40 an ounce.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.241 percent higher by 0.026 bps, while 5-year yield was 0.026 bps up at 1.7739 percent.

The Australian bonds rallied on the last trading day of the week as investors covered previous short positions amid a silent trading session that witnessed data of least economic significance. The yield on the benchmark 10-year Treasury note slipped 1 basis point to 2.48 percent, the yield on 15-year note also plunged almost 3-1/2 basis points to 2.90 percent and the yield on short-term 4-year traded 1/2 basis point lower at 1.99 percent.

The New Zealand government bonds gained, sending yields 3 basis points lower at the long end of the curve.

The Canadian government bond prices were mixed as the curve flattened in sympathy with the U.S. yield curve. The 10-year note edged up 4 Canadian cents to yield 1.447 percent. The yield had hit its lowest intraday since Nov. 10 at 1.417 percent. The gap between the 2-year and 10-year yields narrowed 1.7 basis points to a spread of 77.5 basis points as longer-dated bonds outperformed.

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