News

Asia Roundup: Aussie rises on upbeat retail sales, dollar struggles on weak U.S. ISM data and political turmoil, Asian shares edge up – Friday, August 4th, 2017

Market Roundup

  • Australia's central bank upbeat on economy as consumers splurge
     
  • Australia's Jun Retail sales, 0.3% vs 0.6%, forecast 0.2%
     
  • Australia's Q2 Retail sales, 1.5% vs 0.1, forecast 1.2%
     
  • U.S. taxable bond funds attract cash for 4th straight week -Lipper
     
  • Foreign CB US debt holdings +$8.0 bln to $3.3 tln July 26 week
     
  • Treasuries $3.0 bln to $3.0 tln, agencies +$509 mln to $262.3 bln
     
  • Japan June total cash earnings -0.4% y/y, first fall in 13 months
     
  • Real wages -0.8%, fall fastest in 2 yrs, bonuses -1.5%, overtime -0.2%
     
  • Japan EconMin Motegi – Govt, BoJ should work together to beat deflation
     
  • New EconMin wants to look at overall economy regarding any sales tax hike
     

Economic Data Ahead

  • (0300 ET/0700 GMT) Spain Industrial Output
     
  • (0400 ET/0800 GMT) Italy Retail Sales

Key Events Ahead

  • (0605 ET/1005 GMT) UK 1-month, Stg0.5 bln auction
     
  • (0605 ET/1005 GMT) UK 3-month, Stg1.0 bln auction
     
  • (0605 ET/1005 GMT) UK 6-month, Stg1.5 bln auction

FX Beat

DXY: The dollar eased across the board as weaker-than-expected U.S. services sector data reduced expectations for a third U.S. rate increase this year. The greenback against a basket of currencies traded flat at 92.77, having touched a low of 92.55 on Wednesday, it’s lowest since May 3, 2016. FxWirePro's Hourly Dollar Strength Index stood at -47.93 (Neutral) by 0500 GMT.

EUR/USD: The euro rose, extending gains for the third consecutive session, as the greenback eased in the wake of weak U.S. data. The U.S. Services Business Activity Index released by the Institute for Supply Management dropped to 53.9 from 57.4 in June, while the employment sub-index of the ISM report also decreased by 2.2 points to 53.6.  The European currency traded 0.1 percent up at 1.1880, having touched a high of 1.1909 on Wednesday, its highest since Jan 5, 2015. FxWirePro's Hourly Euro Strength Index stood at 110.30 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of the U.S. Non-farm payroll and employment data. Immediate resistance is located at 1.1930, a break above targets 1.1980. On the downside, support is seen at 1.1792 (78.6% retracement 1.1370 and 1.1909), a break below could drag it near 1.1702 (61.8% retracement 1.1370 and 1.1909).

USD/JPY: The dollar tumbled to a fresh 1-1/2 month low against the safe-haven Japanese yen, weighed down by political turmoil gripping Washington and downbeat U.S. economic data which have added to uncertainty about the pace of future Federal Reserve policy tightening. The major was trading flat at 110.08, having hit a low of 109.84 earlier, its lowest since Jun 15. FxWirePro's Hourly Yen Strength Index stood at 69.33 (Bullish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of the U.S. Non-farm payroll and employment data for further momentum. Immediate resistance is located at 110.33 (78.6% retracement of 112.19 and 109.84), a break above targets 110.73 (61.8% retracement of 112.19 and 109.84). On the downside, support is seen at 109.63 (June 12 Low), a break below could take it near 109.11 (June 7 Low).

GBP/USD: Sterling steadied after falling from an 11-month high hit in the previous session as the Bank of England voted 6-2 to keep interest rates at their record lows and lowered its forecasts for growth, inflation, and wages. Sterling traded flat at 1.3140, having hit a high of 1.3267 on Thursday, its highest since Sept. 16. FxWirePro's Hourly Sterling Strength Index stood at -34.86 (Neutral) by 0500 GMT. Investors’ focus will remain on U.S. fundamental drivers, amid a lack of data from the UK docket. Immediate resistance is located at 1.3300, a break above could take it near 1.3350. On the downside, support is seen at 1.3192 (78.6% retracement of 1.2816 and 1.3268), a break below targets 1.3113 (10-DMA). Against the euro, the pound was trading 0.1 percent down at 90.40 pence, having hit a near 9-week low of 90.48 the prior day.

AUD/USD: The Australian dollar gained, halting its three-day losing streak following the release of upbeat retail sales data, which rose 0.3 percent in June, surpassing forecast of 0.6 percent. However, the upside was capped as the RBA trimmed GDP forecasts for 2017 and cautioned markets about the negative effect of the strong Aussie dollar. The major trades 0.2 percent up at 0.7965, having hit a low of 0.7914 the prior day, it’s weakest since July 26. FxWirePro's Hourly Aussie Strength Index stood at -78.09 (Slightly Bearish) by 0500 GMT. Investors will continue to digest upbeat domestic data and RBA monetary policy statement, ahead of U.S. economic releases. Immediate support is seen at 0.7914 (Previous Session Low), a break below targets 0.7877 (61.8% retracement of 0.7571 and 0.8065). On the upside, resistance is located at 0.8000, a break above could take it near 0.8050.

NZD/USD: The New Zealand dollar steadied after slumping to a 2-week low in the previous session, however, it was down 1.1 percent for the week and on course for its first weekly fall after three weeks of gains. The Kiwi trades flat at 0.7434, having touched a low of 0.7391 the day before, its lowest level since July 20. FxWirePro's Hourly Kiwi Strength Index was at -120.83 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7450, a break above could take it near 0.7500. On the downside, support is seen at 0.7380 (50.0% retracement of 0.7201 and 0.7558), a break below could drag it till 0.7422 (61.8% retrace).

Equities Recap

Asian shares gained, rebounding from previous session losses, while the greenback eased on news that Special Counsel Robert Mueller had issued grand jury subpoenas in his investigation of alleged Russian interference in the 2016 U.S. elections.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.

Tokyo's Nikkei fell 0.4 percent to 19,952.02 points, Australia's S&P/ASX 200 index lost 0.3 percent to 5,720.60 points and South Korea's KOSPI gained 0.4 percent to 2,396.59 points.

Shanghai composite index rose 0.2 percent to 3,278.72 points, while CSI300 index was trading 0.02 percent down at 3,727.25 points.

Hong Kong’s Hang Seng was trading 0.04 percent higher at 27,541.13 points. Taiwan shares added 0.3 percent to 10,506.56 points.

Commodities Recap

Crude oil markets declined, extending previous session losses, restrained by rising output from the United States as well as producer cartel OPEC. International benchmark Brent crude was trading 0.1 percent down at $51.86 per barrel by 0411 GMT, having hit a high of $52.90 on Tuesday, its strongest since May 25. U.S. West Texas Intermediate was trading 0.1 percent lower at $48.89 a barrel, after rising as high as $50.40 on Tuesday, its strongest since May 25.

Gold prices steadied after declining to a one-week low in the previous session, as investors’ awaited U.S. jobs data for further clues on the outlook for interest rates. Spot gold was trading 0.06 percent higher at $1,268.29 an ounce by 0417 GMT, having touched a low of $1,256.79 on Thursday, its lowest since July 27. U.S. gold futures for December delivery settled down 0.3 percent at $1,274.40.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.226 percent lower by 0.002 bps, while 5-year yield was 0.001 bps down at 1.789 percent.

The Japanese bonds traded nearly flat as market awaits 30-year JGB auction scheduled for Tuesday, August 8 at 0345 GMT. Also, little trading activity is observed in the light of no important economic data or events. The yield on the benchmark 10-year Treasury note traded flat 0.065 percent, the yield on long-term 40-year note remained steady at 1.09 percent and the yield on short-term 3-year hovered around -0.1 percent.

The Australian 10-year bond yields reached its highest in our weeks Friday after the Reserve Bank of Australia (RBA) slightly downgraded its economic growth forecast for the country for this year. However, a tad higher-than-expected retail sales for the month of June was largely shrugged off by investors.  The yield on the benchmark 10-year Treasury note slumped 4 basis points to 2.64 percent, the yield on 15-year note plunged nearly 4-1/2 basis points to 2.94 percent while the yield on short-term 2-year traded nearly flat at 1.79 percent.

The Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries, after the Bank of England downgraded its economic and inflation forecasts. The 10-year rose 41 Canadian cents to yield 1.892 percent.


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