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Asia Roundup: Kiwi near 2-month lows, dollar index regains ahead of Yellen, Draghi speeches at Jackson Hole, Asian shares advance – Thursday, August 24th, 2017

Market Roundup

  • UK finance sector proposes “ambitious” post-Brexit trade pact
     
  • Fellow Republicans rebuke Trump over government shutdown threat
     
  • China's Xi pledges to properly address differences with S.Korea – Xinhua
     
  • New Zealand posts first July trade surplus since 2012
     
  • MoF flow data week-ended Aug 19 – Japanese sell net Y453.2 bln for-bonds
     
  • Foreign investors sell net Y300.7 bln Japan stocks, Y185.1 bln JGBs
     
  • Net Y320.7 bln foreign stocks, Y5.7 bln bills bought however
     
  • Net Y2.2696 trln short-term bills bought though, temporary parking
     
  • “Made in Japan” resurges as Asia labor costs grow – Nikkei
     
  • Japan Mitsui Sumitomo to buy First Capital from Canada Fairfax for $1.6 bln
     

Economic Data Ahead

  • (0245 ET/0645 GMT) France Aug Business climate, 108 eyed, last 109
     
  • (0300 ET/0700 GMT) Spain Q2 GDP, 0.9% q/q, 3.1% y/y eyed; last 0.9%, 3.1%
     
  • (0430 ET/0830 GMT) Great Britain Q2 GDP, 0.3% q/q, 1.7% y/y eyed; last 0.3%, 1.7%
     
  • (0430 ET/0830 GMT) Great Britain Q2 Business investment prelim, 0.4% q/q, 0.5% y/y eyed; last 0.6%, 0.7%
     
  • (0430 ET/0830 GMT) Great Britain Aug CBI distributive trades, 15 eyed, last 22
     

Key Events Ahead

  • (0700 ET/1100 GMT) Riksbank's Jochnick speaks on current issues in the Swedish economy

FX Beat

DXY: The dollar steadied versus its major peers ahead of a looming debate in Congress over raising the debt ceiling. The greenback against a basket of currencies traded flat at 93.24, having touched a high of 94.15 last week, it’s highest since July 26. FxWirePro's Hourly Dollar Strength Index stood at 23.79 (Neutral) by 0500 GMT.

EUR/USD: The euro continued to consolidate within narrow ranges, as investors await ECB President Draghi’s speech at the Jackson Hole Symposium for the next direction.  The European currency traded flat at 1.1802, having touched a high of 1.1828 on Monday, its highest since Aug. 14. FxWirePro's Hourly Euro Strength Index stood at 62.99 (Bullish) by 0400 GMT. Investors’ attention will remain on series of economic data from the Eurozone economies, ahead of the U.S. unemployment benefit claims and existing home sales. Immediate resistance is located at 1.1838 (Aug 14 High), a break above targets 1.1889. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).

USD/JPY: The dollar rebounded after declining to recent lows as U.S. President Donald Trump suggested a shutdown of the government was possible and threatened to terminate the North American Free Trade Agreement. The major was trading 0.1 percent up at 109.17, having hit a low of 108.60 on Friday, its lowest since Apr. 19 2016. FxWirePro's Hourly Yen Strength Index stood at -17.38 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims and existing home sales for further momentum. Immediate resistance is located at 109.39 (78.6% retracement of 112.19 and 108.60), a break above targets 109.99 (61.8% retracement of 112.19 and 108.80). On the downside, support is seen at 109.00, a break below could take it near 108.60 (August 18 Low).

GBP/USD: Sterling slumped to a fresh 8-week low below the 1.2800 handle, weighed down by concerns about Britain's economic prospects and the Brexit process. The major traded 0.1 percent down at 1.2787, having hit a low of 1.2778 earlier, its lowest since June 26. FxWirePro's Hourly Sterling Strength Index stood at -57.07 (Bearish) by 0400 GMT. Investors’ focus will remain on the UK gross domestic product Q2 and total business investment figures, ahead of the U.S. fundamental. Immediate resistance is located at 1.2851 (5-DMA), a break above could take it near 1.2896 (10-DMA). On the downside, support is seen at 1.2750, a break below targets 1.2722 (June 19 Low). Against the euro, the pound was trading flat at 92.29 pence, having hit a fresh 10-month low of 92.25.

AUD/USD: The Australian dollar came under renewed selling pressure, in response to increased nervousness heading into the 2-day Jackson Hole Symposium starting today. Moreover, a fresh selling wave seen across the commodities’ space also undermined the major's upside. The Aussie trades flat at 0.7901, having hit a high of 0.7962 last week, it’s strongest since Aug. 04. FxWirePro's Hourly Aussie Strength Index stood at -85.42 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7869 (August 18 Low), a break below targets 0.7807. On the upside, resistance is located at 0.7950, a break above could take it near 0.7927 (Aug 17 High).

NZD/USD: The New Zealand dollar steadied near two-month lows, with traders focused on an annual meeting of central bankers. On Wednesday, the major was heavily sold-off after the New Zealand government downgraded the country's growth outlook for this fiscal year and next. The Kiwi trades flat at 0.7227, having touched a low of 0.7197 on Wednesday, its lowest level since June 16. FxWirePro's Hourly Kiwi Strength Index was at -137.64 (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 0.7274 (78.6% retracement of 0.7558 and 0.7223), a break above could take it near 0.7373 (21-DMA). On the downside, support is seen at 0.7170 (June 12 Low), a break below could drag it till 0.7126 (June 6 Low).

Equities Recap

Asian shares advanced, while the dollar slightly edged up, as investors shrugged off the risk aversion that gripped financial markets overnight after President Donald Trump threatened to shut down the U.S. government.

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

Tokyo's Nikkei eased 0.3 percent to 19,368.67 points, Australia's S&P/ASX 200 index lost 0.05 percent to 5,740.30 points and South Korea's KOSPI gained 0.4 percent to 2,375.69 points.

Shanghai composite index fell 0.1 percent to 3,283.01 points, while CSI300 index was trading 0.3 percent down at 3,746.18 points.

Hong Kong’s Hang Seng was trading 0.6 percent higher at 27,553.01 points. Taiwan shares added 0.8 percent to 10,488.96 points.

Commodities Recap

Crude oil prices rose, retaining most of their gains from the previous session after another fall in U.S. crude inventories. International benchmark Brent crude was trading 0.1 percent up at $52.56 per barrel by 0442 GMT, having hit a high of $52.93 on Friday, its strongest since Aug. 8. U.S. West Texas Intermediate was trading flat at $48.36 a barrel, after rising as high as $48.71 last week, its highest since Aug. 14.

Gold prices eased, giving up some of its gains made in the previous session after U.S. President Donald Trump's threat of a government shutdown, while investors began to focus on a major central bankers conference in Jackson Hole. Spot gold slipped 0.1 percent to $1,288.34 an ounce by 0448 GMT, having touched a high at $1,300.80 per ounce last week, its highest since Nov. U.S. gold futures for December delivery were down 0.1 percent at $1,293.50 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.193 percent higher by 0.014 bps, while 5-year yield was 0.011 bps up at 1.762 percent.

The Japanese government bonds jumped as investors wait to watch the country’s consumer price inflation for the month of July, scheduled to be released today by 23:30GMT amid an otherwise muted trading session where participants are closely eyeing the Jackson Hole Symposium, starting today. The yield on the benchmark 10-year Treasury note fell 1 basis point to 0.03 percent, the yield on long-term 30-year also slipped 1 basis point to 0.82 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at -0.14 percent.

The Australian bonds gained after the yield on 10-year U.S. Treasuries fell five basis points to 2.17 percent, the lowest closing level since June 26. Also, the markets wary ahead of the Federal Reserve’s Jackson Hole Economic Policy Symposium scheduled for this Friday in Wyoming. The yield on the benchmark 10-year Treasury note fell more than 3 basis points to 2.656 percent, the yield on 15-year note slid nearly 4 basis points to 2.951 percent and the yield on short-term 2-year dipped nearly 2 basis points to 1.837 percent.

The New Zealand bonds ended Thursday’s session on a flat tone after the country’s trade balance surprised on the upside, against expectations of a deficit and as investors wait to watch the Jackson Hole Symposium, starting today for further direction in the bond market. At the time of closing, the yield on the benchmark 10-year Treasury note jumped 4 basis points to 2.94 percent, the yield on 7-year note climbed 3-1/2 basis points to 2.79 percent while the yield on short-term 2-year ended 1 basis point lower at 2.07 percent.

The Canadian government bond prices were higher across the maturity curve, with the two-year price up 2 Canadian cents to yield 1.259 percent and the benchmark 10-year rising 31 Canadian cents to yield 1.884 percent. The Canada-U.S. two-year bond spread stood at -5.3 basis points, while the 10-year spread stood at -28.8 basis points.


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