Asia Roundup: Kiwi eases on downward inflation forecasts revision, dollar rebounds from 10-month lows against yen, Asian shares gain amid improving risk sentiment – Monday, September 11th, 2017

Market Roundup

  • Japan July core machinery orders +8.0% m/m, -7.5% y/y, +4.4%, -7.3% eyed
  • Japan m/m gain in core orders best since Jan ’16, first rise in hour months
  • Japan Aug money supply M2 +4.0% y/y, M3 +3.4%, broadest liquidity +3.7%
  • Investment trust assets in Japan reach new Y102.6 trln high – Nikkei
  • China Aug producer inflation jumps to 4-month high as economy races along
  • China fiscal revenue and spending growth slow in August
  • UK consumers spend a bit more in August, 2017 still seen weak -Visa
  • Blocking EU repeal bill is vote for chaotic Brexit, minister warns UK lawmakers
  • Post-Brexit customs checks could cost 4 bln pounds a year, study says
  • Weakening but still potent Irma aims full force at Florida's Gulf Coast
  • N. Korea warns U.S. will pay due price for spearheading U.N. sanctions
  • U.S. short dollar bets largest since Jan 2013 -CFTC, Reuters

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy Jul Industrial output SA, -0.3% m/m eyed, last 1.1%
  • (0400 ET/0800 GMT) Italy Industrial output WDA, 3.85 eyed, last 5.3%

Key Events Ahead

  • (0300 ET/0700 GMT) ECB's Coeure speaks in Frankfurt
  • (0530 ET/0930 GMT) Germany E2.0 bln for 6 months auction
  • (0855 ET/1255 GMT) France E2.6-3.0/E1.1-1.5/E0.5-0.7 bln for 3/6/12 months auction

FX Beat

DXY: The dollar rebounded from recent lows versus its major peers after North Korean dictator Kim Jong Un decided to hold a party over the weekend rather than launch another missile. The greenback against a basket of currencies traded 0.2 percent up at 91.52, having touched a low of 91.01 on Friday, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at -94.31 (Slightly Bearish) by 0500 GMT.

EUR/USD: The euro edged down after rising to a 2-1/2 year high in the previous session on tensions that North Korea may fire another missile over the weekend, thus leading to escalation of tensions in the Korean Peninsula. The European currency traded 0.2 percent down at 1.2008, having touched a high of 1.2092 the prior session, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 49.64 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone consumer price index and industrial output data, amid a lack of economic data from the U.S. docket. Immediate resistance is located at 1.2050, a break above targets 1.2100. On the downside, support is seen at 1.1989 (61.8% retracement 1.1823 and 1.2092), a break below could drag it near 1.1957 (50.0% retracement 1.1823 and 1.2092).

USD/JPY: The dollar rose, rebounding from a 10-month lows after North Korea marked the anniversary of its founding without resorting to any further missile or nuclear tests. The major was trading 0.5 percent up at 108.34, having hit a low of 107.32 in the previous session, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at -74.65 (Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, as the U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 108.61 (61.8% retracement of 110.67 and 107.32), a break above targets 109.01 (50.0% retracement of 110.67 and 107.32). On the downside, support is seen at 108.00 (Session Low), a break below could take it near 107.32 (Previous Session Low),

GBP/USD: Sterling eased after rising above the 1.3200 handle for the first time in five weeks on Friday as the greenback staged a modest recovery. Investors now keenly await the Bank of England monetary policy decision later in the week for further cues on the central bank's policy outlook.  The major traded 0.3 percent up at 1.3171, having hit a high of 1.3224 in the prior session, its highest since August 3. FxWirePro's Hourly Sterling Strength Index stood at 48.81 (Neutral) by 0400 GMT. Investors’ focus will remain on the BoE monetary policy decision and the U.S inflation report due to release later during the week, amid a lack of fundamental drivers from both the U.S. and the UK docket. Immediate resistance is located at 1.3224 (Previous Session High), a break above could take it near 1.3270. On the downside, support is seen at 1.3072 (78.6% retracement of 1.2773 and 1.3150), a break below targets 1.2952 (5-DMA). Against the euro, the pound was trading 0.05 percent down at 91.20 pence, having hit a 3-week high of 91.04 pence earlier in the session.

AUD/USD: The Australian dollar consolidated within a narrow range despite China reporting a better-than-expected CPI and PPI numbers on Saturday. The major rallied to multi-month highs above the 0.8100 handle in the previous session on the back of a weaker dollar and upbeat Chinese imports data.  The Aussie trades flat at 0.8055, having hit a high of 0.8124 on Friday, it’s strongest since May 2015. FxWirePro's Hourly Aussie Strength Index stood at 37.71 (Neutral) by 0500 GMT.  Investors will continue to track overall market sentiment, amid a lack of U.S. economic releases. Immediate support is seen at 0.8028 (61.8% retracement of 0.7871 and 0.8124), a break below targets 0.8007 (5-DMA). On the upside, resistance is located at 0.8100, a break above could take it near 0.8124 (Previous Session High)

NZD/USD: The New Zealand dollar declined after rising to a near 3-week high in the previous session as the downward revision of the inflation forecasts by the NZIER weakened the bid tone in the major. The Kiwi trades 0.1 percent down at 0.7254, having touched a high of 0.7337 on Friday, its highest level since Aug. 21. FxWirePro's Hourly Kiwi Strength Index was at -23.89 (Neutral) by 0500 GMT. Immediate resistance is located at 0.7300, a break above could take it near 0.7343 (August 9 High). On the downside, support is seen at 0.7218 (5-DMA), a break below could drag it till 0.7172 (September 7 Low).

Equities Recap

Asian shares gained, while the dollar against a basket of currencies rebounded from multi-month lows as risk aversion slightly eased.

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

Tokyo's Nikkei rallied 1.4 percent to 19,545.77 points, Australia's S&P/ASX 200 index gained 0.8 percent to 5,713.10 points and South Korea's KOSPI added 0.6 percent to 2,358.31points.

Shanghai composite index rose 0.3 percent to 3,375.25 points, while CSI300 index was trading 0.1 percent up at 3,829.19 points.

Hong Kong’s Hang Seng was trading 1.03 percent higher at 27,960.58 points. Taiwan shares shed 0.4 percent to 10,572.16 points.

Commodities Recap

Crude oil prices edged up, reversing some of its previous session losses after the Saudi oil minister discussed the possible extension of a pact to cut global oil supplies beyond March 2018 with his Venezuelan and Kazakh counterparts. International benchmark Brent crude was trading 0.5 percent up at $54.01 per barrel by 0435 GMT, having hit a high of $54.83 in the previous session, its strongest since Apr. 19. U.S. West Texas Intermediate was trading 0.9 percent up at $47.84 a barrel, after rising as high as $49.39 on Wednesday, its highest since Aug. 14.

Gold prices slumped after hitting its highest level in over a year in the previous session, as a recovery in the U.S. dollar weakened the bid tone around the metal. Spot gold was trading 0.7 percent down at $1,337.69 an ounce by 0438 GMT, having hit its highest since August 2016 at $1,357.54 on Friday. U.S. gold futures for December delivery were also down 0.7 percent at $1,341.70 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.088 percent higher by 0.028 bps, while 5-year yield was 0.025 bps up at 1.666 percent.

The Japanese government bonds slid on the first trading day of the week, tracking weakness in the U.S. counterpart after tensions over the Korean Peninsula subsided, pulling down demand for safe-haven instruments. The yield on the benchmark 10-year Treasury note rose1 basis point to 0.006 percent, the yield on long-term 30-year hovered around 0.81 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.15 percent.

The Australian bonds slumped after China’s consumer price-led inflation index for the month of August beat market expectations, sharply jumping during the period, with a broader rise in the country’s producer price index for the same period. Australia is the biggest commodity importer of China. The yield on the benchmark 10-year Treasury note jumped 5-1/2 basis points to 2.62 percent, the yield on 15-year note also surged 5-1/2 basis points to 2.92 percent and the yield on short-term 2-year traded nearly 3-1/2 basis points higher at 1.88 percent.

The New Zealand bonds closed mixed on varied economic signals in the global economy after tensions over missile attacks from North Korea eased amid heightened uncertainty over the recent flow of hurricanes over the US territory, although the warnings have softened. At the time of closing, the yield on the benchmark 10-year bond jumped 2 basis points to 2.82 percent, the yield on 7-year note also climbed 2 basis points to 2.68 percent while the yield on short-term 2-year note ended 1/2 basis point lower at 2.02 percent.

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