Asia Roundup: Aussie steadies on upbeat consumer sentiment, dollar hits near 2-week high versus yen as U.S. Treasury yields rise, Asian shares volatile – Wednesday, September 13th, 2017

Market Roundup

  • N. Korea defiant over UN sanctions as Trump says tougher steps needed
  • Japan PM Abe– Next BoJ Gov must focus on meeting CPI goal, trust in Kuroda
  • Japan-China-South Korea CB governors meeting in Seoul today, tom – Reuters
  • Japan Aug domestic corp goods prices unch m/m, +2.9% y/y, +0.1/+3.0% eyed
  • Australia Sep Consumer sentiment, 2.5% vs August -1.2%
  • RBA's Harper Says Economic Growth Too Weak to Justify Rate Hike-BBG
  • Harper also says AUD gains being driven by USD weakness, little RBA can do
  • Juncker to lay out vision for stronger post-Brexit EU
  • Hardliners protest French labour reform after Macron chides “slackers”
  • Average of polls puts New Zealand's ruling Nationals just ahead
  • U.S. incomes, poverty rate bounce back to pre-recession levels in 2016
  • U.S. Supreme Court allows broad Trump refugee ban

Economic Data Ahead

  • (0300 ET/0700 GMT) Spain Aug CPI, 0.2% m/m, 1.6% y/y eyed; last -0.7%, 1.5%
  • (0300 ET/0700 GMT) Spain Aug HICP, 0.2% m/m, 2.0% y/y eyed; last -1.2%, 2.0%
  • (0430 ET/0830 GMT) Great Britain Jul ILO Unemployment rate, 4.4% eyed, last 4.4%
  • (0430 ET/0830 GMT) Great Britain Jul Avg earnings 3m y/y, 2.3% eyed, last 2.1%
  • (0400 ET/0900 GMT) EU Jul Industrial production, 0.1% m/m, 3.4% y/y; last -0.6%, 2.6%

Key Events Ahead

  • N/A ECB's Smets and Jazbec speaks in Slovenia
  • (0300 ET/0700 GMT) Swedish Deputy Central Bank Governor Per Jansson speaks in Stockholm
  • (0330 ET/0730 GMT) Swiss National Bank monetary policy assessment
  • (0510 ET/0910 GMT) Greece E1.0 bln for 13-week auction
  • (0520 ET/0920 GMT) Italy E2.0-2.5/E3.5-4.0/E1.0-1.5 bln for 3/7/19 year auction
  • (0535 ET/0935 GMT) Germany E3 bln for 10-year auction
  • (0535 ET/0935 GMT) Great Britain Stg 2.5 bln for 10-year auction
  • (0540 ET/0940 GMT) Portugal E0.75-1.0 bln for 10-year auction
  • (0700 ET/1100 GMT) BOE announces its rate decision and publishes the minutes of the meeting
  • (1200 ET/1600 GMT) ECB's Mersch speaks in Tallinn

FX Beat

DXY: The dollar slightly eased versus its major peers as investors remained wary of a flare-up of tensions at any moment following  U.S. President Donald Trump's latest comments over North Korea. The greenback against a basket of currencies traded 0.1 percent down at 91.82, having touched a low of 91.01 last week, its lowest since Jan 2015. FxWirePro's Hourly Dollar Strength Index stood at 60.75 (Bullish) by 0500 GMT.

EUR/USD: The euro rose, extending previous session gains, supported by the narrowing of the bond yield spread. The US-German 10-year yield spread stood at 1.759 percent against Monday's print of 1.792 percent. The European currency traded 0.1 percent up at 1.1982, having touched a high of 1.2092 on Friday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 16.56 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone industrial production and Employment change data, ahead of U.S. producer price index and monthly budget statement. Immediate resistance is located at 1.2000, a break above targets 1.2090. On the downside, support is seen at 1.1926 (38.2% retracement 1.1823 and 1.2092), a break below could drag it near 1.1887 (23.6% retracement 1.1823 and 1.2092).

USD/JPY: The dollar steadied after rising to a near 2-week high as yesterday's upbeat JOLTs report showed job openings improved to about 6.2million in July. However, North Korea's latest threat following new sanctions imposed by the UN weighed heavily on the pair. The major was trading flat at 110.13, having hit a low of 107.31 on Friday, its lowest since Nov. 2016. FxWirePro's Hourly Yen Strength Index stood at -159.75 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. producer price index and monthly budget statement for further momentum. Immediate resistance is located at 110.67, a break above targets 111.00. On the downside, support is seen at 109.47, a break below could take it near 108.99 (5-DMA).

GBP/USD: Sterling rallied to a 1-year high above the 1.3300 handle after a report showed UK inflation rose to 2.9 percent in August from a year earlier, recording its highest in more than five years. The major traded 0.2 percent up at 1.3306, having hit a high of 1.3314 earlier, its highest since September 2016. FxWirePro's Hourly Sterling Strength Index stood at 106.41 (Highly Bullish) by 0500 GMT. Investors’ focus will remain on the UK employment report, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3350, a break above could take it near 1.3400. On the downside, support is seen at 1.3200 (78.6% retracement of 1.2773 and 1.3314), a break below targets 1.3155 (5-DMA). Against the euro, the pound was trading 0.1 percent up at 90.03 pence, having hit a high of 89.51 pence in the previous session, its highest since Aug. 3.

AUD/USD: The Australian dollar steadied after tumbling for two consecutive sessions, following data showing consumer sentiment rising in September on growing optimism about the economic outlook. A survey showed the economy's consumer sentiment rose 2.5 percent in September, from August when it dropped 1.2 percent. The Aussie trades up at 0.8022, having hit a high of 0.8124 on Friday, it’s strongest since May 2015. FxWirePro's Hourly Aussie Strength Index stood at- 68.90 (Bearish) by 0500 GMT.  Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7998 (50.0% retracement of 0.7871 and 0.8124), a break below targets 0.7968 (50.0% retracement of 0.7871 and 0.8124). On the upside, resistance is located at 0.8050, a break above could take it near 0.8124 (September 8 High).

NZD/USD: The New Zealand dollar eased as investors braced for the outcome of a looming general election. An average of polls released on Wednesday showed opposition Labour Party was not too far behind the country's ruling National Party, underlining the uncertainty over the policies of the next government. The major trades 0.1 percent down at 0.7281, having touched a high of 0.7337 last week, its highest level since Aug. 21. FxWirePro's Hourly Kiwi Strength Index was at 68.65 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7320 (Previous Session High), a break above could take it near 0.7340. On the downside, support is seen at 0.7216 (10-DMA), a break below could drag it till 0.7131 (August 31 Low).

Equities Recap

Asian shares eased after rising to a 10-year high on the back of record highs on Wall Street, while the greenback eased as investors' continued to remain concerned about North Korean tensions.

MSCI's broadest index of Asia-Pacific shares outside Japan slightly eased after rising to its highest level since October 2007.

Tokyo's Nikkei rallied 0.5 percent to 19,871.56 points, Australia's S&P/ASX 200 index gained 0.01 percent to 5,746.80 points and South Korea's KOSPI climbed 0.3 percent to 2,372.65 points.

Shanghai composite index eased 0.03 percent to 3,378.57 points, while CSI300 index was trading 0.1 percent up at 3,843.80 points.

Hong Kong’s Hang Seng was trading 0.3 percent lower at 27,905.65 points. Taiwan shares shed 0.7 percent to 10,532.88 points.

Commodities Recap

Crude oil prices declined, weighed down by reports of rising U.S. crude stockpiles, but retained some of the previous session gains after OPEC said it expected higher demand for its crude next year. International benchmark Brent crude was trading 0.2 percent down at $54.09 per barrel by 0440 GMT, having hit a high of $54.83 on Friday, its strongest since Apr. 19. U.S. West Texas Intermediate was trading 0.3 percent down at $48.18 a barrel, after rising as high as $49.39 last week, its highest since Aug. 14.

Gold prices steadied after rebounding from a 1-week low touched in the previous session as the dollar remained firm against a basket of currencies. Spot gold was trading flat at $1,331.13 an ounce by 0443 GMT, having hit its low since September 1 at $1,322.53 on Tuesday. U.S. gold futures for December delivery were flat at $1,335.00 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.156 percent lower by 0.014 bps, while 5-year yield was 0.01 bps down at 1.737 percent.

The Japanese government bonds traded flat in muted trading session as investors shifted towards riskier assets including equities and oil. Also, a rise in US Treasury yields post the tepid 10-year auction added to further sluggishness in Japanese bonds. The yield on the benchmark 10-year Treasury note hovered around 0.02 percent, the yield on long-term 30-year rose 1/2 basis point to 0.83 percent and the yield on short-term 2-year traded flat at -0.14 percent.

The Australian bonds slumped, tracking weakness in the U.S. Treasuries, after the latter rose for a third straight session as softer demand for benchmark 10-year notes pressured overall bond prices at the latest 10-year auction held overnight. The yield on the benchmark 10-year Treasury note jumped 4-1/2 basis points to 2.69 percent, the yield on 15-year note climbed nearly 4 basis points to 2.98 percent and the yield on short-term 2-year traded 3 basis points higher at 1.91 percent.

The New Zealand bonds slumped at the time of closing on a slight improvement in investors’ risk appetite after a new poll on the country’s upcoming election showed the National Party on 10 points lead of the Labour counterpart, with the numbers to potentially govern alone. At the time of closing, the yield on the benchmark 10-year Treasury note jumped 4-1/2 basis points to 2.86 percent, the yield on 7-year note surged 4 basis points to 2.72 percent and the yield on short-term 2-year ended 1-1/2  basis points higher at 2.02 percent.

The Canadian government bond prices were mostly lower across the yield curve, although the two-year price rose half a Canadian cent to yield 1.546 percent. The benchmark 10-year falling 13 Canadian cents to yield 2.043 percent.

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