News

Asia Roundup: Antipodeans off multi-month highs despite China's trade surplus, euro hits 1-week peak on hawkish ECB minutes, Asian shares rebound – Friday, January 12th, 2018

Market Roundup

  • Japan Dec economy watchers poll sa decrease to 53.9 vs previous 54.1 (revised from 55.1)
     
  • China Dec trade balance USD increase to 54.69 bln us (forecast 37 bln us) vs previous 40.21 bln us
     
  • China Dec imports yy decrease to 4.5 % (forecast 13 %) vs previous 17.7 %
     
  • China Dec exports yy decrease to 10.9 % (forecast 9.1 %) vs previous 12.3 %
     
  • PBoC sets yuan mid-point at 6.4932 / dlr vs last close 6.4978

     

  • China 2017 trade surplus with U.S. at a record high, according to customs data
     
  • China Customs says estimates it will be hard for China's trade to maintain double-digit growth in 2018
     
  • China Customs: says keeping yuan exchange rate stable will help Chinese companies to stabilize expectations, help keep trade stable
     
  • Japan Econmin Motegi: The price trend has changed but need to have careful debate about whether or not to declare end of deflation
     
  • Japan Econmin Motegi: Can't rely on only one economic indicator when deciding whether to declare end of deflation

Economic Data Ahead

  • (0330 ET/0830 GMT) Sweden CPI MM/YY
     
  • (0330 ET/0830 GMT) Sweden CPIF MM/YY
     
  • (0500 ET/1000 GMT) Greece Harmonized CPI YY
     
  • (0500 ET/1000 GMT) Greece CPI YY

Key Events Ahead

No significant events scheduled

FX Beat

DXY: The dollar index slumped to a near 4-month low after data showed that the U.S. Producer Price Index declined by 0.1 percent on a monthly basis in December, bringing the annual rate down to 2.6 percent. The greenback against a basket of currencies traded 0.1 percent down at 91.80, having touched a low of 91.69 earlier, its lowest since Sept. 20. FxWirePro's Hourly Dollar Strength Index stood at -88.75 (Slightly Bearish) by 0500 GMT.

EUR/USD: The euro rose to a 1-week peak as the European Central Bank December meeting minutes released yesterday hinted that it could be gearing up to trim its massive monetary stimulus. The European currency traded 0.2 percent up at 1.2052, having touched a high of 1.2066 earlier, its highest since Jan. 5. FxWirePro's Hourly Euro Strength Index stood at 71.72 (Bullish) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies, ahead of U.S. retail sales, consumer price index and business inventories. Immediate resistance is located at 1.2080, a break above targets 1.2110. On the downside, support is seen at 1.2007 (10-DMA), a break below could drag it lower 1.1982 (5-DMA).

USD/JPY: The dollar extended losses for the fifth straight session after data released on Thursday showed that the U.S. producer prices fell for the first time in nearly 1-1/2 years in December, which could temper expectations that inflation will accelerate in 2018. The major was trading 0.1 percent down at 111.15, having hit a low of 111.04 the day before, its lowest since Dec. 28. FxWirePro's Hourly Yen Strength Index stood at 37.75 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales, consumer price index and business inventories for further momentum. Immediate resistance is located at 111.60 (23.6% retracement of 111.04 and 113.38), a break above targets 111.94 (38.2% retracement). On the downside, support is seen at 111.04 (Previous Session Low), a break below could take it near 110.84 (Nov. 27 Low).

GBP/USD: Sterling rose, extending previous session's rebound from 2-week lows as the greenback fell to its lowest for this 2018. On Thursday, the major weakened on concerns that a No deal' Brexit could cost the UK about 500,000 jobs.  Sterling traded 0.1 percent up at 1.3550, having hit a low of 1.3458 the day before; it’s lowest since Dec. 29. FxWirePro's Hourly Sterling Strength Index stood at -42.21 (Neutral) by 0400 GMT.  Investors’ focus will remain on the U.S. fundamental drivers, amid lack of economic data from the UK docket. Immediate resistance is located at 1.3590, a break above could take it near 1.3640. On the downside, support is seen at 1.3481 (Jan 10 Low), a break below targets 1.3450. Against the euro, the pound was trading 0.1 percent down at 88.96 pence, having hit a low of 89.12 pence the day before, it’s lowest since Jan. 4.

AUD/USD: The Australian dollar eased after rising to a fresh 3-1/2 month high earlier in the day despite China reporting a sharp rise in the trade surplus in December. The Aussie trades 0.1 percent down at 0.7884, having hit a high of 0.7904 earlier; it’s highest since Sept. 26. FxWirePro's Hourly Aussie Strength Index stood at 82.73 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7851 (5-DMA), a break below targets 0.7814 (Jan 4 Low). On the upside, resistance is located at 0.7940, a break above could take it near 0.7990.

NZD/USD: The New Zealand dollar declined from a 3-1/2 month peak following a retreat in oil prices from multi-year tops. However, better-than-expected Chinese trade balance data, which showed that the surplus unexpectedly widened in December provided some support.  The Kiwi trades 0.2 percent down at 0.7247, having touched a high of 0.7276, its highest level since Sept. 26. FxWirePro's Hourly Kiwi Strength Index was at 93.96 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7300, a break above could take it near 0.7340. On the downside, support is seen at 0.7182 (5-DMA), a break below could drag it lower 0.7151 (10-DMA).

Equities Recap

Asian shares gained following two straight sessions of decline, supported by U.S. earnings optimism, while the greenback slumped to a near 4-month low on the back of weak factory inflation data.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent.

Tokyo's Nikkei eased 0.3 percent to 23,641.62 points, Australia's S&P/ASX 200 index rose 0.1 percent to 6,070.10 points and South Korea's KOSPI surged 0.2 percent to 2,492.67 points.

Shanghai composite index declined 0.1 percent to 3,422.93 points, while CSI300 index was trading 0.1 percent up at 4,210.57 points.

Hong Kong’s Hang Seng was trading 0.6 percent higher at 31,294.96 points. Taiwan shares added 0.7 percent to 10,883.96 points.

Commodities Recap

Crude oil prices steadied after hitting their highest levels since December 2014 the previous day, as analysts said market fundamentals going into 2018 were strong due to ongoing production cuts led by the OPEC. International benchmark Brent crude was trading flat at $69.24 per barrel by 0432 GMT, having hit a high of $70.01 the day before, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.1 percent up at $63.60 a barrel, after rising as high as $64.75 on Thursday, its highest since Dec. 2014.

Gold prices rose for a third straight session to their highest since September and were on track for its fifth weekly gain as the greenback slumped to a near 4-month low. Spot gold gained 0.6 percent to $1,329.54 an ounce by 0439 GMT, having hit their highest since Sept. 15, 2017, at $1,329.67 and was up 0.5 percent for the week so far. U.S. gold futures were up 0.3 percent at $1,326.90 an ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.546 percent higher by 0.015 bps, while 5-year yield was 0.016 bps up at 2.329 percent.

The Australian government bonds slumped following board weakness in the U.S. Treasuries. Yields on the benchmark 10-year US Treasury hit a nine-month high overnight, climbing to 2.5 percent after the Bank of Japan’s trimmed its purchases of super-long debt. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 2.73 percent, the yield on the long-term 30-year note rose nearly 1 basis point to 3.43 percent while the yield on short-term 2-year slumped 2 basis points to 2.04 percent.

The New Zealand government bonds surged on the last trading day of the week as investors remained side-lined in any major trading activity amid lack of major economic data. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1-1/2 basis points to 2.87 percent, the yield on 20-year slumped 2 basis points to 3.34 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 1.98 percent.

The Canadian government bond prices were mixed across the yield curve, with the two-year up 1.1 Canadian cents to yield 1.758 percent and the 10-year falling 2 Canadian cents to yield 2.166 percent. The 10-year yield reached its highest intraday since September 2014 at 2.231 percent on Wednesday.


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