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Asia Roundup: Aussie hits 2- week peak on upbeat business conditions, dollar steadies ahead of U.S. CPI, Asian shares consolidate – Tuesday, March 13th, 2018

Market Roundup

  • China to merge regulators, create new ministries in biggest revamp in years
     
  • White House expects N. Korea summit to happen despite Pyongyang's silence
     
  • U.S. Republicans shut down House Russia probe over Democratic objections
     
  • President Trump halts Broadcom takeover of Qualcomm
     
  • Hammond to give brighter outlook for UK's Brexit-bound economy
     
  • Central banks told to think twice before boarding Bitcoin bandwagon
     
  • Japan's embattled finance minister mulls skipping G20 meeting – media
     
  • Japan to urge G20 for steps to prevent cryptocurrency use for money laundering
     
  • Japan Feb corp goods prices unch m/m, +2.5% y/y, +0.2/+2.6% eyed, Jan +0.3/+2.7%
     
  • Europe, U.S. senator push back as Trump seeks lower EU tariffs
     
  • Australia business activity index hits record high in Feb-NAB
     
  • NAB under fire as Australian banking inquiry opens

Economic Data Ahead

  • (0230 ET/0630 GMT) France Q4 Non-Farm Payrolls, Rev 0.3%
     
  • (0400 ET/0800 GMT) Spain Feb CPI, 0.1% m/m, 1.1% y/y eyed; -1.1%, 0.6% last
     
  • (0400 ET/0800 GMT) Spain Feb HICP, 0.1% m/m, 1.2% y/y eyed; -1.5%, 1.2% last

Key Events Ahead

  • N/A UK FinMin Philip Hammond delivers spring statement on updated fiscal forecasts
     
  • N/A EU Commissioner Pierre Moscovici and Bulgarian FinMin Vladislav Goranov give a news conference in Brussels
     
  • N/A ECB Vice-President Vitor Constancio participates in the ECOFIN meeting in Brussels
     
  • (1030 ET/1430 GMT) Bank of Canada Gov Stephen Poloz speaks at Queen's University in Ontario
     

FX Beat

DXY: The dollar index steadied after falling for two consecutive sessions, ahead of U.S. consumer price index report, which is expected to show core CPI to ease to 0.2 percent m/m in February from 0.3 percent in January, and to remain at +1.8 percent on a y/y basis. The greenback against a basket of currencies 0.1 percent up at 90.02, having touched a high of 90.36 on Friday, its highest since Mar. 1. FxWirePro's Hourly Dollar Strength Index stood at 41.90 (Neutral) by 0500 GMT.

EUR/USD: The euro declined, reversing some of its previous session losses, as European Central Bank President Mario Draghi comments struck a cautious tone on the eurozone economy. The European currency traded 0.1 percent down at 1.2327, having touched a high of 1.2460 on Thursday, its highest since Feb. 16. FxWirePro's Hourly Euro Strength Index stood at -28.33 (Neutral) by 0500 GMT. Investors’ attention will remain on series of economic data from the Eurozone economies, ahead of U.S. consumer price index. Immediate resistance is located at 1.2323 (5-DMA), a break above targets 1.2465 (Feb 14 High). On the downside, support is seen at 1.2290 (Previous Session Low), a break below could drag it lower 1.2221.

USD/JPY: The dollar rose ahead of the U.S. CPI data, which is expected to show annual core CPI inflation at 1.8 percent in February. A higher reading could stoke expectations that the Federal Reserve will likely hike interest rates four times, rather than three times, this year. The major was trading 0.4 percent up at 106.79, having hit a high of 107.04 on Friday, its highest since Mar. 1. FxWirePro's Hourly Yen Strength Index stood at -185.46 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. consumer price index. Immediate resistance is located at 107.20 (Mar 1), a break above targets 107.67 (Feb. 27). On the downside, support is seen at 105.89, a break below could take it lower 105.25.

GBP/USD: Sterling eased below the 1.3900 handle on worries that Britain and EU officials would fail to secure a transition arrangement at a March 22-23 summit. Finance minister Philip Hammond will announce Britain's Budget Report for the next fiscal year which will include updated growth and inflation forecasts later in the day. The major traded 0.1 percent down at 1.3886, having hit a high of 1.3917 the day before, it’s highest since Mar. 6. FxWirePro's Hourly Sterling Strength Index stood at -7.31 (Neutral) by 0500 GMT. Investors’ focus will remain on the UK Budget report, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3929, a break above could take it near 1.3996. On the downside, support is seen at 1.3843 (10-DMA), a break below targets 1.3788 (Mar. 9 Low). Against the euro, the pound was trading 0.1 percent down at 88.75 pence, having hit a high of 88.47 pence on Monday, it’s highest since Mar 1.

AUD/USD: The Australian dollar rose to a fresh 2-week high on optimism about the country's economic outlook after a gauge of business conditions rose to a record. The National Australia Bank showed its index of business conditions climbed 3 points to +21 in February, the highest reading since the survey began in 1997, while business confidence dipped 2 points to +9, but in line with estimates. The Aussie trades flat at 0.7872, having hit a high of 0.7884 earlier; it’s highest since Feb. 26. FxWirePro's Hourly Aussie Strength Index stood at 88.57 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7831 (5-DMA), a break below targets 0.7776 (Mar 9 Low). On the upside, resistance is located at 0.7901 (Feb. 21 High), a break above could take it near 0.7988.

NZD/USD: The New Zealand dollar rose to a 2-week peak, as investor focus turned to U.S. consumer price data due at 1230 GMT, with annual core inflation seen flat at 1.80 percent in February. The Kiwi trades 0.4 percent up at 0.7321, having touched a high of 0.7323 earlier, its highest level since Feb. 26. FxWirePro's Hourly Kiwi Strength Index was at -7.93 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7345 (Mar 1 High), a break above could take it near 0.7386 (Feb 21 High). On the downside, support is seen at 0.7282 (5-DMA), a break below could drag it below 0.7200.

Equities Recap

Asian shares consolidated as Wall Street shares lost steam, while the greenback steadied as investors focused on U.S. inflation data due later in the day for clues on the pace of Federal Reserve interest rate rises this year.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed.

Tokyo's Nikkei rallied 0.4 percent to 21,900.73 points, Australia's S&P/ASX 200 index declined 0.4 percent to 5,974.70 points and South Korea's KOSPI gained 0.1 percent to 2,485.90 points.

Shanghai composite index fell 0.2 percent to 3,319.84 points, while CSI300 index was trading 0.4 percent down at 4,111.50 points.

Hong Kong’s Hang Seng was trading 0.1 percent lower at 31,572.79 points. Taiwan shares added 0.9 percent to 11,095.63 points.

Commodities Recap

Crude oil prices declined, extending previous session losses, as the unstoppable rise in U.S. crude output weighed on markets. International benchmark Brent crude was trading 0.2 percent down at $64.81 per barrel by 0448 GMT, having hit a low of $63.41 on Thursday, its lowest since Mar. 2. U.S. West Texas Intermediate was trading 0.3 percent down at $61.21 a barrel, after falling as low as $59.99 on Thursday, its weakest since Feb. 15.

Gold prices tumbled as investors awaited U.S. consumer price data later in the day to gauge the outlook for inflation and Federal Reserve policy. Spot gold eased 0.3 percent to $1,319.44 per ounce at 0450 GMT, having hit $1,312.70 an ounce on Friday, its lowest since Mar. 1. U.S. gold futures for April delivery climbed 0.3 percent to $1,324.50 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.879 percent higher by 0.009 bps, while 5-year yield was 0.01 bps up at 2.645 percent.

The Australian bonds remained tad higher during Asian session amid a subdued trading day that witnessed data of little economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slid 1/2 basis point to 2.81 percent, the yield on the long-term 30-year note hovered around 3.40 percent and the yield on short-term 2-year traded 1 basis point lower at 2.03 percent.

The Canadian government bond prices were higher across the maturity curve, with the two-year up 0.5 Canadian cent to yield 1.829 percent and the benchmark 10-year rising 25 Canadian cents to yield 2.239 percent.


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