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Asia Roundup: Antipodeans surge on upbeat Chinese economic data, dollar index slumps on weaker-than-expected U.S. CPI, investors eye BoE Carney's speech – Friday, September 14th, 2018

Market Roundup

  • China says world trade system not perfect, needs reform
     
  • Japan PM Abe says BOJ's easy policy shouldn't continue forever
     
  • Japan govt more bullish on capex, eyes on U.S.-China trade row
     
  • As Senate panel sets vote on Trump court pick, new controversy arises
     
  • Sources say former Trump aide Manafort close to plea deal with Mueller
     
  • U.S. House panel backs bill to make Trump tax cuts permanent
     
  • China Aug Industrial Output YY, 6.1%, 6.0% f'cast, 6.0% prev
     
  • China Aug Retail Sales YY, 9.0%, 8.8% f'cast, 8.8% prev
     
  • China Aug Urban investment (ytd)yy, 5.3%, 5.5% f'cast, 5.5% prev
     
  • Investors favor lower-risk bonds in latest week -Lipper
     
  • U.S. taxable bond funds collect cash as equity funds bleed -Lipper
     
  • Foreign CB US debt holdings -$7.042 bln to $3.421 tln Sep 12 week
     
  • Treasuries -$6.314 bln to $3.053 tln, agencies -$28 mln to $298.530 bln
     

Economic Data Ahead

  • (0400 ET/0800 GMT) Italy Aug Consumer Prices Final YY, 1.7% f'cast, 1.7% prev
     
  • (0500 ET/0900 GMT) EZ Jul Eurostat Trade NSA, Eur, 22.5 bln prev
     
  • (0500 ET/0900 GMT) EZ Q2, Labour Costs YY, 2.0% prev
     
  • (0500 ET/0900 GMT) EZ Q2, Wages In Euro Zone, 1.8% prev
     

Key Events Ahead

  • (0300 ET/0700 GMT) ECB's Smets speaks at a conference in Brussels
     
  • (0600 ET/1000 GMT) BoE's Carney gives Whitaker Lecture at Dublin
     
  • (0900 ET/1300 GMT0 Fed's Evans speaks in Fort Wayne, Indiana
     
  • (1000 ET/1400 GMT) Fed's Rosengren speaks on Fed's inflation framework, Washington
     

FX Beat

DXY: The dollar index extended losses for the fourth straight session, after the U.S. consumer price index rose just 0.2 percent in August, less than the 0.3 percent projected.  The greenback against a basket of currencies trades 0.05 percent up at 94.51, having touched a low of 94.43 on Thursday, its lowest since August 28. FxWirePro's Hourly Dollar Strength Index stood at -93.87 (Slightly Bearish) by 0400 GMT.

EUR/USD: The euro steadied after rising to a 2-week peak in the previous session as the European Central Bank kept policy unchanged as expected on Thursday, and remained on course to end its bond purchases this year and hike interest rates next autumn. The European currency traded flat at 1.1691, having touched a high of 1.1700 on Thursday, its highest since Aug 30. FxWirePro's Hourly Euro Strength Index stood at 44.55 (Neutral) by 0400 GMT. Investors’ attention will remain on series of data from the Eurozone economies and EZ trade balance, ahead of the U.S. retail sales; import and export price index, industrial production, capacity utilization, business inventories, and Fed Evan's speech. Immediate resistance is located at 1.1718 (August 30 High), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1594 (21-DMA), a break below could drag it till 1.1542 (September 5 Low).

USD/JPY: The dollar eased after rising to a 1-1/2 month high earlier in the session, as weaker-than-expected U.S. inflation data dimmed the case for a faster pace of policy tightening by the Federal Reserve. The major was trading 0.1 percent down at 111.82, having hit a high of 112.07, its highest since August 1. FxWirePro's Hourly Yen Strength Index stood at -93.87 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. retail sales, import and export price index, industrial production, capacity utilization, business inventories, and Fed Evan's speech. Immediate resistance is located at 112.17 (July 11 High), a break above targets 112.62 (July 12 High). On the downside, support is seen at 111.38 (5-DMA), a break below could take it lower 110.68 (August 31 Low).

GBP/USD: Sterling surged to a fresh 1-1/2 month peak amid renewed optimism around the Brexit deal, after a recent Bloomberg report cited that Britain had agreed to a European Union request for information that could help end a dispute over the Irish border. The major traded 0.1 percent up at 1.3120, having hit a high of 1.3122 earlier; it’s highest since August 2. FxWirePro's Hourly Sterling Strength Index stood at 10.04 (Neutral) 0400 GMT. Investors’ attention will remain on developments surrounding Brexit and BoE Governor Carney’s speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3158 (July 23 High), a break above could take it near 1.3213 (July 26 High). On the downside, support is seen at 1.3023 (5-DMA), a break below targets 1.2961 (10-DMA). Against the euro, the pound was trading 0.05 percent up at 89.17 pence, having hit a high of 88.76 on Tuesday, it’s highest since August 2.

AUD/USD: The Australian dollar rallied, extending gains for the fifth straight session after data showed China's industrial output grew 6.1 percent in August from a year earlier, and retail sales rose 9.0 percent, both beating expectations. The Aussie trades 0.2 percent up at 0.7201, having hit a high of 0.7229 on Thursday; it’s highest since September 4. FxWirePro's Hourly Aussie Strength Index stood at 128.87 (Highly Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7165 (10-DMA), a break below targets 0.7138 (5-DMA). On the upside, resistance is located at 0.7224 (50.0% retracement of 0.7362 and 0.7085), a break above could take it near 0.7257 (61.8% retracement).

NZD/USD: The New Zealand dollar advanced to a 1-week peak, underpinned by easing U.S.-China trade tensions and softer-than-expected U.S. CPI. The Kiwi trades 0.3 percent up at 0.6585, having touched a high of 0.6589, its highest level since September 7. FxWirePro's Hourly Kiwi Strength Index was at 108.99 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6613 (50.0% retracement of 0.6727 and 0.6500), a break above could take it near 0.6639 (61.8% retracement). On the downside, support is seen at 0.6542 (5-DMA),  a break below could drag it below 0.6512.

Equities Recap

Asian shares rallied on expectations that the United States and China could launch a fresh round of trade talks, while the greenback fell towards a 2-week low on softer-than-expected U.S. consumer prices data.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.8 percent.

Tokyo's Nikkei surged 1.2 percent to 23,099.74 points, Australia's S&P/ASX 200 index rose 0.6 percent to 6,165.30 points, and South Korea's KOSPI gained 1.3 percent to 2,316.52 points.

Shanghai composite index fell 0.05 percent to 2,684.53 points, while CSI300 index traded 0.2 percent up at 3,243.98 points.

Hong Kong’s Hang Seng traded 0.9 percent higher at 27,255.79 points. Taiwan shares added 1.3 percent to 10,868.14 points.

Commodities Recap

Crude oil prices eased, extending losses from the previous session, amid concerns that emerging market crises and trade disputes could dent demand. International benchmark Brent crude was trading 0.05 percent down at $78.88 per barrel by 0437 GMT, having hit a high of $80.08 on Wednesday, its highest since May 22. U.S. West Texas Intermediate was trading 0.05 percent down at $68.73 a barrel, after rising as high as $71.24 on Wednesday, its highest since September 4.

Gold prices edged higher as softer-than-expected U.S. consumer prices data slashed expectations of a faster pace of policy tightening by the Federal Reserve. Spot gold was 0.2 percent up at $1,204.60 an ounce as of 0441 GMT, having hit a high of $1212.55 on Thursday, its highest since Aug. 28. The safe-haven metal has gained 0.7 percent so far this week and was heading for its first weekly gain in three. U.S. gold futures were mostly steady at $1,208.50 an ounce.

Treasuries Recap

The Japanese government bond prices trade tad lower during late Asian session after Nikkei 225 surged to a 7-month high following renewed hopes of ease in trade tensions between the United States and China. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.111 percent, the yield on the long-term 30-year note also climbed 1/2 basis point to 0.842 percent and the yield on short-term 2-year traded nearly flat at -0.108 percent.

The Australian bonds suffered during Asian session tracking a similar movement in the United States Treasuries after the latter’s consumer price inflation (CPI) for the month of August missed market expectations. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1/2 basis point to 2.607 percent, the yield on the long-term 30-year bond also fell 1/2 basis point to 3.104 percent and the yield on short-term 2-year traded down 1-1/2 basis points to 2.029 percent.

The Canadian government bond prices edged higher across the yield curve, with the 10-year gaining 6 Canadian cents to yield 2.328 percent.On Wednesday, the 10-year yield touched its highest in more than one month at 2.347 percent.


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