Forex - Asia Open - Overnight Highlights


 19:00 (GMT) 13 Aug

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Asia Open - Overnight Highlights (0100-RPDX-C01)

Asia Overnight Highlights - August 14, 2017

ASIA OUTLOOK - Majors FX Highlights

Soft US CPI data and dovish Fed speakers, along with relent in yen cross pressure, allowed EUR/USD to bounce as US short end yields slipped further. Risk steadied into the weekend, helped by Russia pressing to diffuse US-N.Korea tensions

Major Data Highlights

US CPI came in softer than expected, up just 0.1% m/m, headline and core,
against expectations of twin 0.2% gains. Hotels and cars were the biggest
drags, continuing a series of one-off price declines that increasingly
suggest the Fed may have to delay rate hikes.

German CPI rose 0.4% m/m in July in the final reading, same as in
Preliminary readings.

French CPI fell 0.4% m/m in the final July reading, same as in the
Preliminary.

Spanish CPI fell m/m 0.7% in final July reading.

Emerging Asia FX Highlights

USD/CNY 1Y NDFs rebounded at the end of the week to 6.815
USD/SGD shed some of the week's earlier gains on Friday to 1.3609.
USD/IDR 1M NDFs also ran into profit taking into the weekend, at 13410.

News highlights

- US Jul CPI 0.1% m/m (Prev: 0.0 Mkt: 0.2), ex Food & Energy) 0.1% m/m (Prev: 0.1 Mkt: 0.2)

- Fed's Kashkari - weak CPI data another reason to hold off rate hike

- Fed's Kaplan - should make sure understand inflation before next hike

- Russian Foreign Minister Sergey Lavrov - Russia/N.Korea plan to diffuse US-N.Korea tensions (suggesting N.Korea missile test freeze in exchange for end to large scale US military exercises)

- VIX index: 15.51 (-3.30%)

- Gold Spot: $1,290.69/oz (+0.34%)

- ICE Brent front contract: $51.99 (+$0.09)

- Nymex WTI front contract: btmm jn (+$0.19)

- Reuters/Jefferies Commodities Index: 179.61 (+0.39%)

- 10y UST: 2.191 (-1 bps (Asia morning)

- DJI: 21,858.32 (+0.07%); S&P: 2,441.32 (+0.13%); Nasdaq: 6,256.56 (+0.64%)

Currencies:

- EUR/USD managed a bull flag break higher (+ ½ %) after the soft US CPI data and subsequent Fed comments in support of a rate hike halt until data improves/is understood. Relent in EUR/JPY pressure also helps as cross tests back to 129 figure

- USD/JPY off the 108.73 low as equities improve into the w/e, lifted by the Russia plan headlined, though soft dollar and decline in short end US yields limits the bounce, struggles to re-hold above 109

- EUR/GBP makes it to 0.9119, just shy of the 0.9140 target, at the highs after US data before cable recoups some ground on EUR/USD to regain 1.3 once more

- Generally dollar slip and risk steadying helps hit commodity currencies, NZD/USD leads the way back above 0.73 and ¾ point off the lows at the bests. USD/CAD also off ½ point back below 1.27

- Outside day for EUR/CHF though held by 1.1385 1st bounce resistance. Euro leg doing all the work

- Euro makes a little ground on the SEK and NOK on the bounce, with limited local interest

Bonds:

Risk-off action intensified as the S&P gave up over 1%, while US PPI came in soft at -0.1% headline and core, with the day topped up with a firm 30yr auction. USTs were not really able to make a lot of mileage ahead of Friday's data, though did stretch as equities slipped further into the close. 2s -1.2bps @ 1.33%, 5s -3.5bps @ 1.77%, 10s -4.8bps @ 2.20%, 30s -4.5bps @ 2.78%

- Agency Spreads: Freddie/Fannie 5s +2.3/-0.1 bps, 10s +0.3/0.0 bps.
- Swap Spreads: 2s -0.69bps, 5s 0.00bps, 10s -0.13bps.

Equities:

Equities stabilized into the weekend, calmed by Russia's efforts to intervene in the US/North Korea dispute. The Nasdaq did best after selling off hardest earlier in the week. Similarly, sectors hardest hit by risk off - info tech and consumer discretionary - recovered most while energy and utilities lost ground.

Asia Currencies

Asia Open - Overnight Highlights (0100-RPDX-C02)

USD/CNY: Onshore spot midpoint was fixed successively lower in the week amid USD weakness arising from aggravating N.Korea concerns, which resulted in a stronger yuan over the week although reversal was seen on the last day. Pair printed near 1-yr low of 6.6485, but returned to trade around 6.6700 into end of the week. 1Y NDFs saw a brief look below 6.8000 to a low of 6.7962, but recovered to 6.8200+ levels on Friday as SSEC was in deep red of over 1.5% at last look on the day.

USD/SGD: USD/SGD maintained a steady upside bias in the week following upbeat US NFP data release last Friday. The 1.3600 big figure was broken early in the week, and an eventual 2-week high of 1.3654 was printed. Strong upside revision in 2Q GDP however capped further gains and pair consolidated just below 1.3640 on the last day of the week.

USD/IDR: USD/IDR started the week on a soft note despite weaker than expected 2Q GDP report. Pair maintained a steady upside bias subsequently on sustained geopolitical concerns arising from N.Korea and the US responses. An intraweek low of 13301 was printed in the early part of the week as Govt received large bids in bond auctions, but an eventual break above 13350 was seen on the last day.

USD/INR: USD/INR remained capped below the 64 handle earlier in the week as selling pressures from RBI cut in the previous week underpinned, but upside pressures returned thereafter as Indo-China border tensions aggravated. Geopolitical concerns from N.Korea-US talks also weighed on rupee and an eventual 2-wk high of 64.2800 was printed.


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