Forex - Asia Open - Overnight Highlights


 19:00 (GMT) 13 Aug

  [Forex Highlights]

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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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Forex - Asia Open - Overnight Highlights


 20:41 (GMT) 03 Aug

 [Forex Highlights]

Asia Overnight Highlights - 4 August 2017

ASIA OUTLOOK - Majors FX highlights

A dovish BoE was the main story of the day sending the GBP lower and bonds higher, though otherwise the USD was mostly softer after softer than expected ISM non-manufacturing data and late political concerns.

Majors data highlights

Jul's ISM non-manufacturing index of 53.9 has seen a significant and unexpectedly sharp slowing from Jun's strong index of 57.4. All four components of the composite contributed to the slowing but prices paid, not a contributor to the composite, picked up to 55.7 from 52.1.

Emerging Asia FX highlights

USD/CNY 1Y NDFs continued to pull up from recent lows, climbing to 6.8755. USD/SGD traded only slightly lower, little changed on the session. USD/IDR 1M NDFs traded in a narrow range around 13371. USD/INR saw a bit of follow-through selling early after yesterday's slide, before modest short covering to 63.69.

OVERNIGHT NEWS HIGHLIGHTS

- WSJ reports Special Counsel Mueller impanels Washington Grand Jury in Russia probe.

- BoE left rates unchanged, 6-2 vote, economic forecasts trimmed.

- US weekly initial claims fell to 240k from 245k vs 243k exp.

- US Jul ISM non-manufacturing fell to 53.9 from 57.4 vs 56.9 exp.

- VIX index: 10.44 (+1.56%)

- Gold Spot: $1,268.273/oz (+0.13%)

- ICE Brent front contract: $51.93 ($-0.43)

- Nymex WTI front contract: btmm jn ($-0.65)

- Reuters/Jefferies Commodities Index: 180.65 (-0.73%)

- 10y UST: 2.221 (-5bp) (Asia morning)

- DJI: 22,026.10 (+0.04%); S&P: 2,472.16 (-0.22%); Nasdaq: 6,362.65 (-0.35%)

ASIA NEWS

India: Lok Sahba (Lower House) approves Banking Bill on Non-performing assets, a key step towards addressing the NPL problem and implementing the bancruptcy code. In turn this is a key step towards reforms which should be positive for sentiment.

Singapore: Hong Kong and Singapore leaders are looking for ways to co-invest in China's one belt and road initiative, which could increase FDI from the two countries, as well as increase capital goods exports

China: China Daily reports that the authorities are considering a luxury tax on fur and private jets, which could be the latest in the anti-corruption efforts and counter to conspicuous consumption.

Indonesia: Bank Indonesia Assistant Governor Dody Waluyo noted that the country should try to keep inflation in the 3% range to stay competitive. This would leave little room for easing - the CPI recently fell to 3.88%.

CURRENCIES

- GBP provided most of the excitement with some support from a modestly better than expected UK service PMI release, followed by a sharp sell-off as the BoE left policy unchanged, the vote reverting to 6-2 from 5-3 with Forbes gone, and the Bank revising inflation and GDP expectations modestly lower. EUR/GBP paused briefly at .9000 on profit taking, then headed higher again to just shy of .9050.

- USD/JPY slipped had another short-lived look below 110.00 after soft ISM non-manufacturing data, but saw fresh lows on a WSJ report that a Grand Jury had been impaneled in the Russia probe. GBP/JPY took a dive to lose 2 big figures. EUR/JPY fared better with demand found ahead of 130.50.

- EUR/USD had another late European run higher, topping out at 1.1890/95 so not matching the 1.1910 seen after Europe went home on Wednesday. The pair was bought up from a low around 1.1830, softer than expected ISM non-manufacturing noted, though prices paid were higher. We were back near the highs after the WSJ report late on.

- The commodity currencies were generally softer through late Europe and early N. America before getting support as WTI crude edged closer to $50 without quite getting there. While oil slipped back, the WSJ report provided late support, sending AUD/USD back above .7950. NZD regained some ground with AUD/NZD tucking back inside 1.06/1.07 to 1.0675.

- EUR/CHF saw highs above 1.1510, focus there on Swiss reserves data due on Monday. EUR/SEK is holding on to the 9.60 handle without looking ready to push any higher, a solid service PMI again suggesting the economy in good shape but political worries weighing against the SEK.

BONDS

A rally in gilts on the BoE pulled US yields lower into the start of NY trading. A lower NM ISM headline, lowest since latest August, also gave an extra lift briefly, and while the rise in prices paid proved offsetting given the Fed inflation focus late trade saw the gains extended further, the T.bond testing Jul 21 highs. 2s -2.0bps @ 1.34%, 5s -3.8bps @ 1.79%, 10s -4.3bps @ 2.23%, 30s -5.0bps @ 2.81%

- Agency Spreads: Freddie/Fannie 5s +0.8/-1.0 bps, 10s +2.0/-0.5 bps.

- Swap Spreads: 2s +0.28bps, 5s +0.62bps, 10s +0.50bps.

EQUITIES

The pattern of the NASDAQ underperforming the DJIA continued, the former under pressure with the latter fairly stable. The S&P also slipped, with energy the main drag. Political concerns had little impact on equities.

ASIA CURRENCIES

Once again, KRW took a hit on US sanctions against North Korea being signed into law, falling 0.30% against the USD. USD/KRW touched the 1130.00 mark, from 1123.00. SGD was in second place with a loss of 0.11%. At the other end of the spectrum, INR advanced 0.10% and it was no surprise to see USD/INR continue to fall with a lack of technical supports seen after the break of pivotal support at 63.93 on Wednesday. A new two year low of 63.5675 was printed at last look.

USD/CNY spiked to a high of 6.7314 from 6.7262 but consistent offers were seen entering the market and onshore spot printed a new intraday low of 6.7250 at last look. 1Y NDFs, on the other hand, was seen rising to 6.8791 from 6.8638, which meant that 1Y NDF points were seen back above 15 big figures. Although a near term event risk is sighted in the form of NFP data on Friday, current 1Y NDF points of >15 big figures is too good to pass up for shorts. USD/CNH was seen between 6.7271 -7371, with CNH still seen at a 50 pips discount to CNY.

With short covering still seen in the market, USD/SGD did not deviate too far from 1.3600 on the day, seen between 1.3575-3618. New bids were said to be seen at 1.3570+ levels, with stops said to be building up at sub 1.3545 levels. The pair is unlikely to deviate too far from 1.3600 ahead of NFP data on Friday.

Indonesia's GDP growth is likely to remain just above the key 5% mark in the second quarter, coming in at 5.05% y/y, as investment spending remains constrained. Meanwhile, despite the festival of Ramadan, private consumption seems to have remained subdued in the quarter.

Nothing too interesting was seen in USD/IDR, seen between 13317 -35. Expect sideways trading to continue through to NFP data on Friday, and it would be a surprise to see 13300 yield even after the data, unless a massive disappointment is seen.

With 63.93 decisively broken, there was a lack of technical supports in USD/INR, all the way down to 63.30-35, and we were not surprised to see USD/INR print a two year low of 63.56 at last look. It would be foolish to stand in the way of aggressive selling until 63.30-35, especially ahead of even risk in the form of US NFP data on Friday.

DATA RELEASES DUE TODAY

Data:

01:30 GMT - AU: Retail trade (Jun) % m/m (Mkt: 0.2 Prev: 0.6)

06:00 GMT - DE: Factory orders (nsa) (Jun) % y/y (Mkt: 4.4 Prev: 3.7)

06:00 GMT - DE: Factory orders (sa) (Jun) 4cast: 0.4% m/m (Mkt: 0.5 Prev: 1)

07:00 GMT - ES: Industrial Production (nsa) (Jun) % y/y (Prev: 4.6)

08:00 GMT - IT: Retail sales (nsa) (Jun) % y/y (Prev: 1)

08:00 GMT - IT: Retail sales (sa) (Jun) % m/m (Mkt: 0.1 Prev: -0.1)

12:30 GMT - CA: Unemployment (Jul) 4cast: 6.4% (Mkt: 6.5 Prev: 6.5)

12:30 GMT - US: Average Hourly Earnings (Jul) 4cast: 0.2% m/m (Mkt: 0.3 Prev: 0.2)

12:30 GMT - US: Non-farm Payrolls (Jul) 4cast: 175k (Mkt: 180 Prev: 222)

12:30 GMT - US: Private Payrolls (Jul) 4cast: 170k (Mkt: 180 Prev: 187)

12:30 GMT - US: Trade Balance (Jun) 4cast: -44.2USD bn (Mkt: -44.5 Prev: -46.5)

12:30 GMT - US: Unemployment (Jul) 4cast: 4.3% (Mkt: 4.3 Prev: 4.4)

14:00 GMT - CA: Ivey PMI (Jul) (Prev: 61.6)

EVENTS & AUCTIONS:

01:30 GMT - AU: RBA Statement on Monetary Policy

09:00 GMT - UK: 182-Day Bills Auction GBP (1.5bn)

10:00 GMT - UK: 28-Day Bills Auction GBP (0.5bn)

10:00 GMT - UK: 91-Day Bills Auction GBP (1.0bn)


Forex - Asia Open - Overnight Highlights


 20:41 (GMT) 03 Aug

 [Forex Highlights]

Asia Overnight Highlights - 4 August 2017

ASIA OUTLOOK - Majors FX highlights

A dovish BoE was the main story of the day sending the GBP lower and bonds higher, though otherwise the USD was mostly softer after softer than expected ISM non-manufacturing data and late political concerns.

Majors data highlights

Jul's ISM non-manufacturing index of 53.9 has seen a significant and unexpectedly sharp slowing from Jun's strong index of 57.4. All four components of the composite contributed to the slowing but prices paid, not a contributor to the composite, picked up to 55.7 from 52.1.

Emerging Asia FX highlights

USD/CNY 1Y NDFs continued to pull up from recent lows, climbing to 6.8755. USD/SGD traded only slightly lower, little changed on the session. USD/IDR 1M NDFs traded in a narrow range around 13371. USD/INR saw a bit of follow-through selling early after yesterday's slide, before modest short covering to 63.69.

OVERNIGHT NEWS HIGHLIGHTS

- WSJ reports Special Counsel Mueller impanels Washington Grand Jury in Russia probe.

- BoE left rates unchanged, 6-2 vote, economic forecasts trimmed.

- US weekly initial claims fell to 240k from 245k vs 243k exp.

- US Jul ISM non-manufacturing fell to 53.9 from 57.4 vs 56.9 exp.

- VIX index: 10.44 (+1.56%)

- Gold Spot: $1,268.273/oz (+0.13%)

- ICE Brent front contract: $51.93 ($-0.43)

- Nymex WTI front contract: btmm jn ($-0.65)

- Reuters/Jefferies Commodities Index: 180.65 (-0.73%)

- 10y UST: 2.221 (-5bp) (Asia morning)

- DJI: 22,026.10 (+0.04%); S&P: 2,472.16 (-0.22%); Nasdaq: 6,362.65 (-0.35%)

ASIA NEWS

India: Lok Sahba (Lower House) approves Banking Bill on Non-performing assets, a key step towards addressing the NPL problem and implementing the bancruptcy code. In turn this is a key step towards reforms which should be positive for sentiment.

Singapore: Hong Kong and Singapore leaders are looking for ways to co-invest in China's one belt and road initiative, which could increase FDI from the two countries, as well as increase capital goods exports

China: China Daily reports that the authorities are considering a luxury tax on fur and private jets, which could be the latest in the anti-corruption efforts and counter to conspicuous consumption.

Indonesia: Bank Indonesia Assistant Governor Dody Waluyo noted that the country should try to keep inflation in the 3% range to stay competitive. This would leave little room for easing - the CPI recently fell to 3.88%.

CURRENCIES

- GBP provided most of the excitement with some support from a modestly better than expected UK service PMI release, followed by a sharp sell-off as the BoE left policy unchanged, the vote reverting to 6-2 from 5-3 with Forbes gone, and the Bank revising inflation and GDP expectations modestly lower. EUR/GBP paused briefly at .9000 on profit taking, then headed higher again to just shy of .9050.

- USD/JPY slipped had another short-lived look below 110.00 after soft ISM non-manufacturing data, but saw fresh lows on a WSJ report that a Grand Jury had been impaneled in the Russia probe. GBP/JPY took a dive to lose 2 big figures. EUR/JPY fared better with demand found ahead of 130.50.

- EUR/USD had another late European run higher, topping out at 1.1890/95 so not matching the 1.1910 seen after Europe went home on Wednesday. The pair was bought up from a low around 1.1830, softer than expected ISM non-manufacturing noted, though prices paid were higher. We were back near the highs after the WSJ report late on.

- The commodity currencies were generally softer through late Europe and early N. America before getting support as WTI crude edged closer to $50 without quite getting there. While oil slipped back, the WSJ report provided late support, sending AUD/USD back above .7950. NZD regained some ground with AUD/NZD tucking back inside 1.06/1.07 to 1.0675.

- EUR/CHF saw highs above 1.1510, focus there on Swiss reserves data due on Monday. EUR/SEK is holding on to the 9.60 handle without looking ready to push any higher, a solid service PMI again suggesting the economy in good shape but political worries weighing against the SEK.

BONDS

A rally in gilts on the BoE pulled US yields lower into the start of NY trading. A lower NM ISM headline, lowest since latest August, also gave an extra lift briefly, and while the rise in prices paid proved offsetting given the Fed inflation focus late trade saw the gains extended further, the T.bond testing Jul 21 highs. 2s -2.0bps @ 1.34%, 5s -3.8bps @ 1.79%, 10s -4.3bps @ 2.23%, 30s -5.0bps @ 2.81%

- Agency Spreads: Freddie/Fannie 5s +0.8/-1.0 bps, 10s +2.0/-0.5 bps.

- Swap Spreads: 2s +0.28bps, 5s +0.62bps, 10s +0.50bps.

EQUITIES

The pattern of the NASDAQ underperforming the DJIA continued, the former under pressure with the latter fairly stable. The S&P also slipped, with energy the main drag. Political concerns had little impact on equities.

ASIA CURRENCIES

Once again, KRW took a hit on US sanctions against North Korea being signed into law, falling 0.30% against the USD. USD/KRW touched the 1130.00 mark, from 1123.00. SGD was in second place with a loss of 0.11%. At the other end of the spectrum, INR advanced 0.10% and it was no surprise to see USD/INR continue to fall with a lack of technical supports seen after the break of pivotal support at 63.93 on Wednesday. A new two year low of 63.5675 was printed at last look.

USD/CNY spiked to a high of 6.7314 from 6.7262 but consistent offers were seen entering the market and onshore spot printed a new intraday low of 6.7250 at last look. 1Y NDFs, on the other hand, was seen rising to 6.8791 from 6.8638, which meant that 1Y NDF points were seen back above 15 big figures. Although a near term event risk is sighted in the form of NFP data on Friday, current 1Y NDF points of >15 big figures is too good to pass up for shorts. USD/CNH was seen between 6.7271 -7371, with CNH still seen at a 50 pips discount to CNY.

With short covering still seen in the market, USD/SGD did not deviate too far from 1.3600 on the day, seen between 1.3575-3618. New bids were said to be seen at 1.3570+ levels, with stops said to be building up at sub 1.3545 levels. The pair is unlikely to deviate too far from 1.3600 ahead of NFP data on Friday.

Indonesia's GDP growth is likely to remain just above the key 5% mark in the second quarter, coming in at 5.05% y/y, as investment spending remains constrained. Meanwhile, despite the festival of Ramadan, private consumption seems to have remained subdued in the quarter.

Nothing too interesting was seen in USD/IDR, seen between 13317 -35. Expect sideways trading to continue through to NFP data on Friday, and it would be a surprise to see 13300 yield even after the data, unless a massive disappointment is seen.

With 63.93 decisively broken, there was a lack of technical supports in USD/INR, all the way down to 63.30-35, and we were not surprised to see USD/INR print a two year low of 63.56 at last look. It would be foolish to stand in the way of aggressive selling until 63.30-35, especially ahead of even risk in the form of US NFP data on Friday.

DATA RELEASES DUE TODAY

Data:

01:30 GMT - AU: Retail trade (Jun) % m/m (Mkt: 0.2 Prev: 0.6)

06:00 GMT - DE: Factory orders (nsa) (Jun) % y/y (Mkt: 4.4 Prev: 3.7)

06:00 GMT - DE: Factory orders (sa) (Jun) 4cast: 0.4% m/m (Mkt: 0.5 Prev: 1)

07:00 GMT - ES: Industrial Production (nsa) (Jun) % y/y (Prev: 4.6)

08:00 GMT - IT: Retail sales (nsa) (Jun) % y/y (Prev: 1)

08:00 GMT - IT: Retail sales (sa) (Jun) % m/m (Mkt: 0.1 Prev: -0.1)

12:30 GMT - CA: Unemployment (Jul) 4cast: 6.4% (Mkt: 6.5 Prev: 6.5)

12:30 GMT - US: Average Hourly Earnings (Jul) 4cast: 0.2% m/m (Mkt: 0.3 Prev: 0.2)

12:30 GMT - US: Non-farm Payrolls (Jul) 4cast: 175k (Mkt: 180 Prev: 222)

12:30 GMT - US: Private Payrolls (Jul) 4cast: 170k (Mkt: 180 Prev: 187)

12:30 GMT - US: Trade Balance (Jun) 4cast: -44.2USD bn (Mkt: -44.5 Prev: -46.5)

12:30 GMT - US: Unemployment (Jul) 4cast: 4.3% (Mkt: 4.3 Prev: 4.4)

14:00 GMT - CA: Ivey PMI (Jul) (Prev: 61.6)

EVENTS & AUCTIONS:

01:30 GMT - AU: RBA Statement on Monetary Policy

09:00 GMT - UK: 182-Day Bills Auction GBP (1.5bn)

10:00 GMT - UK: 28-Day Bills Auction GBP (0.5bn)

10:00 GMT - UK: 91-Day Bills Auction GBP (1.0bn)


Forex - Asia Open - Overnight Highlights


 20:34 (GMT) 31 Jul

 [Forex Highlights]

Asia Overnight Highlights - 1 August 2017

ASIA OUTLOOK - Majors FX highlights

On a relatively slow news day EUR/USD took off at the fix and triggered stops at 1.1800, the USD coming under increased pressure late on further signs of turmoil within the Trump administration. Otherwise it was a subdued day, with bonds and equities mixed.

Majors data highlights

Jul's US Chicago PMI fell short of expectations, slipping to 58.9 from a strong, consistent with Philly Fed and Empire State data which also weakened in Jul. Jun US pending home sales however exceeded expectations with a 1.5% increase, the first gain in 4 months.

The Eurozone unemployment rate fell to 9.1% in June from 9.2% in May, extending a steady decline from mid-2013. That is the lowest unemployment rate so far in the expansion. Italy's unemployment rate fell to 11.1% in June from 11.3% in May. That matches the lowest jobless rate since Q3 2012.

Emerging Asia FX highlights

USD/CNY 1Y NDFs were fairly stable around 6.8650 but USD/SGD has fallen back below 1.3550. USD/IDR 1M NDFs have edged below 13360. USD/INR has slipped from a high near 64.25, but remains above 64.15.

OVERNIGHT NEWS HIGHLIGHTS

- US Jul Chicago PMI fell to 58.9 from 65.7 vs 60.0 exp.

- US Jun pending home sales +1.5% vs 1.0% exp.

- Scaramucci reported removed as White House Communications Director reportedly at request of Chief of Staff Kelly

- VIX index: 10.26 (-0.29%)

- Gold Spot: $1,269.65/oz (0.00%)

- ICE Brent front contract: $52.74 ($+0.52)

- Nymex WTI front contract: btmm jn ($+0.55)

- Reuters/Jefferies Commodities Index: 182.64 (+0.29%)

- 10y UST: 2.289% (0bp) (Asia morning)

- DJI: 21,830.31 (+0.28%); S&P: 2,472.10 (-0.07%); Nasdaq: 6,374.68 (-0.42%)

ASIA NEWS

Indonesia: A magnitude 5.1 earthquake hit southern Sumatra.

India: State Bank of India cut the rate it pays on deposits less than INR 10 million by 50 bps to 3.5%, suggesting a cut by the RBI.

China: Ambassador to the UN Liu Ieyi said the US talk of "all options on the table" is increasing tensions with North Korea.

CURRENCIES

- It took most of the day but EUR/USD finally managed a run to a fresh high as it came within a few pips of 1.1800 into the late fix. After a brief dip the pair took another run higher to eventually top out at 1.1830, extended to 1.1844 after the removal of Scaramucci as White House communications director was confirmed.

- USD/JPY managed to avoid much of the late USD sell off as EUR/JPY went with the EUR/USD move to trade just over 130.50, though was quicker to respond to the Scaramucci story, hitting the day's low of 110.18.

- Cable rode the EUR/USD wave higher too though only managed a couple of ticks above 1.3200 as EUR/GBP remained underpinned to finish close to session highs over .8960. EUR/CHF has continued its run higher to break above 1.14.

- USD/CAD picked on reports of increased OPEC production, hitting a high at 1.2528 before slipping back near previous support at 1.2460 as the USD eased off. AUD/USD touched .8000 but AUD/CAD gains fell just short of parity, while USD/NZD settled in midrange near .7500 as AUD/NZD firmed.

- All was very quiet on the Scandies with ranges holding untroubled.

BONDS

A relatively contained start to the week, as the latest N.Korea news as well as Russia expelling US diplomats failed to provide any lasting bid after only brief touch of UST support in Asia. US 30yr yields moved a little higher/steeper after failing to source any further boost from month end and dragged by rate lock selling though later equity slippage provides support saw the market close fairly neutral. Chicago PMI a little below market but seen coming off very high levels. 2s 0.0bps @ 1.35%, 5s -0.3bps @ 1.83%, 10s -0.0bps @ 2.29%, 30s +0.2bps @ 2.90%.

- Agency Spreads: Freddie/Fannie 5s 0.0/+0.1 bps, 10s -1.0/+0.4 bps.

- Swap Spreads: 2s +0.61bps, 5s +0.25bps, 10s -0.37bps.

EQUITIES

Equities saw a contrast between strength in the DJIA supported in particular by Boeing, and struggles on the NASDAQ, while the S&P slipped from a positive open to near neutral, financials the strongest sector.

ASIA CURRENCIES

With the sole exception of SGD, having already moved higher last Friday, all Asian currencies advanced against the USD after poor US GDP and employment cost index last Friday. THB saw the strongest gain at 0.29%, followed by TWD at 0.28% and KRW at 0.27%. For the latter, escalating North Korea tensions (again) saw USD/KRW gap towards a high of 1125.22 but market participants quickly lost interest as usual and prices fell back below 1120, towards 1119.00.

A significant move was seen in onshore spot on the day as USD/CNY broke below last week's support of 6.7251 towards a new near ten month low of 6.7213, from 6.7365. Market chatter was that a break of 6.7000 will be seen before the end of the week. 1Y NDFs fell to a low of 6.8615 from 6.8784, which meant that 1Y NDF points were seen in the upper end of its recent 12-14 big figure range. We expect any incursions out of 14 big figures on the topside in 1Y NDF points to meet into good offers. Compared to onshore spot, the fall in USD/CNH was actually limited, with the low at 6.7251 from 6.7414. Last week's low of 6.7249 managed to hold up at last look.

USD/SGD printed a low of 1.3561 last Friday after poorer than expected US data, but profit taking emerged on the first day of the week, with USD/SGD seen between 1.3562 - 85. It helped that apart from USD/JPY, there were no new lows printed in the USD against the majors. However with EUR/USD pushing through 1.1800 we expect it to be only a matter of time before the 1.3500 handle is challenged and broken. Medium sized stops are sighted below.

In Indonesia July inflation is likely to see increased upside pressures as food inflation picks up pace due to a weaker base effect. The education sector is also likely to contribute as the new academic year kicks off. Meanwhile, transport inflation would likely remain sturdy as oil prices remain supported. As such, we expect July inflation to come in at 4.50% y/y, the highest level seen since November 2015.

Despite poorer than expected US data last Friday, USD/IDR did not come close to even testing the 13300 handle, seen trading sideways between 13318 - 29 on the day. Unlike other USD/Asians, offers in USD/IDR were limited, and we expect the 13300 handle to hold up well through to the end of the week, before NFP data.

USD/INR surpassed last week's low of 64.063, seen falling to a low of 64.048 on the day, though prices managed to rebound to close to 64.25 before correcting. Despite the rebound, we expect the 64.00 handle to prove magnetic, and it is more likely than not that a test of the important support will be seen before NFP data on Friday.

DATA RELEASES DUE TODAY

n/a GMT - US: Total Vehicle Sales (Jul) mn (Mkt: 16.8 Prev: 16.41)

04:30 GMT - AU: RBA - Overnight Rate (Aug 1) % (Mkt: 1.5 Prev: 1.5)

05:00 GMT - IE: Manufacturing PMI (Jul) index (Prev: 56)

05:00 GMT - JP: Vehicle Sales (Aug) % y/y (Prev: 9.7)

06:30 GMT - SE: Manufacturing PMI (Jul) index (Prev: 62.4)

07:00 GMT - NO: Manufacturing PMI (Jul) index (Mkt: 55 Prev: 55.1)

07:15 GMT - ES: Manufacturing PMI (Jul) index (Mkt: 54.5 Prev: 54.7)

07:30 GMT - CH: Manufacturing PMI (Jul) index (Mkt: 58.8 Prev: 60.1)

07:45 GMT - IT: Manufacturing PMI (Jul) index (Mkt: 55 Prev: 55.2)

07:50 GMT - FR: Manufacturing PMI (Final) (Jul) index (Mkt: 55.4 Prev: 55.4)

07:55 GMT - DE: Manufacturing PMI (Final) (Jul) index (Mkt: 58.3 Prev: 58.3)

08:00 GMT - EU: Manufacturing PMI (Final) (Jul) index (Mkt: 56.8 Prev: 56.8)

08:00 GMT - GR: Manufacturing PMI (Jul) index (Prev: 50.5)

08:30 GMT - UK: CIPS / Markit Manufacturing PMI (Jul) 4cast: 54index (Mkt: 54.5 Prev: 54.3)

09:00 GMT - EU: GDP (Prelim) (Q2) 4cast: 0.5% q/q (Mkt: 0.6 Prev: 0.6)

09:00 GMT - EU: GDP (Prelim) (Q2) 4cast: 2.1% y/y (Mkt: 2.1 Prev: 1.9)

12:30 GMT - US: Core PCE Price Index (Jun) 4cast: 0.1% m/m (Mkt: 0.1 Prev: 0.1)

12:30 GMT - US: Personal income (Jun) 4cast: 0.3% m/m (Mkt: 0.4 Prev: 0.4)

12:30 GMT - US: Personal spending (Jun) % m/m (Mkt: 0.1 Prev: 0.1)

13:45 GMT - US: Manufacturing PMI (final) (Jul) index (Mkt: 53.1 Prev: 53.2)

14:00 GMT - US: Construction Spending (Jun) % m/m (Mkt: 0.5 Prev: 0)

14:00 GMT - US: ISM Manufacturing (Jul) 4cast: 55.5index (Mkt: 56.4 Prev: 57.8)

22:45 GMT - NZ: Unemployment (Q2) % (Mkt: 4.8 Prev: 4.9)

23:30 GMT - AU: AIG Manufacturing PMI (Jul) index (Prev: 55)

EVENTS & AUCTIONS:

n/a GMT - CH: Market Holiday - National Day

03:45 GMT - JP: 10yr Bond Auction

04:30 GMT - AU: RBA Holds Interest Rate Meeting

09:30 GMT - BE: 98-Day Bill Auction

09:30 GMT - BE: 161-Day Bill Auction

09:30 GMT - DE: 2yr Bond Auction (EUR 4bn)

09:30 GMT - UK: 10yr Bond Auction (GBP 2.25bn)

15:30 GMT - US: 4wk Bill Auction


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