Forex - Asia Open - Overnight Highlights


 00:11 (GMT) 11 Jul

  [Forex Highlights]

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Asia Open - Overnight Highlights (0101-MKWS-C01)

Asia Overnight Highlights - 11 Jul 2019

MAJORS

FX Highlights:

Fed Chairman Powell came across as dovish in his testimony. Markets increased expectations of Fed easing, fully pricing a 25bp cut in July and nearly fully pricing 50bp of rate cuts by September. The USD slipped on the initial statement and further through the testimony below 108.50 on USD/JPY and above 1.1250 on EUR/USD. The minutes had a similar tone but the response was modest.
The BoC left rates unchanged as expected but the statement placed heavy emphasis on ongoing trade tensions, and was seen as dovish. USD/CAD initially reversed the move seen on Powell's statement, but after peaking at 1.3150 fell to post-Powell lows, assisted by gains in oil and USD weakness. AUD/USD and NZD/USD rebounded on USD weakness on Powell.

Data/Events Highlights:

-Fed's Powell said trade uncertainties and concerns about global economy continue to weigh, will act as necessary to sustain growth. Baseline solid growth and inflation back to target, risk weak inflation will be more persistent than Fed currently anticipates.

-FOMC minutes said many thought near term ease warranted if trade and other risks continued to weigh, several others said easing could be appropriate if data deteriorated further.

- VIX index: 13.03 (-7.52%)

- Gold Spot: $1,423.75/oz (+0.34%)

- ICE Brent front contract: $67.01 (+$2.85)

- Nymex WTI front contract: $60.47 (+$0.04)

- Reuters/Jefferies Commodities Index: 184.17 (+1.92%)

- 10y UST: 2.047% (-1bp) (Asia morning)

- DJI: 26,860.20 (+0.29%); S&P: 2,993.07 (+0.45%); Nasdaq: 8,202.53 (+0.75%)

Data/Events Ahead:

US CPI data will be a focus on Thursday following the Powell testimony, but it would be a major surprise if there is anything in the numbers that makes the markets doubt the dovish view that the Fed will ease in July. We look for core CPI to be in line with market expectations at 0.2%, while we see a 0.1% rise in headline, slightly above market expectations.

Asia Open - Overnight Highlights (0101-MKWS-C02)

EMERGING ASIA

FX Highlights:

Asian currencies have rallied against a weaker dollar overnight after Federal Reserve Chairman Jerome Powell boosted expectations of a rate cut from the central bank this month. CNH gained by 0.34% against greenback, while SGD and CNY gained 0.22%. MYR was in mild gains. IDR, INR, PHP are all set for a catch-up rally after their onshore markets open. Other currencies were relatively stable.

USD/CNH sank to a 1-week low of 6.8700 overnight, below 50MA level, on Fed meeting minutes. The pair held onto losses into early Asian hours. Risk remains on the downside, next support is seen at 6.8499 level. 1Y NDFs dropped from 6.9250 level overnight to stabilize at around 6.9050 levels at last look. The onshore spot also slipped to a 1-week low of 6.8730 overnight. A firm break of 6.8700 level will likely open door for further downside.

USD/SGD saw overnight decline to 1.3570 level from around 1.3610 before the FOMC minutes. Upside momentum has faded somewhat, focus turns back to support level at 1.3575 ahead of lower one at 1.3545. Singapore's Q2 GDP and May's retail sales due on Friday, a disappointment in growth may see SGD pared back some gains.

USD/IDR 1M NDFs plunged to 14160 levels from around 14220 overnight on Wednesday. Onshore spot is poised for further downmove after onshore market open today. The pair traded with a downside bias and closed at 14133 on Wednesday. A key level to watch will be 14100. On the domestic front, Indonesia lowered its growth estimate for next year, weighing on sentiment as BI rate cuts become more probable.

USD/INR 1M NDFs dropped further overnight, from 68.800 to 68.600 levels. Onshore spot gapped higher to open at 68.620 on Wednesday vs. last close of 68.540 amid gains in oil prices. The pair consolidated lower to 68.550 before close on Wednesday. USD/INR is poised for downmove after market open on Thursday, with strong support level seen at 68.345.

Data/Events Highlights:

The latest trade data from the Philippines showed that exports saw modest gains in May, rising by 1% y/y, while imports disappointed, down by 5.4% y/y.

China's CPI inflation stayed at 2.7% y/y for the second consecutive month. This was a monthly drop in inflation. Food inflation climbed further to 8.3% y/y from 7.7% a month ago. Meanwhile, PPI was flat, continuing to highlight the concerns from manufacturers on flat factory price growth.

Data/Events Ahead:

No key data releases are due in the day ahead in Asia.

DATA RELEASES DUE TODAY

01:30 GMT - AU: Housing Finance (May) 4cast: % m/m (Mkt: -1 Prev: -1.1)

04:30 GMT - JP: METI Tertiary activity index (May) 4cast: % m/m (Mkt: -0.1 Prev: 0.8)

12:30 GMT - US: Initial Claims (Jul 6) 4cast: k (Mkt: 221 Prev: 221)

12:30 GMT - US: CPI (ex Food & Energy) (Jun) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.1)

12:30 GMT - US: CPI (Jun) 4cast: 0.1% m/m (Mkt: 0 Prev: 0.1)

12:30 GMT - CA: House Price Index (May) 4cast: % (Mkt: 0.1 Prev: 0)

18:00 GMT - US: Monthly Budget Statement (Jun) 4cast: USD bn (Mkt: -7.7 Prev: -207.8)

EVENTS & AUCTIONS

- JP: Enhanced Liquidity Auction

- 09:30 GMT - UK: BoE Financial Stability Report and Record

- 10:15 GMT - EU: ECB's Coeure Speaks in Frankfurt

- 11:30 GMT - EU: ECB Publishes Account of June 5-6 Policy Meeting

- 13:10 GMT - AU: RBA's Debelle speaks in New York via Videolink

- 14:00 GMT - US: Fed's Powell Testifies to Senate Banking Committee

- 15:30 GMT - US: 4wk Bills Auction

- 15:30 GMT - US: 8wk Bills Auction

- 16:15 GMT - US: Fed's Bostic speaks on monetary policy

- 16:30 GMT - US: Fed's Barkin speaks at Rocky Mountain Economic Summit

- 17:00 GMT - US: 30yr Bond Auction(USD 16bn)

- 17:30 GMT - US: Fed's Quarles speaks on regulation and monetary policy

- 17:30 GMT - US: Fed's Williams speaks in Albany

- 17:30 GMT - US: Fed's Williams speaks in Albany


Forex - Singapore Flows: USD/SGD prints a more than 2-week high at 1.3625, all eyes on Fed


 02:56 (GMT) 10 Jul

 [Forex Flows]

USD/SGD edged higher to retest the MTD 1.3624 high. Pair printed a more than 2-week high at 1.3625, before reversing back down to 1.3619 at last look. All eyes are on Wednesday's June FOMC minutes and Fed Chair Powell's congressional testimony during NY hours. We are expecting Powell to sing the same tune expressed in the June FOMC statement: economic outlook is healthy, but uncertainties around that outlook were mounting. Pair may eye the 1.3631 resistance next. We expect the 1.3631 resistance to remain safe prior to the FOMC minutes and Powell's testimony. SGD NEER was 1.59% above midpoint while STI was up 0.45% at last look.


Forex - China Flows: USD/CNH remains within range, as key data releases later the week provide fresh clues on economy


 02:40 (GMT) 09 Jul

 [Forex Flows]

USD/CNH remained relatively calm on Tuesday. Pair last at 6.8888. CPI, PPI and trade data key to watch this week. We see higher inflation, although PPI is likely to remain subdued. Weak trade data may cause further upsides to the pair, even though we suspect much is priced in. A move beyond the 6.9000 can trigger further upside momentum towards the 6.9102 resistance.

PBoC fixed mid-point at 6.8853 vs. previous close of 6.8827. USD/CNY last at 6.8829, with 1Y NDFs also staying range-bound at 6.9244. Without fresh developments, 6.9000 big figure remains key to watch, on whether expectations shift next towards the 6.9300 resistance.


Forex - Hong Kong Chart Hang Seng Index Update: Retains downside pressure


 01:39 (GMT) 09 Jul

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Forex - Hong Kong Chart Hang Seng Index Update: Opening gap-down jeopardising upmove from 26672 low


 01:49 (GMT) 08 Jul

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