Forex - Philippines Flows: Peso edged higher on the progress in trade talks


 02:33 (GMT) 14 Oct

  [Forex Flows]

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Philippines Flows: Peso edged higher on the progress in trade talks (0101-PKKW-C01)

Peso inched higher after the recent progress made in the U.S.-China trade negotiations lifted sentiment. The mini-trade deal between the two is likely to offer a temporary relief, and markets remain sceptical of the specifics of the deal and some other major issues such as those in high-tech sectors still remain. USD/PHP dipper lower to 51.500 after open, and pressure stays on the downside, lower support is seen at 51.270. 1M NDFs were largely stable at 51.600. Asian stocks rallied on the ease of US-China trade tensions on Monday, and PSEi was also higher by 0.61% at last look.


Forex - Asia Open - Overnight Highlights


 23:36 (GMT) 13 Oct

 [Forex Highlights]

Asia Overnight Highlights - 14 Oct 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded lower on Friday as risk assets were sold off in anticipation of a trade deal between US and China. USD/JPY extended gains above 108.50. EUR/USD, supported at 1.10, reached 1.1060. Announcement of a phase 1 deal late in the day got an underwhelming response.

GBP/USD pushed up to 1.27 and EUR/GBP down to .87, as various banks revised their Brexit outlooks, increasing expectations of a deal after the positive Johnson/Varadkar meeting on Thursday. Reports of little progress in weekend Brexit talks however saw Cable back below 1.2650.

AUD/USD continued to gain ground above .68 but was a notch softer in early trading, while EUR/CHF moved up to 1.10, its highest level for nearly a month.

Canadian employment data was much stronger than expected, with employment rising 53.7k m/m and the unemployment rate falling to 5.5% from 5.7%. USD/CAD fell nearly a big figure on the news below 1.32.

Data/Events Highlights:

- Trump announced phase 1 deal with China, tariffs scheduled to rise on October 15 suspended, no decision on those scheduled for December.

- Canada Sep employment +53.7k vs 7.5k exp, unemployment fell to 5.5% from 5.7% vs 5.7% exp.

- US Preliminary Oct Michigan CSI rose to 96.0 from 93.2 vs 92.0 exp.

- VIX index: 15.58 (-11.33%)

- Gold Spot: $1,483.98/oz (-0.34%)

- ICE Brent front contract: $60.51 ($0.00)

- Nymex WTI front contract: $54.72 (+$0.02)

- Reuters/Jefferies Commodities Index: 176.04 (+1.42%)

- 10y UST: 1.729% (+6bp) (Asia morning)

- DJI: 26,816.59 (+1.21%); S&P: 2,970.27 (+1.09%); Nasdaq: 8,057.04 (+1.34%)

Data/Events Ahead:

We expect the Eurozone industrial production to have improved by 0.5% m/m in August, up from a 0.4% fall in July. Nevertheless, this would bring the industrial output some 2.3% lower than in August 2018 when industrial production was boosted ahead of the introduction of the new world emission rules (WLTP). Our forecast seems plausible as Germany reported a 0.7% m/m increase in August, Italy a 0.3% rise, Spain a 0.9% increase and France a disappointing 0.9% m/m fall.

EMERGING ASIA

FX Highlights:

Asian currencies mostly strengthened during the last week. CNY (+0.85%) and KRW (+0.65%) appeared to have received the most support from hopes of a US/China trade deal, even if it will be limited in nature. In contrast, INR lost 0.19%, as domestic growth concerns remained at the forefront.

USD/CNH reversed gears again to go lower after an underwhelming response to the announcement of phase 1 trade deal that saw gains to 7.0900. Pair dipped back to closer to overnight lows of 7.0705. 7.0500 may likely be tested if risk aversion stays. USD/CNY onshore spot also traded with a downside bias to 7.0870 lows on Friday as trade talks were underway. For the onshore pair, moving below the PBOC fixing at 7.0727 will be a significant breakthrough. 1Y NDFs last seen testing the downside at 7.1400.

USD/SGD was supported at 1.3700 big figure on Friday but rose back to 1.3740-levels later although downside pressures reemerged and pair was last seen at 1.3723. In view of further risk-on sentiments, we turn our eyes to the 1.3709 support.

USD/IDR 1M NDFs slid top 14142 lows in Friday's NY session but reversed to 14180+ later. Onshore spot hit lows of 14128 earlier on Friday but traded with an upside bias to 14150 later. Risk to support at 14110 is seen amid a mildly positive trade talks outcome, although room below 14000 should remain limited.

USD/INR 1M NDFs traded choppily on either side of 71.200 on Friday. Onshore spot started Friday's trading at lows of 70.790 but returned to 71+ levels into the close of trading. Focus for the week ahead will be India's September CPI and WPI on Monday. The break above the 71 handle still remains fragile and a firmer upside bias is likely only if 71.500 breaks. Support at 70.355 will continue to hold.

Data/Events Highlights:

Malaysia widened the budget deficit target to 3.2% of GDP for 2020 from 3% previously. August industrial production came in at 1.9% y/y, close to our and consensus estimate of 2.0% y/y.

India's August factory output disappointed with a negative print of -1.1% y/y against expectations of gains.

Data/Events Ahead:

Singapore's Q3 GDP and MAS policy decision will be first up today. We expect Singapore to avert a technical recession (two quarters of negative q/q growth). However, it will still see muted growth on a y/y basis. Continued growth concerns will likely cause the Monetary Authority of Singapore (MAS) to ease its monetary policy.

China's September trade data as well as India's September CPI will be eyed later in the day.

DATA RELEASES DUE TODAY

CN: Trade Balance (Sep) 4cast: 38.86USD bn [Mkt: 36.73, Prev: 34.84]

CN: Exports (Sep) 4cast: -1.9% y/y [Mkt: -3, Prev: -1]

CN: Imports (Sep) 4cast: -6.6% y/y [Mkt: -6, Prev: -5.6]

00:00 GMT / 08:00 SGT - SG: GDP (Q3 A) 4cast: 0% y/y [Prev: 0.1]

06:30 GMT / 14:30 SGT - IN: WPI (Sep) 4cast: 0.8% y/y [Prev: 1.08]

09:00 GMT / 17:00 SGT - EU: Industrial production (Aug) 4cast: -2.3% y/y [Mkt: -2.6, Prev: -2]

12:00 GMT / 20:00 SGT - IN: CPI (Sep) 4cast: 3.7% y/y [Prev: 3.21]

EVENTS & AUCTIONS

00:00 GMT / 08:00 SGT - SG: MAS Policy Decision

12:10 GMT / 20:10 SGT - UK: BoE's Cunliffe speaks in London


Forex - Asia Open - Overnight Highlights


 23:48 (GMT) 10 Oct

 [Forex Highlights]

Asia Overnight Highlights - 11 Oct 2019

MAJORS

FX Highlights:

The Bloomberg dollar spot index traded with an offered tone on Thursday after slipping below the 99 handle early on. NY session saw US CPI below expectations, making room for another Fed rate cut before the end of the year.

USD/JPY, already off Asian lows, picked up as China's Liu He stated was willing to make a partial trade deal with the US, followed by Trump tweeting that he would meet him on Friday, Trump however questioning his own desire for a deal. The rally tested 108.00, but could not break above.

With the EUR firm, EUR/GBP saw an early push above .90, but GBP subsequently surged, after a statement from the meeting between UK's Johnson and Ireland's Varadkar saw a pathway to a possible deal. An Irish Times report that there had been significant movement from the UK (though details were lacking) helped to further fuel the move. GBP/USD rallied from near 1.22 above 1.2450 while EUR/GBP fell below .8850.

EUR/USD pushed above 1.10, peaking at 1.1034, assisted by signs of splits in the ECB over QE, the FT reporting that the decision to restart QE came despite advice from the monetary policy committee. Minutes showed a split on the issue, but a clear majority supporting resuming QE. GBP and USD strength helped EUR/USD move off its highs.

Trade optimism saw the CHF lower and commodity currencies higher, though a USD/CAD dip below 1.33 found buyers. EUR/SEK fell around 5 figure on a stronger than expected Swedish CPI (1.5% from 1.4%), and later extended the move.

Data/Events Highlights:

- US Sep CPI 0.0% vs +0.1% exp, ex food and energy +0.1% vs 0.2% exp.

- Trump said will meet Chinese Vice Premier Friday, China wants a deal.

- Irish PM Varadkar said Brexit deal possible this month after talks with UK PM Johnson.

- VIX index: 17.57 (-5.74%)

- Gold Spot: $1,492.99/oz (-0.07%)

- ICE Brent front contract: $59.10 (+$0.78)

- Nymex WTI front contract: $53.98 (+$0.43)

- Reuters/Jefferies Commodities Index: 173.58 (+0.30%)

- 10y UST: 1.668% (+8bp) (Asia morning)

- DJI: 26,496.67 (+0.57%); S&P: 2,938.13 (+0.64%); Nasdaq: 7,950.78 (+0.60%)

Data/Events Ahead:

In the US, Sep import prices and the preliminary Oct Michigan CSI are due, though trade talks between the US and China may remain the market focus.

German inflation figures should confirm the flash estimates of a CPI inflation of 1.2% y/y and HICP inflation of 0.9% y/y in September.

EMERGING ASIA

FX Highlights:

Asian currencies were generally up on Thursday. CNH led with gains of 0.47% as possibility of a partial trade deal remained. SGD (+0.37%) followed closely while PHP (+0.28%) enjoyed a narrower trade deficit. KRW (-0.24%) and THB (-0.21%) fell. Market attention is on US-China trade talks even as the best case would be a partial deal.

USD/CNH generally remained below 7.1100 in the NY hours on Thursday. This move turns attention to 7.0965 support, while 7.1585 for first resistance. USD/CNY onshore spot traded lower on Thursday as possibility of a partial US-China trade deal remained, and lows of 7.1000 were printed, testing the psychological support. Pair may rebound and eye the 7.1555 resistance next. 1Y NDFs saw a sharp slide from 7.2200+ levels seen earlier on Thursday to 7.1700 in the NY hours.

USD/SGD traded heavily on Thursday, breaking below 1.3800 early on and extending the loss to 1.3749 in the NY session. If trade deal hopes remain alive, risk to 1.3721 support is seen.

USD/IDR 1M NDFs slid below 14200 as risk on sentiments were seen following hopes of a partial US-China trade deal, and pair dropped further to 14154 lows. Onshore spot hit 14182 highs in early trading on Thursday as risk aversion remained rampant amid US-China trade talks and Turkey starting military operations in Syria. Pair dropped to 14145 as sentiment improved slightly and traded sideways around 14150. Room above 14200 remains limited due to BI presence, but a strongly negative trade talks outcome still poses threat.

USD/INR 1M NDFs dipped to 71.100 lows in the NY session but a slight correction to 71.200+ levels was seen at session close. Onshore spot remained close to the 71 handle earlier on Thursday amid flip-flop announcements in the ongoing US-China trade talks. Possibility of tariffs going up next week still remains high however, and pair traded higher to 71.150 in the afternoon. Eyes also on Xi-Modi meet and RCEP negotiations scheduled for this week. The break above the 71 handle still remains fragile and a firmer upside bias is likely only if 71.500 breaks. Support at 70.355 will continue to hold.

Data/Events Highlights:

On Wednesday, a sharper drop in imports saw Philippines trade deficit narrow to USD 2410mn in August from USD 3393mn in July.

Data/Events Ahead:

A bunch of tier 2 releases are scheduled in EM Asia today - Malaysia and India's August factory output as well as Singapore's August retail sales.

Focus will also be on Malaysia's FY2020 budget announcement.

DATA RELEASES DUE TODAY

04:00 GMT / 12:00 SGT - MY: Industrial Production (Aug) 4cast: 2% y/y [Mkt: 2.3, Prev: 1.2]

05:00 GMT / 13:00 SGT - SG: Retail Sales (Aug) 4cast: -7.3% y/y [Prev: -1.8]

12:00 GMT / 20:00 SGT - IN: Industrial Production (Aug) 4cast: 4% y/y [Prev: 4.3]

12:30 GMT / 20:30 SGT - US: Import Price Index (Sep) [Mkt: 0, Prev: -0.5]

12:30 GMT / 20:30 SGT - CA: Unemployment (Sep) 4cast: 5.6% [Mkt: 5.7, Prev: 5.7]

12:30 GMT / 20:30 SGT - CA: Employment (Sep) 4cast: 20 k [Mkt: 5, Prev: 81.1]

14:00 GMT / 22:00 SGT - US: Univ of Mich Sentiment (Oct P) [Mkt: 92, Prev: 93.2]

18:00 GMT / 02:00 SGT - US: Monthly Budget Statement (Sep) [Prev: -200.3]

23:50 GMT / 07:50 SGT - JP: M2 Money Supply (Sep) [Prev: 2.4]

EVENTS & AUCTIONS

TW: Market Holiday - National Day

12:00 GMT / 20:00 SGT - US: Fed's Kashkari takes part in Q+A in New York

17:15 GMT / 01:15 SGT - US: Fed's Rosengren speaks in Wisconsin

18:00 GMT / 02:00 SGT - US: FOMC minutes from September 18 meeting

21:00 GMT / 05:00 SGT - US: Fed's Kaplan speaks in San Francisco


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