Forex - Asia Highlights - Wednesday, 9 October 2019


 04:22 (GMT) 09 Oct

  [Forex Highlights]

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Asia Highlights - Wednesday, 9 October 2019 (0101-PJKW-C01)

US Overview:
Trade optimism faded on the US having blacklisted 28 Chinese firms on human rights issues. Brexit pessimism grew with the aftermath of a Johnson-Merkel conversation leaving little hope for a deal. Powell steepened the curve after stating the Fed was contemplating T-Bill purchases to expand the balance sheet for reserve purposes.

US Highlights:
- Fed's Powell said will soon announce steps to add reserves over time, growth of balance sheet for reserves purposes is not QE.
- Fed's Evans said could be an argument for a bit more insurance.
- US Sep PPI -0.3% vs +0.1% exp, ex food and energy -0.3% vs +0.2% exp.

Currencies:
A weaker GBP was the main feature of the European morning as UK government sources indicated that they would make efforts to prevent a Brexit delay, saying that Merkel had told Johnson for a Brexit deal to be done Northern Ireland would need to be in the EU Customs Union "forever". GBP saw lows below 1.22 but EUR/GBP could not clear 0.90.
EUR/USD was weaker falling below 1.0950 despite better than expected Aug German industrial production, with equities weaker mostly on concerns about US/China trade. EUR/CHF moved back below 1.09 as equities fell. The commodity currencies weakened marginally.
While equities remained weak, and US PPI data was soft, USD/JPY recovered from a 106.79 low as UST yields picked up ahead of a speech from Fed's Powell. Powell had little impact on FX in a speech that focused on renewed growth of the balance sheet to ease money market tensions, but USD/JPY briefly slipped back below 107 as the US imposed visa bans on certain Chinese officials on human rights grounds.

Asia FX and News:
-Nasdaq May Tighten IPO Approvals of Small Chinese Firms ~: 21st
-Australia Oct. Consumer Confidence Falls 5.5% M/m to 92.8
-'Many' Tory MPs to quit if it comes to no deal Brexit ~ Times
-Despite a lack of positive headlines on trade in Asia, that is seen by markets as good enough for modest risk-taking. Both USD/JPY and AUD/USD rose, as E-minis claw back some of the losses from Tuesday. AUD/USD initially weighed by poor consumer confidence figures which fell to a 4 year low, and tested Tuesday's low before eventually shrugging it off with a supportive yuan in the background. NZD/USD under bid tone as well, touched 0.6315 before coming off a shade. EUR/GBP drifted higher but capped at its 100dma as Tory MPs threatens to quit on no-deal Brexit.

Data

06:00 GMT - NO: GDP (Aug) % m/m (Prev: 1.0%)

14:00 GMT - US: Wholesale Inventories (Aug F) % m/m (Prev: 0.4)

18:00GMT - US: FOMC minutes from September 18

21:45 GMT - NZ: Food Prices (Sep) % m/m (Prev: 0.7)

23:01 GMT - UK: RICS Housing Survey (Sep) % (Prev: -4)

23:50 GMT - JP: PPI (Sep) % y/y (Prev: -0.9)

23:50 GMT - JP: Bank Lending Data (Ex trusts) (Sep) % y/y (Prev: 2.2)

23:50 GMT - JP: PPI (Sep) % m/m (Prev: -0.3)

23:50 GMT - JP: Core Machine orders (Aug) 4cast: -1.3% y/y (Prev: 0.3)

Events

14:30 GMT - US: Fed's Powell takes part in Fed listens event

17:00 GMT - US: 10 year Notes Reopening (USD 24bn)


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