Forex - Asia Open - Overnight Highlights


 23:44 (GMT) 09 Sep

  [Forex Highlights]

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

Asia Overnight Highlights - 10 Sept 2019

MAJORS

FX Highlights:

GBP weakened early in Europe but recovered strongly, helped by better than expected GDP data. GBP/USD peaked at 1.2382 and while a brief correction was seen on the news Speaker Bercow (who helped enable Parliament to oppose a no deal Brexit) was to resign, it remained firm. UK PM Johnson visiting Ireland expressed optimism that a Brexit deal can be done, but Irish PM Varadkar said that no backstop mean no deal for them.
EUR/USD advanced as far as 1.1067 on a report that Germany was mulling a shadow budget that would enable spending beyond domestic limits. The USD was generally weaker, losing ground against most risk-sensitive currencies, while gaining a touch against the JPY in more risk positive markets. Equities giving up their gains saw USD/JPY briefly below 107.00 but UST yields continued to support.
Data Overnight:

UK GDP rose 0.3% in July, with all sectors showing m/m rises, making a Q2/Q3 recession very unlikely if July is left unrevised. The July goods trade deficit was slightly smaller than expected at 9.14bn. German trade data showed a larger than expected surplus of EUR20.2bn in July, helped both by a rise in exports and a decline in imports.
Data Ahead:

The Australian confidence data will be a focus on Tuesday. The RBA chose to wait and see in the September meeting, but the confidence data will be on RBA's watch list to look for any pass-through from monetary policy stimulus to the business sector as post-tax cut optimism has faded. Conditions in the retail sector are at recessionary levels, increasing the downside risk to retail sales numbers, and will be key to watch. In the absence of significant changes in risk tone, near-term sentiment on the AUD might depend on the data.

- VIX index: 15.00 (-7.81%)

- Gold Spot: $1,506.54/oz (-0.01%)

- ICE Brent front contract: $61.77 (+$0.23)

- Nymex WTI front contract: $56.88 (+$0.36)

- Reuters/Jefferies Commodities Index: 172.62 (+0.16%)

- 10y UST: 1.560% (+0bp) (Asia morning)

- DJI: 26,797.46 (+0.26%); S&P: 2,978.71 (+0.09%); Nasdaq: 8,103.07 (-0.17%)

Data/Events Ahead:

Japan's final print of Q2 GDP will be out today. There is likely some downward revision of the preliminary print to take into account the latest capital spending and household consumption data. August Economic watchers survey will be out on the same day.

US Jul consumer credit will be out today as well.

We expect a 0.1% fall in the UK July monthly GDP update (at least in m/m terms) an outcome which would be a repeat of the June outcome.

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

EMERGING ASIA

FX Highlights:

Majority of the Asian currencies saw gains against the USD on Monday, as dollar weakened following disappointing non-farm payroll (NFP) data in August. IDR was the biggest winner, up 0.39% against the greenback. This was followed by KRW (0.32%), INR (0.26%), THB (0.11%) and PHP (0.10%). CNH and CNY were the biggest losers, down 0.32% and 0.25% respectively against the dollar, partially due to China's weak trade data in August. HKD, JPY, SGD and TWD were relatively unchanged. Malaysia's markets were closed on Monday due to a market holiday.

USD/CNH is retreating from the mild bid tone on Monday. Pair was last at 7.7.1195 after a week low of 7.0961 on Friday and a 7.1320 high on Monday. Next data point is China CPI and PPI data on Tuesday. This is likely to show elevated CPI pressures while factory prices fall again. Resistance of 7.1438 next to watch for.

1Y NDF remained last at 7.1851, within a narrow range during NY trading hours. On Monday, PBoC fixed mid-point at 7.0851 vs. previous close of 7.1150. USD/CNY was slightly higher on Monday, last at 7.1333. For USDCNY, it is likely to trade above 7.1000. A test of 7.1500 psychological big figure may pose further upside risks to 3 September high of 7.1847.

USD/SGD was relatively stable, last at 1.3803. It held just above the 1.3800 big figure during Monday's Asian session. Risks, however, were tilted slightly to the downside following dollar weakness, which was accentuated by weak U.S. data in last week's session. Focus for the week ahead will be Singapore's July retail sales data on Thursday. Eyes remain on the 1.3794 support. If broken, will turn our attention to the 1.3744 support next.

USD/IDR 1M NDF was stabilizing last at 14079 during NY session. Onshore spot remained below the key 14100 mark on Monday, amid a downbeat NFP weighing on the USD. The downside was extended to sub-14080 levels seen but a drop to sub-14050 levels was only seen in the afternoon with the pair printing fresh over 1-month lows of 14030 at last look amid optimism around US-China trade talks and China's stimulus measures helping to contain the growth downside. Clear risk to 14025 support followed by the 14000 big figure, upside will now be contained by 14180/190 area.

During the NY session, USD/INR 1M NDF was last inching up to 72.12. The onshore spot traded with an offered tone at the start of the new week, slipping to fresh MTD lows of 71.500 from previous close of 71.720. A downbeat NFP print on Friday weighed on the dollar, and further China stimulus measures also boosted sentiment. Meanwhile, hopes of further fiscal stimulus from FinMin Sitaraman kept the rupee in gains despite higher oil prices. Support at 71.375 is coming into view, break of which will open the doors for further correction to the 71 handle.

Data/Events Highlights:

Taiwan exports rose 2.6% y/y from a 0.5% fall a month ago. Trade surplus also surprised on the upside.

Data/Events Ahead:

China's August CPI and PPI is released today, where we expect continued factory price deflation and elevated consumer price pressures from food.

China's August monetary data is also due sometime this week.

DATA RELEASES DUE TODAY

01:00 GMT / 09:00 SGT - PH: Exports (Jul) 4cast: 2.1% y/y [Mkt: 1.9, Prev: 1.5]

01:00 GMT / 09:00 SGT - PH: Imports (Jul) 4cast: -4.1% y/y [Mkt: -5, Prev: -10.4]

01:00 GMT / 09:00 SGT - PH: Trade Balance (Jul) 4cast: -3482USD mn [Mkt: -3327, Prev: -2473]

01:30 GMT / 09:30 SGT - AU: NAB Business Conditions (Aug) [Prev: 2]

01:30 GMT / 09:30 SGT - AU: NAB Business Confidence (Sep) [Prev: 4]

01:30 GMT / 09:30 SGT - CN: CPI (Aug) 4cast: 2.7% y/y [Mkt: 2.6, Prev: 2.8]

01:30 GMT / 09:30 SGT - CN: PPI (Aug) 4cast: -0.5% y/y [Mkt: -0.9, Prev: -0.3]

08:30 GMT / 16:30 SGT - UK: ILO Unemployment Rate (Jul) 4cast: 4% [Mkt: 3.9, Prev: 3.9]

08:30 GMT / 16:30 SGT - UK: Average Earnings (incl. bonus) (Jul) 4cast: 3.7% 3m y/y [Mkt: 3.7, Prev: 3.7]

10:00 GMT / 18:00 SGT - US: NFIB Small Business Optimism (Aug) 4cast: 104 [Mkt: 103.5, Prev: 104.7]

12:15 GMT / 20:15 SGT - CA: Housing Starts (Aug) 4cast: 215k [Mkt: 212.5, Prev: 222]

12:30 GMT / 20:30 SGT - CA: Building permits (Jul) [Mkt: 2, Prev: -3.7]

23:00 GMT / 07:00 SGT - KR: Unemployment (sa) (Aug) 4cast: 4% y/y [Mkt: 4, Prev: 4]

EVENTS & AUCTIONS

09:30 GMT / 17:30 SGT - EU: ECB Main Refinancing Operation Result

15:30 GMT / 23:30 SGT - US: 52wk Bills Auction (USD 28bln)

17:00 GMT / 01:00 SGT - US: 3yr Notes Auction (USD 38bln)


Forex - India Flows: Rupee gains further despite higher oil


 05:09 (GMT) 09 Sep

 [Forex Flows]

USD/INR onshore spot traded with an offered tone at the start of the new week, slipping to fresh MTD lows of 71.530 in early trading from previous close of 71.720. A downbeat NFP print on Friday weighed on the dollar, and further China stimulus measures are supporting Asian currencies this morning. Meanwhile, hopes of further fiscal stimulus from FinMin Sitaraman kept the rupee in gains despite higher oil prices. Support at 71.375 is coming into view, break of which will open the doors for further correction to the 71 handle. 1M NDFs saw a rebound to 72+ levels earlier in the day, but were last seen back below the big figure. SENSEX in modest gains of over 0.3% at last check.


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