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Forex - Asia Open - Overnight Highlights


 23:54 (GMT) 14 Feb

  [Forex Highlights]

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Asia Open - Overnight Highlights (0100-LNNS-C01)

Asia Overnight Highlights - 15 February 2017

Charu Chanana

ASIA OUTLOOK

Yellen the big focus and all it took was the Fed chair to be upbeat on macro targets and wary of being behind the curve for US yields and dollar to stretch higher. Equities too prove resilient.

Majors FX Highlights

The dollar index saw a fresh rally overnight to 3-week highs of 101.38 as hawkish Yellen took the limelights. The Yellen testimony to the Senate was the Big Event of the day, the Fed Chair saying that rates are likely to go up at one of the forthcoming meetings and that all that was needed for the fast money to buy some USD. Yellen made no promises on a March move, though did put Wednesday's CPI in the spotlight when she said that the move would be dependent on inflation and employment developing as expected. Fed's Lacker was typically hawkish saying there is a strong case for a March move, and Kaplan more notably hawkish later on. EUR/USD broke below the support at 1.0590 and printed a low of 1.0561, before consolidating around 1.0580 later, seeing only a modest bounce. USD/JPY spiked up to 114.50 from 113.25, and remained supported above 114.20 into the Asian morning. GBP/USD slid to 1.2444 in the European hours as UK CPI disappointed, and continued to trade around 1.2470 subsequently. AUD had been the best of the commodity currencies earlier so fell the furthest as the USD picked up, USD/CAD taking a look over 1.31 before seeing a correction. AUD/CAD saw a move below 1.00. NZD/USD hit a low of .7132 as AUD/NZD retreated from a look over 1.0700.

Majors Data Highlights

US Jan PPI makes a stronger than expected start to the New Year, 0.6% overall, 0.4% ex food and energy but a relatively moderate 0.2% in the less volatile ex food, energy and trade series. We saw strength in the core rates in Jan 2016 too (yr/yr growth in the core rates slowed) so it is unclear that this is a change in trend. PPI is more volatile than CPI but in this month we also expect core CPI, due tomorrow, to be on the firm side of trend. UK CPI fell by 0.5%m/m in January (prev: 0.5%m/m), translating to a higher y/y rate of 1.8%y/y (prev: 1.6y/y). However this falls short of market expectations for 1.9%y/y.

On the wires today will be US CPI, expected to be +0.4% m/m, with ex-food and energy at +0.3%. Core CPI merits attention as prices often see bounces in the New Year and input costs have risen recently. A 0.3% rise would leave y/y growth stable, a lack of a bounce would see it dip, but a strong bounce would mean risk of core PCE prices reaching 2.0% earlier than expected. The number could have a significant impact on Fed policy risks. January retail sales and February's Empire State survey will be released alongside CPI, the former expected to be flat on the headline but a solid +0.5% ex-autos and 0.4% ex-autos and gasoline. January production data follows and should post an improved +0.4% for manufacturing but be flat overall due to a correction in utilities. February's NAHB survey is also on the calendar. UK's employment data is likely to post a modest 1k rise in the claimant count and an unchanged ILO unemployment rate at 4.8%. Average weekly earnings for December are expected to be stable at 2.8% in 3m y/y terms.

Emerging Asia FX Highlights

USD/Asians saw an upward bias overnight as the dollar index was bid following Yellen comments. USD/CNY 1Y NDFs saw a mild recovery from the low of 7.0765 in the NY hours and traded on either side of 7.0900. USD/SGD recovered in NY and inched back above the 1.4200 handle. USD/IDR 1M NDFs saw steep gains to 13407 on Yellen testimony but a quick retreat to near-13350 levels was also noted. USD/INR 1M NDFs slipped to 66.9400 before Yellen's comments ignited a rally in dollar taking prices up to 67.1200 only to retreat again later.

Emerging Asia Data Highlights

China CPI and PPI for January both surprised on the upside, with CPI at 2.50% y/y vs 2.40% y/y market consensus, and PPI at 6.90% y/y vs market consensus of 6.60% y/y. India WPI also rose by 5.25% from a year earlier, the highest level since June 2014 and sharply quicker than the 3.39% increase in December. A busy day ahead with Indonesia's January trade and Singapore's December retail sales scheduled for release.

OVERNIGHT NEWS HIGHLIGHTS

- Fed's Yellen - at upcoming meetings, Fed will evaluate if inflation and employment evolving in line with expectations, in which case a further rate increase would likely be appropriate. Waiting too long would be unwise. Must be careful not to let labor mkt get too tight. Every meeting is live, cannot say whether next hike will come in Mar or Jun.

- Fed's Kaplan - moving sooner rather later will make it more likely that future removals of accommodation can be done gradually.

- Fed's Lockhart in 2 hikes in 2017 camp, felt it too early to factor in fiscal stimulus.

- US Jan PPI 0.6% m/m from 0.2 vs Mkt 0.3; ex Food & Energy 0.4% m/m from 0.1 vs Mkt 0.2

- VIX index: 10.74 (-2.98%)

- Gold Spot: $1,229.00/oz (+0.07%)

- ICE Brent front contract: $55.97 (+$0.38)

- Nymex WTI front contract: $53.05 ($-0.15)

- Reuters/Jefferies Commodities Index: 192.28 (+0.11%)

- 10y UST: 2.470% (+3bp) (Asia morning)

- DJI: 20,504.40 (+0.45%); S&P: 2,337.58 (+0.40%); Nasdaq: 5,782.57 (+0.32%)

ASIA NEWS

- China: Jan. aggregate financing 3.74t yuan; est. 3t yuan; Jan. new loans 2.03t yuan; est. 2.44t yuan; Jan. M2 +11.3% y/y; matching estimate. - BBG

- Singapore: Singapore forecasts slower growth in tourist arrivals in 2017. - BBG

Asia Open - Overnight Highlights (0100-LNNS-C03)

CURRENCIES

- The Yellen testimony to the Senate was the Big Event of the day, the Fed Chair saying that rates are likely to go up at one of the forthcoming meetings and that all that was needed for the fast money to buy some USD. EUR/USD finally managed to break stubborn support at 1.0590 without bouncing straight back, though 1.0555 support did hold out and we saw a very modest bounce.

- USD/JPY got a boost too, seeing a high at 114.49 but running into offers there despite the DJIA turning positive.

- GBP was the earlier interest as UK CPI fell short of expectation at 1.8% where may had been looking for a return to target. Cable dropped to a low of 1.2440 from around 1.2530 before the release, though was notably unmoved as the USD made strides on the Yellen testimony.

Asia Open - Overnight Highlights (0100-LNNS-C04)

BONDS

US PPI came in on the strong side but the UST market was in waiting mode until Yellen spoke. Yields did then see a decent pop higher as the red headlines hit the wires, as Yellen sounded an upbeat note on recent data being on track, thus implying the Fed 3 hike view was still on course, as well as emphasising the need to get on with tightening and not get behind the curve in terms of leaving policy too accommodative. US10s pushed on towards the 2.5% reference, while the 5s spike was a little short of 2%. Yields came of the highs in late trade, particularly at the long end. 2s +2.9bps @ 1.23%, 5s +4.3bps @ 1.96%, 10s +3.2bps @ 2.47%, 30s +2.8bps @ 3.06%.

- Agency Spreads: Freddie/Fannie 5s -1.1/-0.6 bps, 10s -0.2/-0.7 bps.

- Swap Spreads: 2s +0.23bps, 5s -0.75bps, 10s 0.00bps.

EQUITIES

Equities prove resilient to the 'hawkish' reaction to Fed's Yellen after briefly dipping, S&P pushing to a new high as the market continues to drive to next higher target levels despite overbought conditions.

Asia Open - Overnight Highlights (0100-LNNS-C02)

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw a mild recovery from the low of 7.0765 in the NY hours and traded on either side of 7.0900. The PBoC restarted reverse repurchase agreements on the day, and CNY was correspondingly offered. Onshore spot traded to a high of 6.8910 after the higher midpoint fixing of 6.8898. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. 1Y NDF points might have rebounded to near 25 big figures, but we still look for opportunities to buy at near 20 big figures levels.

USD/CNH: Pair saw a dip to 6.8465 in the European hours but a quick recovery above 6.8500 was noted, with the pair trading higher to >6.8600 levels as the dollar was boosted by a hawkish Yellen. Although we expected the CNHCNY spread to go back into positive this week, agent bank machinations showed that a >1 big figure spread was maintained in the day. Traders placing their bets on a positive spread would do well to come back in the latter half of the week, or even next week.

USD/SGD: Despite a sell-off into the European session to a low of 1.4156, prices recovered in NY with gains in the dollar index and inched back above the 1.4200 handle. Likely potential for gains to extend beyond the 1.4250 figure on Yellen, but some downside pressures are likely into the end of the week with expectations of an expansionary Budget next week. Support at 1.4150 should however remain intact.

USD/IDR: 1M NDFs saw steep gains to 13407 on Yellen testimony but a quick retreat to near-13350 levels was also noted. Onshore spot traded firmly around 13330 in the morning before turning a tad lower below 13325 in the afternoon as the dollar index weakened. Trading however remained thin ahead of the Jakarta governor elections on Wednesday and BI decision due on Thursday. Gains to 13400 are likely in case protests are seen during the elections, which seems unlikely. Focus on Fed Yellen's testimony later today, but markets remain closed on Wednesday for local elections.

USD/INR: 1M NDFs slipped to 66.9400 before Yellen's comments ignited a rally in dollar taking prices up to 67.1200 only to retreat again later. Onshore spot gapped slightly lower to open below the 67 handle at 66.9700 vs. last close of 67.0150, shrugging off any impact from the record low Jan CPI print reported on Monday night. Pair continued to trade around 66.9500 in the day, but some upside is likely today, and eyes will be on 67.2000.

DATA RELEASED TODAY MORNING AND DUE TODAY

- n/a GMT - ID: Exports (Jan) 4cast:19 % y/y [Prev: 15.57]

- n/a GMT - ID: Imports (Jan) 4cast:10 % y/y [Prev: 5.82]

- n/a GMT - ID: Trade Balance (Jan) 4cast:959 USD mn [Mkt: 853, Prev: 992]

- 00:30 GMT - AU: New motor vehicle sales (Jan) [Prev: 0.3]

- 05:00 GMT - SG: Retail Sales (Dec) 4cast:1.4 % y/y [Mkt: 1.4, Prev: 1.1]

- 05:00 GMT - SG: Retail Sales (sa) (Dec) 4cast:-2.2 % m/m [Mkt: -1.9, Prev: 0.5]

- 08:00 GMT - TW: GDP (Final) (Q4) [Mkt: 2.6, Prev: 2.58]

- 09:30 GMT - UK: Average Earnings (incl. bonus) (Dec) 4cast:2.8 % 3m y/y [Mkt: 2.8, Prev: 2.8]

- 09:30 GMT - UK: Claimant Count Change (Jan) 4cast:1 k [Mkt: 1, Prev: -10.1]

- 09:30 GMT - UK: Claimant Count Rate (Jan) 4cast:2.3 % [Mkt: 2.3, Prev: 2.3]

- 09:30 GMT - UK: ILO Unemployment Rate (Dec) 4cast:4.8 % [Mkt: 4.8, Prev: 4.8]

- 10:00 GMT - EU: Trade Balance (sa) (Dec) [Mkt: 22, Prev: 22.7]

- 13:30 GMT - US: CPI (Jan) 4cast:0.4 % m/m [Mkt: 0.3, Prev: 0.3]

- 13:30 GMT - US: CPI (ex Food & Energy) (Jan) 4cast:0.3 % m/m [Mkt: 0.2, Prev: 0.2]

- 13:30 GMT - US: Empire State Survey (Feb) [Mkt: 7, Prev: 6.5]

- 13:30 GMT - US: Retail Sales (Jan) 4cast:0 % m/m [Mkt: 0.1, Prev: 0.6]

- 13:30 GMT - US: Retail Sales (ex Auto) (Jan) 4cast:0.5 % m/m [Mkt: 0.4, Prev: 0.2]

- 13:30 GMT - CA: Manufacturing sales (Dec) 4cast:0 % m/m [Mkt: 0.3, Prev: 1.5]

- 14:15 GMT - US: Capacity utilisation (Jan) 4cast:75.4 % [Mkt: 75.5, Prev: 75.5]

- 14:15 GMT - US: Industrial production (Jan) 4cast:0 % m/m [Mkt: 0, Prev: 0.8]

- 15:00 GMT - US: Business inventories (Dec) [Mkt: 0.4, Prev: 0.7]

- 15:00 GMT - US: NAHB Builders survey (Feb) [Mkt: 67, Prev: 67]

- 21:00 GMT - US: Net Long-term TICS Flows (Dec) [Prev: 30.8]

EVENTS & AUCTIONS

- 15:00 GMT - US: Fed's Yellen Speaks in Washington

- 17:00 GMT - US: Fed's Rosengren Speaks in New York

- 17:45 GMT - US: Fed's Harker Speaks in Philadelphia

- 22:00 GMT - AU: RBA's Ellis Speaks

- 23:00 GMT - NZ: Finance Minister Joyce Speaks


Forex - China Flows: USD/CNY; PBoC restarts OMOs


 03:50 (GMT) 13 Feb

 [Forex Flows]

BBG: China's central bank restarted the use of an instrument that adds cash to the financial system, helping ease liquidity concerns before $153 billion of funds come due this week. The monetary authority sold a total 100 billion yuan ($14.5 billion) of reverse-repurchase agreements, the first auction after a six-day pause, a statement posted on its website showed. While the open-market operations resulted in a net withdrawal of 90 billion yuan because of maturing contracts, the resumption signals that policy makers don't want a sudden tightening of money supply.

The CNY 100 bn injected into the market was larger than the usual average of CNY 50, and signifies that the PBoC is cognizant of the fact that there is a limit to squeezing liquidity. The PBoC also demonstrated that they are comfortable with a weaker CNY fixing, with the latest number at 6.8898. Onshore spot seen between 6.8810 - 8910 in the morning session, and 1Y NDFs were seen rising to 7.1297 from 7.1185. Despite the advance, 1Y NDF points were actually slightly narrower, last at 24 big figures. Should the PBoC refrain from squeezing onshore liquidity again, we expect to see 1Y NDFs stay above 7.1000 for the whole of the week.


Forex - Asia Open - Overnight Highlights


 23:30 (GMT) 08 Feb

 [Forex Highlights]

Asia Overnight Highlights - 09 February 2017

Charu Chanana

ASIA OUTLOOK

Quiet day. Early interest was the speeding decline in core yields, depressing banks, but US yields corrected later in the session after the 10yr auction, propping USD/JPY.

Majors FX Highlights

The dollar index turned lower again overnight, slipping to a low of 100.060 even as a weak EUR continued to contain the downside amid political uncertainty in France and upcoming elections in Netherlands, Germany, and possibly Italy. The index later recovered briefly to 100.360. EUR/USD extended the week's low to 1.0641 in European session before NY traders pushed the pair back higher to near 1.0700-levels. USD/JPY traded on either side of the 112.00 handle as investors remained cautious ahead of PM Abe's meeting with President Trump on Friday. GBP/USD remained bid above 1.2500 handle in NY, but the high was stalled at 1.2550. House of Commons voted to give the PM the power to trigger Brexit, and PM May said that an independent Scotland would not be part of the EU. USD/CAD had a look at 1.3200 but finished closer to session lows as WTI prices shrugged off another large build in crude inventory by the EIA, though the 13.8mn barrel increase on the week fell short of the 14.2mn reported by the API. No great excitement on AUD/USD, but NZD/USD slipped on a dovish statement as the RBNZ left rates unchanged, AUD/NZD moving above 1.05.

Majors Data Highlights

Data-wise, initial claims and December wholesale inventories are due today, while dovish non-voter Bullard and dovish voter Evans will be on the wires for comments.

Emerging Asia FX Highlights

USD/Asians saw a slight downward bias, but USD/INR was steeply offered on RBI decision. USD/CNY 1Y NDFs flatlined around the 7.1000 handle in the NY session. USD/SGD saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. USD/IDR 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. USD/INR 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral.

Emerging Asia Data Highlights

RBI left policy rates unchanged in an unexpected decision, and more importantly, changed policy stance to neutral from accommodative. A quiet day ahead with no data reported from our key countries, but look out for the BSP decision.

OVERNIGHT NEWS HIGHLIGHTS

- RBNZ leaves rates unchanged, sees uncertainties in international outlook and says policy may need to be adjusted accordingly.

- VIX index: 11.45 (+1.42%)

- Gold Spot: $1,241.21/oz (-0.02%)

- ICE Brent front contract: $55.19 (+$0.14)

- Nymex WTI front contract: $52.34 (+$0.17)

- Reuters/Jefferies Commodities Index: 192.26 (+0.47%)

- 10y UST: 2.336% (-6bp) (Asia morning)

- DJI: 20,054.34 (-0.18%); S&P: 2,294.67 (+0.07%); Nasdaq: 5,682.45 (+0.15%)

ASIA NEWS

- China: China may keep tightening monetary policy this year amid pressure from yuan rate stabilization, financial de-leveraging, curbs on real estate and faster inflation, China Securities Journal says. - BBG

- China: 4Q current-account surplus $37.6 billion.

- Indonesia: Outlook revised to Positive from Stable by Moody's; Change in outlook reflects emerging signs of a reduction in structural constraints on Indonesia's rating, Moody's says. - BBG

- India: India's central bank unexpectedly left borrowing costs unchanged for a second straight meeting and signaled that its interest-rate easing cycle is coming to an end. - BBG

CURRENCIES

- EUR/USD made an early push lower to extend Tuesday's low to 1.0638 but there was no great appetite to push it any further and we saw a drift back up for a look over 1.07 later in the session before slipping back. There has been no new news of note and in a market lacking in meaningful data this week the intraday traders seem to have things to themselves.

- USD/JPY slipped off the 112 handle after being in a 112.00/50 range through Asia and the European morning. Sellers may be depending on MoF officials maintaining radio silence ahead of PM Abe's meeting with Mr Trump on Friday. The pair popped back above the figure later in the session as US yields bounced off the lows post auction.

- GBP continued its late Tuesday form into the morning session. Cable moved higher as the USD slipped though EUR/GBP is off the lows if still well below .8600. The GBP saw modest late gains after the House of Commons voted to give the PM the power to trigger Brexit.

BONDS

Core bonds extended the bid on early real money buying, with USTs initially led by the bund rally. Buying picked up pace over the day, forcing the market sharply richer into supply. In the end that did temper the auction results, and yields corrected significantly higher before starting to slip again. 2s -1.6bps @ 1.15%, 5s -3.5bps @ 1.81%, 10s -4.6bps @ 2.35%, 30s -6.1bps @ 2.96%

- Agency Spreads: Freddie/Fannie 5s +0.5/+1.1 bps, 10s -0.4/+0.6 bps.

- Swap Spreads: 2s -0.66bps, 5s -1.13bps, 10s -1.62bps.

EQUITIES

Moribund trade continues as S&P puts in another flat performance. Banks weighed with a sharp drop as lower yields detracted.

ASIA CURRENCIES

USD/CNY: 1Y NDFs flatlined around the 7.1000 handle in the NY session. Onshore spot meanwhile saw an offered tone in the late trading session, slipping below 6.8650 from 6.8916 high seen at the open of the Asian session. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. While 1Y NDF points could narrow to within 20 big figures, prices close to 7.0500 should still represent a bargain in the medium term.

USD/CNH: Pair surged to a high of 6.8569 in late Asian trading on Wednesday , and remained mostly supported above 6.8400 handle in NY. We maintain our view that CNH/CNY spread should be maintained within three big figures, as the PBoC is unlikely to stand idly by. Profit taking should also come in soon.

USD/SGD: Pair saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. Eyes are on a break of the 1.4200 handle ahead of the resistance at 1.4211 as upside potential is still seen amid a weak economy and Trump concerns.

USD/IDR: 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. Onshore spot gapped slightly higher to open at 13338 vs. last close of 13329, but the pair reversed gains to trade below 13335 for most part of the day before picking up some traction into the close. We do not expect a test of the support level at 13300. Some gains to 13400 are likely with growth underperformance, Trump concerns and regional elections scheduled for next week, but no risk is seen to the 13500 handle.

USD/INR: 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral. Onshore spot gapped lower to open at 67.3800 vs. last close of 67.4075 and traded mostly below 67.3500 ahead of the RBI decision. Prices retreated below 67.2000 into the close on RBI decision, and further downside is likely with strong support seen at 67.1450 ahead of the key 67 handle.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 3.1, Prev: -5.1]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 4.5, Prev: 10.4]

- 00:01 GMT - UK: RICS House Price Balance (Jan) [Mkt: 22, Prev: 24]

- 08:00 GMT - PH: BSP- Overnight Reverse Repo Rate (Feb 9) [Mkt: 3, Prev: 3]

- 13:30 GMT - US: Initial Claims (Feb 4) [Mkt: 249, Prev: 246]

- 13:30 GMT - CA: House Price Index (Dec) [Mkt: 0.2, Prev: 0.2]

- 15:00 GMT - US: Wholesale Inventories (Dec) [Mkt: 1, Prev: 1]

- 23:50 GMT - JP: PPI (Jan) [Mkt: 0, Prev: -1.2]

EVENTS & AUCTIONS

- JP: BoJ's Nakaso Speaks in Kochi

- NZ: RBNZ Interest rate announcement

- 04:00 GMT - KR: Bloomberg Feb Economic Survey

- 08:00 GMT - EU: EU's Bienkowska Speaks in Brussels

- 13:45 GMT - US: Bloomberg Feb Economic Survey

- 14:10 GMT - US: Fed's Bullard Speaks in St. Louis

- 16:35 GMT - CA: BoC's Schembri Speaks in London

- 18:00 GMT - US: Fed's Evans Speaks in Chicago

- 18:30 GMT - UK: BoE's Carney Speaks in London


Forex - Asia Open - Overnight Highlights


 23:30 (GMT) 08 Feb

 [Forex Highlights]

Asia Overnight Highlights - 09 February 2017

Charu Chanana

ASIA OUTLOOK

Quiet day. Early interest was the speeding decline in core yields, depressing banks, but US yields corrected later in the session after the 10yr auction, propping USD/JPY.

Majors FX Highlights

The dollar index turned lower again overnight, slipping to a low of 100.060 even as a weak EUR continued to contain the downside amid political uncertainty in France and upcoming elections in Netherlands, Germany, and possibly Italy. The index later recovered briefly to 100.360. EUR/USD extended the week's low to 1.0641 in European session before NY traders pushed the pair back higher to near 1.0700-levels. USD/JPY traded on either side of the 112.00 handle as investors remained cautious ahead of PM Abe's meeting with President Trump on Friday. GBP/USD remained bid above 1.2500 handle in NY, but the high was stalled at 1.2550. House of Commons voted to give the PM the power to trigger Brexit, and PM May said that an independent Scotland would not be part of the EU. USD/CAD had a look at 1.3200 but finished closer to session lows as WTI prices shrugged off another large build in crude inventory by the EIA, though the 13.8mn barrel increase on the week fell short of the 14.2mn reported by the API. No great excitement on AUD/USD, but NZD/USD slipped on a dovish statement as the RBNZ left rates unchanged, AUD/NZD moving above 1.05.

Majors Data Highlights

Data-wise, initial claims and December wholesale inventories are due today, while dovish non-voter Bullard and dovish voter Evans will be on the wires for comments.

Emerging Asia FX Highlights

USD/Asians saw a slight downward bias, but USD/INR was steeply offered on RBI decision. USD/CNY 1Y NDFs flatlined around the 7.1000 handle in the NY session. USD/SGD saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. USD/IDR 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. USD/INR 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral.

Emerging Asia Data Highlights

RBI left policy rates unchanged in an unexpected decision, and more importantly, changed policy stance to neutral from accommodative. A quiet day ahead with no data reported from our key countries, but look out for the BSP decision.

OVERNIGHT NEWS HIGHLIGHTS

- RBNZ leaves rates unchanged, sees uncertainties in international outlook and says policy may need to be adjusted accordingly.

- VIX index: 11.45 (+1.42%)

- Gold Spot: $1,241.21/oz (-0.02%)

- ICE Brent front contract: $55.19 (+$0.14)

- Nymex WTI front contract: $52.34 (+$0.17)

- Reuters/Jefferies Commodities Index: 192.26 (+0.47%)

- 10y UST: 2.336% (-6bp) (Asia morning)

- DJI: 20,054.34 (-0.18%); S&P: 2,294.67 (+0.07%); Nasdaq: 5,682.45 (+0.15%)

ASIA NEWS

- China: China may keep tightening monetary policy this year amid pressure from yuan rate stabilization, financial de-leveraging, curbs on real estate and faster inflation, China Securities Journal says. - BBG

- China: 4Q current-account surplus $37.6 billion.

- Indonesia: Outlook revised to Positive from Stable by Moody's; Change in outlook reflects emerging signs of a reduction in structural constraints on Indonesia's rating, Moody's says. - BBG

- India: India's central bank unexpectedly left borrowing costs unchanged for a second straight meeting and signaled that its interest-rate easing cycle is coming to an end. - BBG

CURRENCIES

- EUR/USD made an early push lower to extend Tuesday's low to 1.0638 but there was no great appetite to push it any further and we saw a drift back up for a look over 1.07 later in the session before slipping back. There has been no new news of note and in a market lacking in meaningful data this week the intraday traders seem to have things to themselves.

- USD/JPY slipped off the 112 handle after being in a 112.00/50 range through Asia and the European morning. Sellers may be depending on MoF officials maintaining radio silence ahead of PM Abe's meeting with Mr Trump on Friday. The pair popped back above the figure later in the session as US yields bounced off the lows post auction.

- GBP continued its late Tuesday form into the morning session. Cable moved higher as the USD slipped though EUR/GBP is off the lows if still well below .8600. The GBP saw modest late gains after the House of Commons voted to give the PM the power to trigger Brexit.

BONDS

Core bonds extended the bid on early real money buying, with USTs initially led by the bund rally. Buying picked up pace over the day, forcing the market sharply richer into supply. In the end that did temper the auction results, and yields corrected significantly higher before starting to slip again. 2s -1.6bps @ 1.15%, 5s -3.5bps @ 1.81%, 10s -4.6bps @ 2.35%, 30s -6.1bps @ 2.96%

- Agency Spreads: Freddie/Fannie 5s +0.5/+1.1 bps, 10s -0.4/+0.6 bps.

- Swap Spreads: 2s -0.66bps, 5s -1.13bps, 10s -1.62bps.

EQUITIES

Moribund trade continues as S&P puts in another flat performance. Banks weighed with a sharp drop as lower yields detracted.

ASIA CURRENCIES

USD/CNY: 1Y NDFs flatlined around the 7.1000 handle in the NY session. Onshore spot meanwhile saw an offered tone in the late trading session, slipping below 6.8650 from 6.8916 high seen at the open of the Asian session. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. While 1Y NDF points could narrow to within 20 big figures, prices close to 7.0500 should still represent a bargain in the medium term.

USD/CNH: Pair surged to a high of 6.8569 in late Asian trading on Wednesday , and remained mostly supported above 6.8400 handle in NY. We maintain our view that CNH/CNY spread should be maintained within three big figures, as the PBoC is unlikely to stand idly by. Profit taking should also come in soon.

USD/SGD: Pair saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. Eyes are on a break of the 1.4200 handle ahead of the resistance at 1.4211 as upside potential is still seen amid a weak economy and Trump concerns.

USD/IDR: 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. Onshore spot gapped slightly higher to open at 13338 vs. last close of 13329, but the pair reversed gains to trade below 13335 for most part of the day before picking up some traction into the close. We do not expect a test of the support level at 13300. Some gains to 13400 are likely with growth underperformance, Trump concerns and regional elections scheduled for next week, but no risk is seen to the 13500 handle.

USD/INR: 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral. Onshore spot gapped lower to open at 67.3800 vs. last close of 67.4075 and traded mostly below 67.3500 ahead of the RBI decision. Prices retreated below 67.2000 into the close on RBI decision, and further downside is likely with strong support seen at 67.1450 ahead of the key 67 handle.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 3.1, Prev: -5.1]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 4.5, Prev: 10.4]

- 00:01 GMT - UK: RICS House Price Balance (Jan) [Mkt: 22, Prev: 24]

- 08:00 GMT - PH: BSP- Overnight Reverse Repo Rate (Feb 9) [Mkt: 3, Prev: 3]

- 13:30 GMT - US: Initial Claims (Feb 4) [Mkt: 249, Prev: 246]

- 13:30 GMT - CA: House Price Index (Dec) [Mkt: 0.2, Prev: 0.2]

- 15:00 GMT - US: Wholesale Inventories (Dec) [Mkt: 1, Prev: 1]

- 23:50 GMT - JP: PPI (Jan) [Mkt: 0, Prev: -1.2]

EVENTS & AUCTIONS

- JP: BoJ's Nakaso Speaks in Kochi

- NZ: RBNZ Interest rate announcement

- 04:00 GMT - KR: Bloomberg Feb Economic Survey

- 08:00 GMT - EU: EU's Bienkowska Speaks in Brussels

- 13:45 GMT - US: Bloomberg Feb Economic Survey

- 14:10 GMT - US: Fed's Bullard Speaks in St. Louis

- 16:35 GMT - CA: BoC's Schembri Speaks in London

- 18:00 GMT - US: Fed's Evans Speaks in Chicago

- 18:30 GMT - UK: BoE's Carney Speaks in London


Forex - Asia Open - Overnight Highlights


 23:30 (GMT) 08 Feb

 [Forex Highlights]

Asia Overnight Highlights - 09 February 2017

Charu Chanana

ASIA OUTLOOK

Quiet day. Early interest was the speeding decline in core yields, depressing banks, but US yields corrected later in the session after the 10yr auction, propping USD/JPY.

Majors FX Highlights

The dollar index turned lower again overnight, slipping to a low of 100.060 even as a weak EUR continued to contain the downside amid political uncertainty in France and upcoming elections in Netherlands, Germany, and possibly Italy. The index later recovered briefly to 100.360. EUR/USD extended the week's low to 1.0641 in European session before NY traders pushed the pair back higher to near 1.0700-levels. USD/JPY traded on either side of the 112.00 handle as investors remained cautious ahead of PM Abe's meeting with President Trump on Friday. GBP/USD remained bid above 1.2500 handle in NY, but the high was stalled at 1.2550. House of Commons voted to give the PM the power to trigger Brexit, and PM May said that an independent Scotland would not be part of the EU. USD/CAD had a look at 1.3200 but finished closer to session lows as WTI prices shrugged off another large build in crude inventory by the EIA, though the 13.8mn barrel increase on the week fell short of the 14.2mn reported by the API. No great excitement on AUD/USD, but NZD/USD slipped on a dovish statement as the RBNZ left rates unchanged, AUD/NZD moving above 1.05.

Majors Data Highlights

Data-wise, initial claims and December wholesale inventories are due today, while dovish non-voter Bullard and dovish voter Evans will be on the wires for comments.

Emerging Asia FX Highlights

USD/Asians saw a slight downward bias, but USD/INR was steeply offered on RBI decision. USD/CNY 1Y NDFs flatlined around the 7.1000 handle in the NY session. USD/SGD saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. USD/IDR 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. USD/INR 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral.

Emerging Asia Data Highlights

RBI left policy rates unchanged in an unexpected decision, and more importantly, changed policy stance to neutral from accommodative. A quiet day ahead with no data reported from our key countries, but look out for the BSP decision.

OVERNIGHT NEWS HIGHLIGHTS

- RBNZ leaves rates unchanged, sees uncertainties in international outlook and says policy may need to be adjusted accordingly.

- VIX index: 11.45 (+1.42%)

- Gold Spot: $1,241.21/oz (-0.02%)

- ICE Brent front contract: $55.19 (+$0.14)

- Nymex WTI front contract: $52.34 (+$0.17)

- Reuters/Jefferies Commodities Index: 192.26 (+0.47%)

- 10y UST: 2.336% (-6bp) (Asia morning)

- DJI: 20,054.34 (-0.18%); S&P: 2,294.67 (+0.07%); Nasdaq: 5,682.45 (+0.15%)

ASIA NEWS

- China: China may keep tightening monetary policy this year amid pressure from yuan rate stabilization, financial de-leveraging, curbs on real estate and faster inflation, China Securities Journal says. - BBG

- China: 4Q current-account surplus $37.6 billion.

- Indonesia: Outlook revised to Positive from Stable by Moody's; Change in outlook reflects emerging signs of a reduction in structural constraints on Indonesia's rating, Moody's says. - BBG

- India: India's central bank unexpectedly left borrowing costs unchanged for a second straight meeting and signaled that its interest-rate easing cycle is coming to an end. - BBG

CURRENCIES

- EUR/USD made an early push lower to extend Tuesday's low to 1.0638 but there was no great appetite to push it any further and we saw a drift back up for a look over 1.07 later in the session before slipping back. There has been no new news of note and in a market lacking in meaningful data this week the intraday traders seem to have things to themselves.

- USD/JPY slipped off the 112 handle after being in a 112.00/50 range through Asia and the European morning. Sellers may be depending on MoF officials maintaining radio silence ahead of PM Abe's meeting with Mr Trump on Friday. The pair popped back above the figure later in the session as US yields bounced off the lows post auction.

- GBP continued its late Tuesday form into the morning session. Cable moved higher as the USD slipped though EUR/GBP is off the lows if still well below .8600. The GBP saw modest late gains after the House of Commons voted to give the PM the power to trigger Brexit.

BONDS

Core bonds extended the bid on early real money buying, with USTs initially led by the bund rally. Buying picked up pace over the day, forcing the market sharply richer into supply. In the end that did temper the auction results, and yields corrected significantly higher before starting to slip again. 2s -1.6bps @ 1.15%, 5s -3.5bps @ 1.81%, 10s -4.6bps @ 2.35%, 30s -6.1bps @ 2.96%

- Agency Spreads: Freddie/Fannie 5s +0.5/+1.1 bps, 10s -0.4/+0.6 bps.

- Swap Spreads: 2s -0.66bps, 5s -1.13bps, 10s -1.62bps.

EQUITIES

Moribund trade continues as S&P puts in another flat performance. Banks weighed with a sharp drop as lower yields detracted.

ASIA CURRENCIES

USD/CNY: 1Y NDFs flatlined around the 7.1000 handle in the NY session. Onshore spot meanwhile saw an offered tone in the late trading session, slipping below 6.8650 from 6.8916 high seen at the open of the Asian session. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. While 1Y NDF points could narrow to within 20 big figures, prices close to 7.0500 should still represent a bargain in the medium term.

USD/CNH: Pair surged to a high of 6.8569 in late Asian trading on Wednesday , and remained mostly supported above 6.8400 handle in NY. We maintain our view that CNH/CNY spread should be maintained within three big figures, as the PBoC is unlikely to stand idly by. Profit taking should also come in soon.

USD/SGD: Pair saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. Eyes are on a break of the 1.4200 handle ahead of the resistance at 1.4211 as upside potential is still seen amid a weak economy and Trump concerns.

USD/IDR: 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. Onshore spot gapped slightly higher to open at 13338 vs. last close of 13329, but the pair reversed gains to trade below 13335 for most part of the day before picking up some traction into the close. We do not expect a test of the support level at 13300. Some gains to 13400 are likely with growth underperformance, Trump concerns and regional elections scheduled for next week, but no risk is seen to the 13500 handle.

USD/INR: 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral. Onshore spot gapped lower to open at 67.3800 vs. last close of 67.4075 and traded mostly below 67.3500 ahead of the RBI decision. Prices retreated below 67.2000 into the close on RBI decision, and further downside is likely with strong support seen at 67.1450 ahead of the key 67 handle.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 3.1, Prev: -5.1]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 4.5, Prev: 10.4]

- 00:01 GMT - UK: RICS House Price Balance (Jan) [Mkt: 22, Prev: 24]

- 08:00 GMT - PH: BSP- Overnight Reverse Repo Rate (Feb 9) [Mkt: 3, Prev: 3]

- 13:30 GMT - US: Initial Claims (Feb 4) [Mkt: 249, Prev: 246]

- 13:30 GMT - CA: House Price Index (Dec) [Mkt: 0.2, Prev: 0.2]

- 15:00 GMT - US: Wholesale Inventories (Dec) [Mkt: 1, Prev: 1]

- 23:50 GMT - JP: PPI (Jan) [Mkt: 0, Prev: -1.2]

EVENTS & AUCTIONS

- JP: BoJ's Nakaso Speaks in Kochi

- NZ: RBNZ Interest rate announcement

- 04:00 GMT - KR: Bloomberg Feb Economic Survey

- 08:00 GMT - EU: EU's Bienkowska Speaks in Brussels

- 13:45 GMT - US: Bloomberg Feb Economic Survey

- 14:10 GMT - US: Fed's Bullard Speaks in St. Louis

- 16:35 GMT - CA: BoC's Schembri Speaks in London

- 18:00 GMT - US: Fed's Evans Speaks in Chicago

- 18:30 GMT - UK: BoE's Carney Speaks in London


Forex - Asia Open - Overnight Highlights


 23:30 (GMT) 08 Feb

 [Forex Highlights]

Asia Overnight Highlights - 09 February 2017

Charu Chanana

ASIA OUTLOOK

Quiet day. Early interest was the speeding decline in core yields, depressing banks, but US yields corrected later in the session after the 10yr auction, propping USD/JPY.

Majors FX Highlights

The dollar index turned lower again overnight, slipping to a low of 100.060 even as a weak EUR continued to contain the downside amid political uncertainty in France and upcoming elections in Netherlands, Germany, and possibly Italy. The index later recovered briefly to 100.360. EUR/USD extended the week's low to 1.0641 in European session before NY traders pushed the pair back higher to near 1.0700-levels. USD/JPY traded on either side of the 112.00 handle as investors remained cautious ahead of PM Abe's meeting with President Trump on Friday. GBP/USD remained bid above 1.2500 handle in NY, but the high was stalled at 1.2550. House of Commons voted to give the PM the power to trigger Brexit, and PM May said that an independent Scotland would not be part of the EU. USD/CAD had a look at 1.3200 but finished closer to session lows as WTI prices shrugged off another large build in crude inventory by the EIA, though the 13.8mn barrel increase on the week fell short of the 14.2mn reported by the API. No great excitement on AUD/USD, but NZD/USD slipped on a dovish statement as the RBNZ left rates unchanged, AUD/NZD moving above 1.05.

Majors Data Highlights

Data-wise, initial claims and December wholesale inventories are due today, while dovish non-voter Bullard and dovish voter Evans will be on the wires for comments.

Emerging Asia FX Highlights

USD/Asians saw a slight downward bias, but USD/INR was steeply offered on RBI decision. USD/CNY 1Y NDFs flatlined around the 7.1000 handle in the NY session. USD/SGD saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. USD/IDR 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. USD/INR 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral.

Emerging Asia Data Highlights

RBI left policy rates unchanged in an unexpected decision, and more importantly, changed policy stance to neutral from accommodative. A quiet day ahead with no data reported from our key countries, but look out for the BSP decision.

OVERNIGHT NEWS HIGHLIGHTS

- RBNZ leaves rates unchanged, sees uncertainties in international outlook and says policy may need to be adjusted accordingly.

- VIX index: 11.45 (+1.42%)

- Gold Spot: $1,241.21/oz (-0.02%)

- ICE Brent front contract: $55.19 (+$0.14)

- Nymex WTI front contract: $52.34 (+$0.17)

- Reuters/Jefferies Commodities Index: 192.26 (+0.47%)

- 10y UST: 2.336% (-6bp) (Asia morning)

- DJI: 20,054.34 (-0.18%); S&P: 2,294.67 (+0.07%); Nasdaq: 5,682.45 (+0.15%)

ASIA NEWS

- China: China may keep tightening monetary policy this year amid pressure from yuan rate stabilization, financial de-leveraging, curbs on real estate and faster inflation, China Securities Journal says. - BBG

- China: 4Q current-account surplus $37.6 billion.

- Indonesia: Outlook revised to Positive from Stable by Moody's; Change in outlook reflects emerging signs of a reduction in structural constraints on Indonesia's rating, Moody's says. - BBG

- India: India's central bank unexpectedly left borrowing costs unchanged for a second straight meeting and signaled that its interest-rate easing cycle is coming to an end. - BBG

CURRENCIES

- EUR/USD made an early push lower to extend Tuesday's low to 1.0638 but there was no great appetite to push it any further and we saw a drift back up for a look over 1.07 later in the session before slipping back. There has been no new news of note and in a market lacking in meaningful data this week the intraday traders seem to have things to themselves.

- USD/JPY slipped off the 112 handle after being in a 112.00/50 range through Asia and the European morning. Sellers may be depending on MoF officials maintaining radio silence ahead of PM Abe's meeting with Mr Trump on Friday. The pair popped back above the figure later in the session as US yields bounced off the lows post auction.

- GBP continued its late Tuesday form into the morning session. Cable moved higher as the USD slipped though EUR/GBP is off the lows if still well below .8600. The GBP saw modest late gains after the House of Commons voted to give the PM the power to trigger Brexit.

BONDS

Core bonds extended the bid on early real money buying, with USTs initially led by the bund rally. Buying picked up pace over the day, forcing the market sharply richer into supply. In the end that did temper the auction results, and yields corrected significantly higher before starting to slip again. 2s -1.6bps @ 1.15%, 5s -3.5bps @ 1.81%, 10s -4.6bps @ 2.35%, 30s -6.1bps @ 2.96%

- Agency Spreads: Freddie/Fannie 5s +0.5/+1.1 bps, 10s -0.4/+0.6 bps.

- Swap Spreads: 2s -0.66bps, 5s -1.13bps, 10s -1.62bps.

EQUITIES

Moribund trade continues as S&P puts in another flat performance. Banks weighed with a sharp drop as lower yields detracted.

ASIA CURRENCIES

USD/CNY: 1Y NDFs flatlined around the 7.1000 handle in the NY session. Onshore spot meanwhile saw an offered tone in the late trading session, slipping below 6.8650 from 6.8916 high seen at the open of the Asian session. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. While 1Y NDF points could narrow to within 20 big figures, prices close to 7.0500 should still represent a bargain in the medium term.

USD/CNH: Pair surged to a high of 6.8569 in late Asian trading on Wednesday , and remained mostly supported above 6.8400 handle in NY. We maintain our view that CNH/CNY spread should be maintained within three big figures, as the PBoC is unlikely to stand idly by. Profit taking should also come in soon.

USD/SGD: Pair saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. Eyes are on a break of the 1.4200 handle ahead of the resistance at 1.4211 as upside potential is still seen amid a weak economy and Trump concerns.

USD/IDR: 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. Onshore spot gapped slightly higher to open at 13338 vs. last close of 13329, but the pair reversed gains to trade below 13335 for most part of the day before picking up some traction into the close. We do not expect a test of the support level at 13300. Some gains to 13400 are likely with growth underperformance, Trump concerns and regional elections scheduled for next week, but no risk is seen to the 13500 handle.

USD/INR: 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral. Onshore spot gapped lower to open at 67.3800 vs. last close of 67.4075 and traded mostly below 67.3500 ahead of the RBI decision. Prices retreated below 67.2000 into the close on RBI decision, and further downside is likely with strong support seen at 67.1450 ahead of the key 67 handle.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 3.1, Prev: -5.1]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 4.5, Prev: 10.4]

- 00:01 GMT - UK: RICS House Price Balance (Jan) [Mkt: 22, Prev: 24]

- 08:00 GMT - PH: BSP- Overnight Reverse Repo Rate (Feb 9) [Mkt: 3, Prev: 3]

- 13:30 GMT - US: Initial Claims (Feb 4) [Mkt: 249, Prev: 246]

- 13:30 GMT - CA: House Price Index (Dec) [Mkt: 0.2, Prev: 0.2]

- 15:00 GMT - US: Wholesale Inventories (Dec) [Mkt: 1, Prev: 1]

- 23:50 GMT - JP: PPI (Jan) [Mkt: 0, Prev: -1.2]

EVENTS & AUCTIONS

- JP: BoJ's Nakaso Speaks in Kochi

- NZ: RBNZ Interest rate announcement

- 04:00 GMT - KR: Bloomberg Feb Economic Survey

- 08:00 GMT - EU: EU's Bienkowska Speaks in Brussels

- 13:45 GMT - US: Bloomberg Feb Economic Survey

- 14:10 GMT - US: Fed's Bullard Speaks in St. Louis

- 16:35 GMT - CA: BoC's Schembri Speaks in London

- 18:00 GMT - US: Fed's Evans Speaks in Chicago

- 18:30 GMT - UK: BoE's Carney Speaks in London


Forex - Asia Open - Overnight Highlights


 23:30 (GMT) 08 Feb

 [Forex Highlights]

Asia Overnight Highlights - 09 February 2017

Charu Chanana

ASIA OUTLOOK

Quiet day. Early interest was the speeding decline in core yields, depressing banks, but US yields corrected later in the session after the 10yr auction, propping USD/JPY.

Majors FX Highlights

The dollar index turned lower again overnight, slipping to a low of 100.060 even as a weak EUR continued to contain the downside amid political uncertainty in France and upcoming elections in Netherlands, Germany, and possibly Italy. The index later recovered briefly to 100.360. EUR/USD extended the week's low to 1.0641 in European session before NY traders pushed the pair back higher to near 1.0700-levels. USD/JPY traded on either side of the 112.00 handle as investors remained cautious ahead of PM Abe's meeting with President Trump on Friday. GBP/USD remained bid above 1.2500 handle in NY, but the high was stalled at 1.2550. House of Commons voted to give the PM the power to trigger Brexit, and PM May said that an independent Scotland would not be part of the EU. USD/CAD had a look at 1.3200 but finished closer to session lows as WTI prices shrugged off another large build in crude inventory by the EIA, though the 13.8mn barrel increase on the week fell short of the 14.2mn reported by the API. No great excitement on AUD/USD, but NZD/USD slipped on a dovish statement as the RBNZ left rates unchanged, AUD/NZD moving above 1.05.

Majors Data Highlights

Data-wise, initial claims and December wholesale inventories are due today, while dovish non-voter Bullard and dovish voter Evans will be on the wires for comments.

Emerging Asia FX Highlights

USD/Asians saw a slight downward bias, but USD/INR was steeply offered on RBI decision. USD/CNY 1Y NDFs flatlined around the 7.1000 handle in the NY session. USD/SGD saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. USD/IDR 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. USD/INR 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral.

Emerging Asia Data Highlights

RBI left policy rates unchanged in an unexpected decision, and more importantly, changed policy stance to neutral from accommodative. A quiet day ahead with no data reported from our key countries, but look out for the BSP decision.

OVERNIGHT NEWS HIGHLIGHTS

- RBNZ leaves rates unchanged, sees uncertainties in international outlook and says policy may need to be adjusted accordingly.

- VIX index: 11.45 (+1.42%)

- Gold Spot: $1,241.21/oz (-0.02%)

- ICE Brent front contract: $55.19 (+$0.14)

- Nymex WTI front contract: $52.34 (+$0.17)

- Reuters/Jefferies Commodities Index: 192.26 (+0.47%)

- 10y UST: 2.336% (-6bp) (Asia morning)

- DJI: 20,054.34 (-0.18%); S&P: 2,294.67 (+0.07%); Nasdaq: 5,682.45 (+0.15%)

ASIA NEWS

- China: China may keep tightening monetary policy this year amid pressure from yuan rate stabilization, financial de-leveraging, curbs on real estate and faster inflation, China Securities Journal says. - BBG

- China: 4Q current-account surplus $37.6 billion.

- Indonesia: Outlook revised to Positive from Stable by Moody's; Change in outlook reflects emerging signs of a reduction in structural constraints on Indonesia's rating, Moody's says. - BBG

- India: India's central bank unexpectedly left borrowing costs unchanged for a second straight meeting and signaled that its interest-rate easing cycle is coming to an end. - BBG

CURRENCIES

- EUR/USD made an early push lower to extend Tuesday's low to 1.0638 but there was no great appetite to push it any further and we saw a drift back up for a look over 1.07 later in the session before slipping back. There has been no new news of note and in a market lacking in meaningful data this week the intraday traders seem to have things to themselves.

- USD/JPY slipped off the 112 handle after being in a 112.00/50 range through Asia and the European morning. Sellers may be depending on MoF officials maintaining radio silence ahead of PM Abe's meeting with Mr Trump on Friday. The pair popped back above the figure later in the session as US yields bounced off the lows post auction.

- GBP continued its late Tuesday form into the morning session. Cable moved higher as the USD slipped though EUR/GBP is off the lows if still well below .8600. The GBP saw modest late gains after the House of Commons voted to give the PM the power to trigger Brexit.

BONDS

Core bonds extended the bid on early real money buying, with USTs initially led by the bund rally. Buying picked up pace over the day, forcing the market sharply richer into supply. In the end that did temper the auction results, and yields corrected significantly higher before starting to slip again. 2s -1.6bps @ 1.15%, 5s -3.5bps @ 1.81%, 10s -4.6bps @ 2.35%, 30s -6.1bps @ 2.96%

- Agency Spreads: Freddie/Fannie 5s +0.5/+1.1 bps, 10s -0.4/+0.6 bps.

- Swap Spreads: 2s -0.66bps, 5s -1.13bps, 10s -1.62bps.

EQUITIES

Moribund trade continues as S&P puts in another flat performance. Banks weighed with a sharp drop as lower yields detracted.

ASIA CURRENCIES

USD/CNY: 1Y NDFs flatlined around the 7.1000 handle in the NY session. Onshore spot meanwhile saw an offered tone in the late trading session, slipping below 6.8650 from 6.8916 high seen at the open of the Asian session. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. While 1Y NDF points could narrow to within 20 big figures, prices close to 7.0500 should still represent a bargain in the medium term.

USD/CNH: Pair surged to a high of 6.8569 in late Asian trading on Wednesday , and remained mostly supported above 6.8400 handle in NY. We maintain our view that CNH/CNY spread should be maintained within three big figures, as the PBoC is unlikely to stand idly by. Profit taking should also come in soon.

USD/SGD: Pair saw a dip to 1.4140-levels in early NY trading but recovered to bid up above 1.4160 subsequently. Eyes are on a break of the 1.4200 handle ahead of the resistance at 1.4211 as upside potential is still seen amid a weak economy and Trump concerns.

USD/IDR: 1M NDFs consolidated around 13340 in NY after being bid over 13380 earlier. Onshore spot gapped slightly higher to open at 13338 vs. last close of 13329, but the pair reversed gains to trade below 13335 for most part of the day before picking up some traction into the close. We do not expect a test of the support level at 13300. Some gains to 13400 are likely with growth underperformance, Trump concerns and regional elections scheduled for next week, but no risk is seen to the 13500 handle.

USD/INR: 1M NDFs saw a steep bearish bias, slipping to trade around 67.2000 in NY after RBI unexpectedly decided to hold rates and change policy stance to neutral. Onshore spot gapped lower to open at 67.3800 vs. last close of 67.4075 and traded mostly below 67.3500 ahead of the RBI decision. Prices retreated below 67.2000 into the close on RBI decision, and further downside is likely with strong support seen at 67.1450 ahead of the key 67 handle.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 3.1, Prev: -5.1]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 4.5, Prev: 10.4]

- 00:01 GMT - UK: RICS House Price Balance (Jan) [Mkt: 22, Prev: 24]

- 08:00 GMT - PH: BSP- Overnight Reverse Repo Rate (Feb 9) [Mkt: 3, Prev: 3]

- 13:30 GMT - US: Initial Claims (Feb 4) [Mkt: 249, Prev: 246]

- 13:30 GMT - CA: House Price Index (Dec) [Mkt: 0.2, Prev: 0.2]

- 15:00 GMT - US: Wholesale Inventories (Dec) [Mkt: 1, Prev: 1]

- 23:50 GMT - JP: PPI (Jan) [Mkt: 0, Prev: -1.2]

EVENTS & AUCTIONS

- JP: BoJ's Nakaso Speaks in Kochi

- NZ: RBNZ Interest rate announcement

- 04:00 GMT - KR: Bloomberg Feb Economic Survey

- 08:00 GMT - EU: EU's Bienkowska Speaks in Brussels

- 13:45 GMT - US: Bloomberg Feb Economic Survey

- 14:10 GMT - US: Fed's Bullard Speaks in St. Louis

- 16:35 GMT - CA: BoC's Schembri Speaks in London

- 18:00 GMT - US: Fed's Evans Speaks in Chicago

- 18:30 GMT - UK: BoE's Carney Speaks in London


Forex - Asia Open - Overnight Highlights


 23:35 (GMT) 07 Feb

 [Forex Highlights]

Asia Overnight Highlights - 08 February 2017

Charu Chanana

ASIA OUTLOOK

While it was a quieter day in European bonds, the risk tone generally remained off, and core bonds bid on dips. Cable had a lively day.

Majors FX Highlights

The dollar index gained some strength overnight and was bid up to an over 1-week high of 100.720 on Tuesday as some correction was seen from the earlier lows. Gains against the euro which was weighed by political uncertainty in Europe bolstered the dollar as well. EUR/USD broke below 1.0700 to print a low of 1.0656 before a slight recovery later in the session. ECB speakers have been across the wires; Coeure said the EUR level is appropriate, while Villeroy said the US Gov't should refrain from comment on currencies, a view backed up later by Weidmann. USD/JPY regained the 112.00 handle but the high remained limited to 112.58 before a brief dip below the key figure again only to settle around 112.40 into the close of the NY session. GBP/USD saw wild movements despite the lack of catalysts. Priced dipped to a low of 1.2347 entering the NY session but saw a sharp bounce all the way to 1.2246 subsequently. BoE's Forbes warned that the central bank may have to tighten sooner than expected, but the rally cannot be completely attributed to her comments which came a good bit ahead. The commodity currencies are mainly a shade softer, NZD giving back most of the gains made in the local session and not getting any lift from a small lift in prices at the GDT dairy auction. USD/CAD managed to correct from a run over 1.32 despite softer crude prices (WTI -$1), but AUD/CAD holding comfortably over 1.00. The RBNZ board is scheduled to meet on the 9th of February and we believe the Bank would keep the interest rates unchanged at historic lows of 1.75% after cutting the OCR by 25 bps in November.

Majors Data Highlights

Dec's $44.3bn trade deficit was narrower than the $45.0bn we and the market had expected but the surprise is largely offset by an upward revision to Nov's deficit to $45.7bn from $45.2bn.

A quiet day ahead in the US, but the final commons vote on the Article 50 Bill is scheduled for today.

Emerging Asia FX Highlights

A mixed day for USD/Asians. USD/CNY 1Y NDFs recovered from the near 3 month low of 7.0717 printed in the Asian session on Tuesday to a high of 7.1075 as FX reserves dropped below psychological USD 3 trillion. USD/SGD saw further gains in NY and gains were only seen stalling at the 1.4200 handle after the dollar strengthened from Europe political concerns. USD/IDR 1M NDFs however retreated in consolidation to 13340 from >13360 levels earlier. USD/INR 1M NDFs also saw an offered bias overnight, slipping to 67.5000 levels from a high of 67.6500 earlier.

Emerging Asia Data Highlights

No key data was reported in Asia on Tuesday, but we are looking ahead at India's RBI policy decision due later today where we see a rate cut on the table with low inflation levels and the government's fiscal prudence in the Budget announcement.

OVERNIGHT NEWS HIGHLIGHTS

- US Dec Trade Balance USD -44.3 bn from -45.7 vs Mkt -45

- VIX index: 11.29 (-0.70%)

- Gold Spot: $1,233.96/oz (+0.00%)

- ICE Brent front contract: $54.68 ($-1.04)

- Nymex WTI front contract: $52.17 ($-0.84)

- Reuters/Jefferies Commodities Index: 191.37 (-0.41%)

- 10y UST: 2.393% (-1bp) (Asia morning)

- DJI: 20,090.29 (+0.19%); S&P: 2,293.08 (+0.02%); Nasdaq: 5,674.22 (+0.19%)

ASIA NEWS

- China: China's forex reserves fell below $3t for the first time since Feb., 2011, according to data from People's Bank of China. - BBG

- Singapore: Monetary Authority of Singapore is proposing a list of amendments to its banking regulations, requiring its approval for banks that are setting up money-changing or remittance businesses. - BBG

- Singapore: Foreign-exchange reserves rise to US$252.74b, up 2.5% from $246.58b a month ago, Monetary Authority of Singapore says on website. - BBG

- Indonesia: Foreign reserves rise to $116.89 billion in January, equivalent to 8.7 months imports or 8.4 months imports and payment of govt external debts, Bank Indonesia says. - BBG

CURRENCIES

- There was some movement to keep the FX markets interested, GBP providing the most interest with a sharp sell-off in the morning followed by a sharp bounce around the 16.00gmt fix that made it all back. There was no obvious catalyst for either move. While BoE's Forbes has got some credit for the bounce her comment that UK rates may soon came a good bit ahead of the break above 1.2400. A final leg higher reached 1.2545 after 1.2500 gave way, getting EUR/GBP below .8550.

- EUR/USD looked heavy through the first half of the day and made a low at 1.0653, but that was as far as it was going to get. The p.m. rally was put in the shade by the Cable but highs above 1.0700 were seen.

- USD/JPY regained the 112 handle seeing a high just over 112.50. As UST yields fell a move below 112.00 was seen but the day's lows held, a 112 handle returned as UST yields found a base.

BONDS

USTs initially led off the overnight best levels by the bund action, before being better bid again through the European close, at the long end especially, encouraged by a flattener trade, seeing profit taking on the steepeners. The 3yr auction then saw strong bidding, from indirects especially, but after touching fresh lows immediately after the auction, the front end in particular saw yields correct higher. 2s +1.6bps @ 1.17%, 5s -0.3bps @ 1.84%, 10s -2.0bps @ 2.39%, 30s -3.1bps @ 3.02%.

- Agency Spreads: Freddie/Fannie 5s -0.6/+0.6 bps, 10s 0.0/-0.2 bps.

- Swap Spreads: 2s -1.42bps, 5s +0.25bps, 10s 0.00bps.

EQUITIES

Another pretty flat day, with earlier upside efforts rebuffed as the general risk tone turned softer through the day, oil for one giving up some ground. Still largely idling overall on the S&P at present.

ASIA CURRENCIES

USD/CNY: 1Y NDFs recovered from the near 3 month low of 7.0717 printed in the Asian session on Tuesday to a high of 7.1075 as FX reserves dropped below psychological USD 3 trillion. Onshore spot also rallied to 6.8853 into the close of the late trading session from the opening low of 6.8625. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. While 1Y NDF points could narrow to within 20 big figures, prices close to 7.0500 should still represent a bargain in the medium term.

USD/CNH: Pair surged to a high of 6.8408 early this morning after consolidating just below 6.8400 in NY on FX reserves disappointment. A negative 5-6 figure spread has been maintained after the CNY holidays and we do not expect anything different for the rest of the week.

USD/SGD: Pair saw further gains in NY and gains were only seen stalling ahead of the 1.4200 handle after the dollar strengthened from Europe political concerns. Eyes on a break of the 1.4200 handle today, and next resistance is seen at 1.4211.

USD/IDR: 1M NDFs retreated in consolidation to 13340 from >13360 levels earlier. Onshore spot saw a firm opening but slid to a fresh 2-week low of 13313 this morning. Prices however recovered to inch back above 13330 in the afternoon. Support at 13300 should continue to hold, as we have long argued. Some gains to 13400 are likely, but we do not see any risk to the 13500 handle.

USD/INR: 1M NDFs saw an offered bias overnight, slipping to 67.5000 levels from a high of 67.6100 earlier. Onshore spot recovered from the near 3-month low of 67.1425 printed on Monday to gap up higher at 67.2900 vs. Monday's close of 67.2125. Prices were seen trading mostly above 67.3500 as the RBI meeting kicks off, possibly with a rate cut on the table, and traded around 67.4000 into the close. Focus has now turned to the highly anticipated RBI decision due this week, and some consolidation around 67.5000 is likely.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Bank Lending Data (Jan) [Prev: 2.6]

- 23:50 GMT - JP: Current Account (Dec) [Mkt: 1183.3, Prev: 1415.5]

- n/a GMT - JP: Economy Watchers Survey (Jan) [Mkt: 51.8, Prev: 51.4]

- 00:30 GMT - TW: CPI (Jan) [Mkt: 2.02, Prev: 1.7]

- 00:30 GMT - TW: WPI (Jan) [Mkt: 1.5, Prev: 1.41]

- 04:00 GMT - MY: Exports (Dec) [Mkt: 9.4, Prev: 7.8]

- 04:00 GMT - MY: Imports (Dec) [Mkt: 11.2, Prev: 11.2]

- 04:00 GMT - MY: Trade Balance (Dec) [Mkt: 8.68, Prev: 9.03]

- 07:00 GMT - TH: BoT - Overnight Repo Rate (Feb 8) [Mkt: 1.5, Prev: 1.5]

- 09:00 GMT - IN: RBI - Repo Rate (Feb 8) 4cast:6 % [Mkt: 6, Prev: 6.25]

- 09:00 GMT - IN: RBI - Reverse Repo Rate (Feb 8) 4cast:5.5 % [Mkt: 5.5, Prev: 5.75]

- 13:15 GMT - CA: Housing starts (Jan) 4cast:200 k [Mkt: 200, Prev: 207]

- 20:00 GMT - NZ: RBNZ Interest Rate (Feb 9) 4cast:1.75 % [Mkt: 1.75, Prev: 1.75]

- 21:45 GMT - NZ: Building Permits (Dec) [Prev: -9.2]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 3.1, Prev: -5.1]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 4.5, Prev: 10.4]

EVENTS & AUCTIONS

- EU: EU's Jourova Speaks in Brussels

- AU: RBA's Lowe Speaks in Sydney (to 9th)

- 13:00 GMT - UK: BoE's Cunliffe Speaks In Birmingham

- 21:00 GMT - NZ: RBNZ's Wheeler Speaks (to 9th)


Forex - Asia Open - Overnight Highlights


 23:35 (GMT) 07 Feb

 [Forex Highlights]

Asia Overnight Highlights - 08 February 2017

Charu Chanana

ASIA OUTLOOK

While it was a quieter day in European bonds, the risk tone generally remained off, and core bonds bid on dips. Cable had a lively day.

Majors FX Highlights

The dollar index gained some strength overnight and was bid up to an over 1-week high of 100.720 on Tuesday as some correction was seen from the earlier lows. Gains against the euro which was weighed by political uncertainty in Europe bolstered the dollar as well. EUR/USD broke below 1.0700 to print a low of 1.0656 before a slight recovery later in the session. ECB speakers have been across the wires; Coeure said the EUR level is appropriate, while Villeroy said the US Gov't should refrain from comment on currencies, a view backed up later by Weidmann. USD/JPY regained the 112.00 handle but the high remained limited to 112.58 before a brief dip below the key figure again only to settle around 112.40 into the close of the NY session. GBP/USD saw wild movements despite the lack of catalysts. Priced dipped to a low of 1.2347 entering the NY session but saw a sharp bounce all the way to 1.2246 subsequently. BoE's Forbes warned that the central bank may have to tighten sooner than expected, but the rally cannot be completely attributed to her comments which came a good bit ahead. The commodity currencies are mainly a shade softer, NZD giving back most of the gains made in the local session and not getting any lift from a small lift in prices at the GDT dairy auction. USD/CAD managed to correct from a run over 1.32 despite softer crude prices (WTI -$1), but AUD/CAD holding comfortably over 1.00. The RBNZ board is scheduled to meet on the 9th of February and we believe the Bank would keep the interest rates unchanged at historic lows of 1.75% after cutting the OCR by 25 bps in November.

Majors Data Highlights

Dec's $44.3bn trade deficit was narrower than the $45.0bn we and the market had expected but the surprise is largely offset by an upward revision to Nov's deficit to $45.7bn from $45.2bn.

A quiet day ahead in the US, but the final commons vote on the Article 50 Bill is scheduled for today.

Emerging Asia FX Highlights

A mixed day for USD/Asians. USD/CNY 1Y NDFs recovered from the near 3 month low of 7.0717 printed in the Asian session on Tuesday to a high of 7.1075 as FX reserves dropped below psychological USD 3 trillion. USD/SGD saw further gains in NY and gains were only seen stalling at the 1.4200 handle after the dollar strengthened from Europe political concerns. USD/IDR 1M NDFs however retreated in consolidation to 13340 from >13360 levels earlier. USD/INR 1M NDFs also saw an offered bias overnight, slipping to 67.5000 levels from a high of 67.6500 earlier.

Emerging Asia Data Highlights

No key data was reported in Asia on Tuesday, but we are looking ahead at India's RBI policy decision due later today where we see a rate cut on the table with low inflation levels and the government's fiscal prudence in the Budget announcement.

OVERNIGHT NEWS HIGHLIGHTS

- US Dec Trade Balance USD -44.3 bn from -45.7 vs Mkt -45

- VIX index: 11.29 (-0.70%)

- Gold Spot: $1,233.96/oz (+0.00%)

- ICE Brent front contract: $54.68 ($-1.04)

- Nymex WTI front contract: $52.17 ($-0.84)

- Reuters/Jefferies Commodities Index: 191.37 (-0.41%)

- 10y UST: 2.393% (-1bp) (Asia morning)

- DJI: 20,090.29 (+0.19%); S&P: 2,293.08 (+0.02%); Nasdaq: 5,674.22 (+0.19%)

ASIA NEWS

- China: China's forex reserves fell below $3t for the first time since Feb., 2011, according to data from People's Bank of China. - BBG

- Singapore: Monetary Authority of Singapore is proposing a list of amendments to its banking regulations, requiring its approval for banks that are setting up money-changing or remittance businesses. - BBG

- Singapore: Foreign-exchange reserves rise to US$252.74b, up 2.5% from $246.58b a month ago, Monetary Authority of Singapore says on website. - BBG

- Indonesia: Foreign reserves rise to $116.89 billion in January, equivalent to 8.7 months imports or 8.4 months imports and payment of govt external debts, Bank Indonesia says. - BBG

CURRENCIES

- There was some movement to keep the FX markets interested, GBP providing the most interest with a sharp sell-off in the morning followed by a sharp bounce around the 16.00gmt fix that made it all back. There was no obvious catalyst for either move. While BoE's Forbes has got some credit for the bounce her comment that UK rates may soon came a good bit ahead of the break above 1.2400. A final leg higher reached 1.2545 after 1.2500 gave way, getting EUR/GBP below .8550.

- EUR/USD looked heavy through the first half of the day and made a low at 1.0653, but that was as far as it was going to get. The p.m. rally was put in the shade by the Cable but highs above 1.0700 were seen.

- USD/JPY regained the 112 handle seeing a high just over 112.50. As UST yields fell a move below 112.00 was seen but the day's lows held, a 112 handle returned as UST yields found a base.

BONDS

USTs initially led off the overnight best levels by the bund action, before being better bid again through the European close, at the long end especially, encouraged by a flattener trade, seeing profit taking on the steepeners. The 3yr auction then saw strong bidding, from indirects especially, but after touching fresh lows immediately after the auction, the front end in particular saw yields correct higher. 2s +1.6bps @ 1.17%, 5s -0.3bps @ 1.84%, 10s -2.0bps @ 2.39%, 30s -3.1bps @ 3.02%.

- Agency Spreads: Freddie/Fannie 5s -0.6/+0.6 bps, 10s 0.0/-0.2 bps.

- Swap Spreads: 2s -1.42bps, 5s +0.25bps, 10s 0.00bps.

EQUITIES

Another pretty flat day, with earlier upside efforts rebuffed as the general risk tone turned softer through the day, oil for one giving up some ground. Still largely idling overall on the S&P at present.

ASIA CURRENCIES

USD/CNY: 1Y NDFs recovered from the near 3 month low of 7.0717 printed in the Asian session on Tuesday to a high of 7.1075 as FX reserves dropped below psychological USD 3 trillion. Onshore spot also rallied to 6.8853 into the close of the late trading session from the opening low of 6.8625. USDCNY likely to be caught within the two forces of tightening liquidity and medium term worries. While 1Y NDF points could narrow to within 20 big figures, prices close to 7.0500 should still represent a bargain in the medium term.

USD/CNH: Pair surged to a high of 6.8408 early this morning after consolidating just below 6.8400 in NY on FX reserves disappointment. A negative 5-6 figure spread has been maintained after the CNY holidays and we do not expect anything different for the rest of the week.

USD/SGD: Pair saw further gains in NY and gains were only seen stalling ahead of the 1.4200 handle after the dollar strengthened from Europe political concerns. Eyes on a break of the 1.4200 handle today, and next resistance is seen at 1.4211.

USD/IDR: 1M NDFs retreated in consolidation to 13340 from >13360 levels earlier. Onshore spot saw a firm opening but slid to a fresh 2-week low of 13313 this morning. Prices however recovered to inch back above 13330 in the afternoon. Support at 13300 should continue to hold, as we have long argued. Some gains to 13400 are likely, but we do not see any risk to the 13500 handle.

USD/INR: 1M NDFs saw an offered bias overnight, slipping to 67.5000 levels from a high of 67.6100 earlier. Onshore spot recovered from the near 3-month low of 67.1425 printed on Monday to gap up higher at 67.2900 vs. Monday's close of 67.2125. Prices were seen trading mostly above 67.3500 as the RBI meeting kicks off, possibly with a rate cut on the table, and traded around 67.4000 into the close. Focus has now turned to the highly anticipated RBI decision due this week, and some consolidation around 67.5000 is likely.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Bank Lending Data (Jan) [Prev: 2.6]

- 23:50 GMT - JP: Current Account (Dec) [Mkt: 1183.3, Prev: 1415.5]

- n/a GMT - JP: Economy Watchers Survey (Jan) [Mkt: 51.8, Prev: 51.4]

- 00:30 GMT - TW: CPI (Jan) [Mkt: 2.02, Prev: 1.7]

- 00:30 GMT - TW: WPI (Jan) [Mkt: 1.5, Prev: 1.41]

- 04:00 GMT - MY: Exports (Dec) [Mkt: 9.4, Prev: 7.8]

- 04:00 GMT - MY: Imports (Dec) [Mkt: 11.2, Prev: 11.2]

- 04:00 GMT - MY: Trade Balance (Dec) [Mkt: 8.68, Prev: 9.03]

- 07:00 GMT - TH: BoT - Overnight Repo Rate (Feb 8) [Mkt: 1.5, Prev: 1.5]

- 09:00 GMT - IN: RBI - Repo Rate (Feb 8) 4cast:6 % [Mkt: 6, Prev: 6.25]

- 09:00 GMT - IN: RBI - Reverse Repo Rate (Feb 8) 4cast:5.5 % [Mkt: 5.5, Prev: 5.75]

- 13:15 GMT - CA: Housing starts (Jan) 4cast:200 k [Mkt: 200, Prev: 207]

- 20:00 GMT - NZ: RBNZ Interest Rate (Feb 9) 4cast:1.75 % [Mkt: 1.75, Prev: 1.75]

- 21:45 GMT - NZ: Building Permits (Dec) [Prev: -9.2]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 3.1, Prev: -5.1]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: 4.5, Prev: 10.4]

EVENTS & AUCTIONS

- EU: EU's Jourova Speaks in Brussels

- AU: RBA's Lowe Speaks in Sydney (to 9th)

- 13:00 GMT - UK: BoE's Cunliffe Speaks In Birmingham

- 21:00 GMT - NZ: RBNZ's Wheeler Speaks (to 9th)


Forex - Asia Open - Overnight Highlights


 23:39 (GMT) 06 Feb

 [Forex Highlights]

Asia Overnight Highlights - 07 February 2017

Charu Chanana

ASIA OUTLOOK

European politics takes over the agenda on an otherwise quiet week, with EGB spreads blowing out further and EUR/JPY under some pressure (JPY also eying Trump-Abe meeting).

Majors FX Highlights

The dollar index was mixed overnight, as gains against the weak Euro were somewhat offset by losses against the safe-haven yen. The index was bid up to 100.250 before retreating to fall below the 100.00-mark again in the NY session. EUR/USD slid all the way to a low of 1.0706, retreating from the near 1.08-levels seen at the start of the week amid political uncertainty with French candidate Le Pen launching her presidential bid, vowing to fight globalization and take France out of the Eurozone. ECB Draghi also downplayed calls for scaling back the stimulus program. USD/JPY meanwhile slid to 2-month lows of 111.63 in NY as demand for safe-haven yen remained robust as the focus now shifts to the elections in the Eurozone. Focus also on the Trump-Abe meeting scheduled for next week. GBP/USD was choppy again in NY, but remained below the key 1.2500 handle, and was last seen flatlining around 1.2470. USD/CAD saw 1.30 hold the base and it then staged a rally of around a big figure to trade clear of 1.31 before the USD came off generally. There was no obvious catalyst with the rise leading a dip in oil but it was steady from the very get-go of the N.American session. AUD/USD reversed most of its modest losses with AUD/CAD back over 1.00. AUD/NZD is hovering around 1.0450. Focus will be on the RBA meeting this morning, where we should see the OCR remaining unchanged at historic lows of 1.50% for the seventh consecutive month.

Majors Data Highlights

After a quiet start to the week, all eyes today on the US December trade deficit which should be little changed from November at USD45.0bn after USD45.2bn. JOLTS and consumer credit data are also due. German production data will also be due, but first focus will be on the RBA meeting this morning.

Emerging Asia FX Highlights

USD/Asians saw a downward bias in NY. USD/CNY 1Y NDFs continued to see an offered tone overnight, slipping from 7.0700 levels at the start of the week to <7.0300 in early Asian trading today. USD/SGD recovered to tread above the 1.4100 handle just as we had expected, and was bid up to a high of 1.4128 in NY before returning lower to 1.4090 levels later. USD/IDR 1M NDFs continued to consolidate with a downward bias, and slid below 13340 in NY. USD/INR 1M NDFs saw a consolidative tone around 67.3750 in NY.

Emerging Asia Data Highlights

Indonesia's GDP growth decelerated in Q4 and printed growth of 4.94% y/y, after reaching >5% levels in the previous two quarters. This translated into overall growth of 5.02% in 2016, in-line with expectations, but only slightly higher than 4.88% (revised) growth seen in 2015, which was the slowest since 2009, driven by a combination of fiscal and monetary boost. No key data in Asia is scheduled today.

OVERNIGHT NEWS HIGHLIGHTS

- ECB`s Draghi - underlying price pressures remained very subdued and need to 'look through' temporary increases

- France`s Fillon to stay in race, apologies for payments to family

- Fed Senior Loan Officer survey shows little change in standards or demand for C+I loans, some slowing in demand for consumer, mortgage and commercial real estate loans.

- VIX index: 11.37 (+3.65%)

- Gold Spot: $1,234.66/oz (-0.06%)

- ICE Brent front contract: $55.88 ($-0.93)

- Nymex WTI front contract: $53.01 ($-0.82)

- Reuters/Jefferies Commodities Index: 192.16 (-0.54%)

- 10y UST: 2.408% (-6bp) (Asia morning)

- DJI: 20,052.42 (-0.09%); S&P: 2,292.56 (-0.21%); Nasdaq: 5,663.55 (-0.06%)

ASIA NEWS

- Indonesia: Bank Indonesia Jan consumer confidence index at 115.3. - BBG

CURRENCIES

- There was some movement to keep the FX market on the alert, EUR/USD edging lower over much of the session with Fed's Williams' comments about a possible March hike noted, while politics weighed with French contender Fillon calling a press conference (he did not pull out!), Marine Le Pen's odds tumbling below 3/1, and a poll in Germany showing Merkel down in 2nd place. However, 1.0700 held relatively easily and the pair rallied above 1.0750.

- USD/JPY similarly tried a run lower and saw a couple of trades below 112 before bouncing to the mid 112.30s. However with UST yields (and to a lesser extent equities) a subsequent break lower was seen, down to 111.60. EUR/JPY saw lows below 120.00, but with little follow through.

- GBP saw a couple of bouts of selling pressure, initially finding some support in the European morning at 1.2445, then dipping further in th3 afternoon to 1.2423 before erasing most of the losses. EUR/GBP still can't hold any dips below .8600.

BONDS

After Fri's setback inspired by Fed Williams, further risk-off trade in EGBs led to a sharp turnaround again, with USTs back in safehaven demand. Price action remained volatile with the T.bond future 1pt off the early highs at one point, but fresh highs follwed later as BTPs, OATs etc remained pressured. 2s -4.4bps @ 1.15%, 5s -5.6bps @ 1.85%, 10s -5.2bps @ 2.41%, 30s -4.0bps @ 3.05%.

- Agency Spreads: Freddie/Fannie 5s +0.3/+0.5 bps, 10s +0.3/+0.1 bps.

- Swap Spreads: 2s +2.00bps, 5s +1.70bps, 10s +1.25bps.

EQUITIES

In a relatively quiet day of flat to negative trade, equities held up pretty well to the European risk off tone though that helped cap again ahead of the recent ceiling levels. The S&P fell 0.21%.

ASIA CURRENCIES

USD/CNY: 1Y NDFs continued to see an offered tone overnight, slipping from >7.1100 levels seen on Monday morning to <7.0800 in early Asian trading today. Onshore spot USDCNY midpoint was lower than expected at 6.8606 today, and onshore spot traded below the previous closing of 6.8727 as a result. Although 1Y NDFs delved below 7.1000, there was no sign of sustained downward momentum and we expect sub 7.1000 prices to remain a bargain in the medium term, though 1Y NDF points should narrow in the short term.

USD/CNH: Pair oscillated around 6.8100 at the start of the NY session before retreating to the 6.8000 handle and finally dipping below it into the close. While we expect CNH sellers to continue testing the patience of the authorities soon, USDCNH movements are likely to be dictated by onshore spot for the time being, with any CNH/CNY spread not likely to narrow within three big figures for the week.

USD/SGD: Pair recovered to tread above the 1.4100 handle just as we had expected, and was bid up to a high of 1.4128 in NY before returning lower to 1.4090 levels later. A break above 1.4100 should ease downside pressures, but we do not expect gains to stretch above 1.4150 amid Trump concerns.

USD/IDR: 1M NDFs continued to consolidate with a downward bias, and slid below 13340 in NY. Onshore spot slid to an over 1-week low of 13319 on Monday, while trading on either side of 13330 for most part of the day. No meaningful impact was seen from the GDP report. Support at 13300 should continue to hold, as we have long argued. Some gains to 13400 are likely, but we do not see any risk to the 13500 handle.

USD/INR: 1M NDFs saw a consolidative tone around 67.3750 in NY. Onshore spot gapped lower to open at 67.2000 vs. Friday's close of 67.3100 and printed a fresh near 3-month low of 67.1463. Pair continued to trade on either side of 67.2000. Focus has now turned to the highly anticipated RBI decision due this week, and some consolidation below 67.5000 is likely.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 01:00 GMT - PH: CPI (Jan) [Mkt: 2.8, Prev: 2.6]

- 02:00 GMT - NZ: RBNZ Inflation Expectations (Q4) [Prev: 1.68]

- 03:30 GMT - AU: RBA - Overnight Rate (Feb 7) 4cast:1.5 % [Mkt: 1.5, Prev: 1.5]

- 05:00 GMT - JP: Leading indicator (Prelim) (Dec) [Mkt: 105.5, Prev: 102.8]

- 08:00 GMT - TW: Exports (Jan) [Mkt: 10, Prev: 14]

- 08:00 GMT - TW: Imports (Jan) [Mkt: 12.7, Prev: 13.2]

- 08:00 GMT - TW: Trade Balance (Jan) [Mkt: 3.64, Prev: 4.86]

- 08:30 GMT - UK: Halifax House Price Index (Jan) [Mkt: 6.1, Prev: 6.5]

- 08:30 GMT - UK: Halifax House Price Index (Jan) [Mkt: 0, Prev: 1.7]

- 13:30 GMT - US: Trade Balance (Dec) 4cast:-45 USD bn [Mkt: -45, Prev: -45.2]

- 13:30 GMT - CA: Building permits (Dec) [Prev: -0.1]

- 13:30 GMT - CA: Merchandise Trade (Dec) [Prev: 0.53]

- 20:00 GMT - US: Consumer Credit (Dec) [Mkt: 20, Prev: 24.532]

- 23:50 GMT - JP: Bank Lending Data (Jan) [Prev: 2.6]

- 23:50 GMT - JP: Current Account (Dec) [Mkt: 1183.3, Prev: 1415.5]

EVENTS & AUCTIONS

- 01:00 GMT - NZ: Monthly Economic Indicators Published

- 14:30 GMT - AU: RBA Holds Interest Rate Meeting

- 23:15 GMT - NZ: Finance Minister Joyce Speaks


Forex - Asia Open - Overnight Highlights


 23:39 (GMT) 06 Feb

 [Forex Highlights]

Asia Overnight Highlights - 07 February 2017

Charu Chanana

ASIA OUTLOOK

European politics takes over the agenda on an otherwise quiet week, with EGB spreads blowing out further and EUR/JPY under some pressure (JPY also eying Trump-Abe meeting).

Majors FX Highlights

The dollar index was mixed overnight, as gains against the weak Euro were somewhat offset by losses against the safe-haven yen. The index was bid up to 100.250 before retreating to fall below the 100.00-mark again in the NY session. EUR/USD slid all the way to a low of 1.0706, retreating from the near 1.08-levels seen at the start of the week amid political uncertainty with French candidate Le Pen launching her presidential bid, vowing to fight globalization and take France out of the Eurozone. ECB Draghi also downplayed calls for scaling back the stimulus program. USD/JPY meanwhile slid to 2-month lows of 111.63 in NY as demand for safe-haven yen remained robust as the focus now shifts to the elections in the Eurozone. Focus also on the Trump-Abe meeting scheduled for next week. GBP/USD was choppy again in NY, but remained below the key 1.2500 handle, and was last seen flatlining around 1.2470. USD/CAD saw 1.30 hold the base and it then staged a rally of around a big figure to trade clear of 1.31 before the USD came off generally. There was no obvious catalyst with the rise leading a dip in oil but it was steady from the very get-go of the N.American session. AUD/USD reversed most of its modest losses with AUD/CAD back over 1.00. AUD/NZD is hovering around 1.0450. Focus will be on the RBA meeting this morning, where we should see the OCR remaining unchanged at historic lows of 1.50% for the seventh consecutive month.

Majors Data Highlights

After a quiet start to the week, all eyes today on the US December trade deficit which should be little changed from November at USD45.0bn after USD45.2bn. JOLTS and consumer credit data are also due. German production data will also be due, but first focus will be on the RBA meeting this morning.

Emerging Asia FX Highlights

USD/Asians saw a downward bias in NY. USD/CNY 1Y NDFs continued to see an offered tone overnight, slipping from 7.0700 levels at the start of the week to <7.0300 in early Asian trading today. USD/SGD recovered to tread above the 1.4100 handle just as we had expected, and was bid up to a high of 1.4128 in NY before returning lower to 1.4090 levels later. USD/IDR 1M NDFs continued to consolidate with a downward bias, and slid below 13340 in NY. USD/INR 1M NDFs saw a consolidative tone around 67.3750 in NY.

Emerging Asia Data Highlights

Indonesia's GDP growth decelerated in Q4 and printed growth of 4.94% y/y, after reaching >5% levels in the previous two quarters. This translated into overall growth of 5.02% in 2016, in-line with expectations, but only slightly higher than 4.88% (revised) growth seen in 2015, which was the slowest since 2009, driven by a combination of fiscal and monetary boost. No key data in Asia is scheduled today.

OVERNIGHT NEWS HIGHLIGHTS

- ECB`s Draghi - underlying price pressures remained very subdued and need to 'look through' temporary increases

- France`s Fillon to stay in race, apologies for payments to family

- Fed Senior Loan Officer survey shows little change in standards or demand for C+I loans, some slowing in demand for consumer, mortgage and commercial real estate loans.

- VIX index: 11.37 (+3.65%)

- Gold Spot: $1,234.66/oz (-0.06%)

- ICE Brent front contract: $55.88 ($-0.93)

- Nymex WTI front contract: $53.01 ($-0.82)

- Reuters/Jefferies Commodities Index: 192.16 (-0.54%)

- 10y UST: 2.408% (-6bp) (Asia morning)

- DJI: 20,052.42 (-0.09%); S&P: 2,292.56 (-0.21%); Nasdaq: 5,663.55 (-0.06%)

ASIA NEWS

- Indonesia: Bank Indonesia Jan consumer confidence index at 115.3. - BBG

CURRENCIES

- There was some movement to keep the FX market on the alert, EUR/USD edging lower over much of the session with Fed's Williams' comments about a possible March hike noted, while politics weighed with French contender Fillon calling a press conference (he did not pull out!), Marine Le Pen's odds tumbling below 3/1, and a poll in Germany showing Merkel down in 2nd place. However, 1.0700 held relatively easily and the pair rallied above 1.0750.

- USD/JPY similarly tried a run lower and saw a couple of trades below 112 before bouncing to the mid 112.30s. However with UST yields (and to a lesser extent equities) a subsequent break lower was seen, down to 111.60. EUR/JPY saw lows below 120.00, but with little follow through.

- GBP saw a couple of bouts of selling pressure, initially finding some support in the European morning at 1.2445, then dipping further in th3 afternoon to 1.2423 before erasing most of the losses. EUR/GBP still can't hold any dips below .8600.

BONDS

After Fri's setback inspired by Fed Williams, further risk-off trade in EGBs led to a sharp turnaround again, with USTs back in safehaven demand. Price action remained volatile with the T.bond future 1pt off the early highs at one point, but fresh highs follwed later as BTPs, OATs etc remained pressured. 2s -4.4bps @ 1.15%, 5s -5.6bps @ 1.85%, 10s -5.2bps @ 2.41%, 30s -4.0bps @ 3.05%.

- Agency Spreads: Freddie/Fannie 5s +0.3/+0.5 bps, 10s +0.3/+0.1 bps.

- Swap Spreads: 2s +2.00bps, 5s +1.70bps, 10s +1.25bps.

EQUITIES

In a relatively quiet day of flat to negative trade, equities held up pretty well to the European risk off tone though that helped cap again ahead of the recent ceiling levels. The S&P fell 0.21%.

ASIA CURRENCIES

USD/CNY: 1Y NDFs continued to see an offered tone overnight, slipping from >7.1100 levels seen on Monday morning to <7.0800 in early Asian trading today. Onshore spot USDCNY midpoint was lower than expected at 6.8606 today, and onshore spot traded below the previous closing of 6.8727 as a result. Although 1Y NDFs delved below 7.1000, there was no sign of sustained downward momentum and we expect sub 7.1000 prices to remain a bargain in the medium term, though 1Y NDF points should narrow in the short term.

USD/CNH: Pair oscillated around 6.8100 at the start of the NY session before retreating to the 6.8000 handle and finally dipping below it into the close. While we expect CNH sellers to continue testing the patience of the authorities soon, USDCNH movements are likely to be dictated by onshore spot for the time being, with any CNH/CNY spread not likely to narrow within three big figures for the week.

USD/SGD: Pair recovered to tread above the 1.4100 handle just as we had expected, and was bid up to a high of 1.4128 in NY before returning lower to 1.4090 levels later. A break above 1.4100 should ease downside pressures, but we do not expect gains to stretch above 1.4150 amid Trump concerns.

USD/IDR: 1M NDFs continued to consolidate with a downward bias, and slid below 13340 in NY. Onshore spot slid to an over 1-week low of 13319 on Monday, while trading on either side of 13330 for most part of the day. No meaningful impact was seen from the GDP report. Support at 13300 should continue to hold, as we have long argued. Some gains to 13400 are likely, but we do not see any risk to the 13500 handle.

USD/INR: 1M NDFs saw a consolidative tone around 67.3750 in NY. Onshore spot gapped lower to open at 67.2000 vs. Friday's close of 67.3100 and printed a fresh near 3-month low of 67.1463. Pair continued to trade on either side of 67.2000. Focus has now turned to the highly anticipated RBI decision due this week, and some consolidation below 67.5000 is likely.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 01:00 GMT - PH: CPI (Jan) [Mkt: 2.8, Prev: 2.6]

- 02:00 GMT - NZ: RBNZ Inflation Expectations (Q4) [Prev: 1.68]

- 03:30 GMT - AU: RBA - Overnight Rate (Feb 7) 4cast:1.5 % [Mkt: 1.5, Prev: 1.5]

- 05:00 GMT - JP: Leading indicator (Prelim) (Dec) [Mkt: 105.5, Prev: 102.8]

- 08:00 GMT - TW: Exports (Jan) [Mkt: 10, Prev: 14]

- 08:00 GMT - TW: Imports (Jan) [Mkt: 12.7, Prev: 13.2]

- 08:00 GMT - TW: Trade Balance (Jan) [Mkt: 3.64, Prev: 4.86]

- 08:30 GMT - UK: Halifax House Price Index (Jan) [Mkt: 6.1, Prev: 6.5]

- 08:30 GMT - UK: Halifax House Price Index (Jan) [Mkt: 0, Prev: 1.7]

- 13:30 GMT - US: Trade Balance (Dec) 4cast:-45 USD bn [Mkt: -45, Prev: -45.2]

- 13:30 GMT - CA: Building permits (Dec) [Prev: -0.1]

- 13:30 GMT - CA: Merchandise Trade (Dec) [Prev: 0.53]

- 20:00 GMT - US: Consumer Credit (Dec) [Mkt: 20, Prev: 24.532]

- 23:50 GMT - JP: Bank Lending Data (Jan) [Prev: 2.6]

- 23:50 GMT - JP: Current Account (Dec) [Mkt: 1183.3, Prev: 1415.5]

EVENTS & AUCTIONS

- 01:00 GMT - NZ: Monthly Economic Indicators Published

- 14:30 GMT - AU: RBA Holds Interest Rate Meeting

- 23:15 GMT - NZ: Finance Minister Joyce Speaks


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