Forex - Asia Open - Overnight Highlights


 23:41 (GMT) 03 Dec

  [Forex Highlights]

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Asia Overnight Highlights - 04 Dec 2019

MAJORS

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

FX Highlights:

The Bloomberg dollar spot index was lower on Tuesday after the comment from President Trump in a press conference at the NATO Summit, saying that he had no deadline on a trade deal with China and it might be better to wait until after the November 2020 election. This triggered a risk off reaction in markets which had been hoping for a phase one deal by the end of the year or at least early in 2020.

USD/JPY lost around 15 pips on the statement, but as US equity and UST yield losses built, a low below 108.50 was seen. Comments from Commerce Secretary Ross suggesting tariffs on China might be hiked on December 15 added to market concerns.

EUR/USD fell around 20 pips down to 1.1065 on Trump's comments before picking up as UST yields weighed on the USD, though 1.10 still contains the upside. Trump suggested he could use trade as a weapon against countries not meeting their NATO commitments.

GBP was a little firmer against the EUR, benefitting from a new Kantar poll showing an increase in the Conservative poll lead to 12%. The UK construction PMI stayed very weak, but was slightly above market expectations. GBP/USD saw highs above 1.30.

AUD/USD fell back to opening levels at 0.6840 after extending the Asian session gains to 0.6860 in the European morning. USD/CAD also ended little changed.

Data/Events Highlights:

- Trump said no deadline for deal with China, could be better to wait until after election

- VIX index: 15.96 (+7.04%)

- Gold Spot: $1,476.79/oz (-0.06%)

- ICE Brent front contract: $60.82 ($-0.10)

- Nymex WTI front contract: $56.41 (+$0.31)

- Reuters/Jefferies Commodities Index: 177.59 (+0.26%)

- 10y UST: 1.716% (-10bp) (Asia morning)

- DJI: 27,502.81 (-1.01%); S&P: 3,093.20 (-0.66%); Nasdaq: 8,520.64 (-0.55%)

Data/Events Ahead:

We expect a 140k Nov increase in ADP's estimate of private sector employment growth. . Nov ISM non-manufacturing data is also due and we expect slippage to 54.0 from 54.7.

The Bank of Canada meets today. A rate cut looks unlikely, but recent data will be closely watched, Q3 GDP in particular.

Eurozone Services and Composite PMIs are due for final readings, whose flash readings were 51.5 (52.2 in October) and 50.3 (50.6 in October) respectively.

EMERGING ASIA

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

FX Highlights:

A mixed day for Asian currencies as dollar held onto its losses. Trump's latest tariffs against Brazil and Argentina rattled market nerves again on Tuesday, and further decline in risk sentiment was seen overnight with President Trump saying he's not running a deadline for the China deal and it could be postponed to after the elections. CNH (-0.37%) led the losses as a result, followed by KRW (-0.33%) and CNY (-0.31%). Philippines peso trimmed some earlier losses, rebounded by 0.25% against USD. SGD (+0.12%), MYR (+0.10%) and IDR (+0.07%) were also in gains.

USD/CNH extended the gains on Tuesday to 7.0800+ levels in NY from 7.0400-levels seen in the Asian session and settled around 7.0700 into the NY close after concerns regarding the phase 1 US/China trade deal rose again. Break above 7.0500 has exposed the 7.1000 handle once again. Onshore spot was seen printing over 1-month highs of 7.0650 on Tuesday amid risks to China tariffs after President Trump imposed tariffs on Brazil and Argentina. Upside remains vulnerable, eyes on 7.1000 big figure. 1Y NDFs were boosted to highs of 7.1585 from sub-7.1200 levels seen earlier.

USD/SGD continued to trade with a bearish bias on Tuesday despite fresh tariff concerns, and pair slid to sub-1.3650 levels in NY as the USD weakened. Pair may eye the 1.3635 support. If broken, we will turn our attention to the 1.3596 support next.

USD/IDR 1M NDFs traded choppily around 14170 on Tuesday, unable to find a firm bias. Onshore spot remained close to Monday's highs of 14132 and re-printed it in early trading. Pair was however possibly halted by authorities. Risk aversion was also higher due to a blast report at Indonesia's national monument park in Jakarta. Pair however retreated to sub-14120 levels into the close. We believe the pair remains fragile amid trade risks and a widening budget deficit at home. However, gains towards 14150 are still likely to be capped.

USD/INR 1M NDFs traded with a bid tone back to the 72 handle from lows of 71.710 earlier on Tuesday. Onshore spot traded in consolidation around 71.600 as the RBI's 3-day meeting began with the decision due on Thursday. Pair however rose back to 71.800 levels into the close, and is likely to face continued upside pressures amid domestic and external volatilities, and the 72 level may be eyed again.

Data/Events Highlights:

Singapore's November manufacturing PMI saw some gains to 49.8 in November from 49.6 in October, but still remained in contraction.

Data/Events Ahead:

Malaysia's October trade data is scheduled in Asia today, and we expect another contraction in exports and imports.

DATA RELEASES DUE TODAY

00:00 GMT / 08:00 SGT - NZ: ANZ Commodity Price (Nov) [Prev: 1.2]

00:30 GMT / 08:30 SGT - JP: Services PMI (Nov F) [Prev: 50.4]

00:30 GMT / 08:30 SGT - JP: Composite PMI (Nov F) [Prev: 49.9]

00:30 GMT / 08:30 SGT - AU: GDP (Q3) 4cast: 1.8% y/y [Mkt: 1.7, Prev: 1.4]

04:00 GMT / 12:00 SGT - MY: Exports (Oct) 4cast: -13.5% y/y [Mkt: -12.5, Prev: -6.8]

04:00 GMT / 12:00 SGT - MY: Imports (Oct) 4cast: -8% y/y [Mkt: -9, Prev: 2.4]

04:00 GMT / 12:00 SGT - MY: Trade Balance (Oct) 4cast: 10.15MYR bn [Mkt: 11.9, Prev: 8.34]

05:00 GMT / 13:00 SGT - IN: Composite PMI (Nov) [Prev: 49.6]

05:00 GMT / 13:00 SGT - IN: Services PMI (Nov) [Prev: 49.2]

09:00 GMT / 17:00 SGT - EU: Services PMI (Nov Final) [Mkt: 51.5, Prev: 51.5]

09:00 GMT / 17:00 SGT - EU: Composite PMI (Nov Final) [Mkt: 50.3, Prev: 50.3]

09:30 GMT / 17:30 SGT - UK: CIPS / Markit Services PMI (Nov Final) [Mkt: 48.6, Prev: 48.6]

09:30 GMT / 17:30 SGT - UK: CIPS/Markit Composite PMI (Nov Final) [Mkt: 48.5, Prev: 48.5]

13:15 GMT / 21:15 SGT - US: ADP Employment Survey (Nov) 4cast: 140k [Mkt: 140, Prev: 125]

14:45 GMT / 22:45 SGT - US: Markit Services PMI (Nov F) [Mkt: 51.6, Prev: 51.6]

15:00 GMT / 23:00 SGT - US: ISM Non-Manufacturing (Nov) 4cast: 54 [Mkt: 54.5, Prev: 54.7]

15:00 GMT / 23:00 SGT - CA: BoC Rate (Dec 4) 4cast: 1.75% [Mkt: 1.75, Prev: 1.75]

23:00 GMT / 07:00 SGT - KR: Current Account Balance (Oct) [Prev: 7.4772]

EVENTS & AUCTIONS

- No Key Events Scheduled


Forex - India REVIEW: Q2 FY2020 GDP Growth Worsened to a Low since FY2013


 03:04 (GMT) 02 Dec

 [Economic Data]

India's Q2 FY2020 GDP growth plummeted further to 4.5% y/y, a low since FY2013. Although, it was aligned with market expectations, this was a slip from 5.0% y/y in Q1 FY 2020.

Private consumption growth ticked slightly higher to 5.1% y/y in Q2 FY2020, however, remained subdued. Investment growth dipped to 1.0% y/y, compared to 4.0% y/y in the previous quarter. Exports contracted for the first time since FY2016, by 0.4% y/y. Meanwhile, growth was supported by a surge in government expenditure at 15.6% y/y in FY 2020.

Overall, this is a weak print and we expect the Reserve Bank of India (RBI) to ease further in order to lend support to growth. We expect a 25-bps rate cut at the RBI's meeting on December 5, to bring the repo rate to 4.9% at year-end. We continue to see room for demand-side fiscal support announcements such as tax cuts either in the February budget or before. Given a tight fiscal hand, we believe an accelerated divestment plan will likely be in the cards.


Forex - Indonesia Flows: USD/IDR still capped at 14100


 02:41 (GMT) 29 Nov

 [Forex Flows]

USD/IDR onshore spot gapped a notch lower to open at 14090 from previous close of 14093 but moved towards 14100 again, and was possibly capped by authorities again. US/China trade talks are at risk again after President Trump signed the HK bill, and fiscal deficit at home is also seeing risks of slippage as government attempts to support growth. No risk is seen to 14050 support and upside pressures are likely to return. We continue to see a risk of another move towards 14110 resistance, but expect BI to limit gains above that. 1M NDFs meanwhile continued to trade in consolidation around 14140 this morning again. JKSE up by nearly 0.5% at last check.


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