Forex - Asia Open - Overnight Highlights

 23:43 (GMT) 11 Jul

  [Forex Highlights]

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Asia Open - Overnight Highlights (0101-MLTG-C03)

Asia Overnight Highlights - 12 Jul 2019


FX Highlights:

A stronger than expected US core CPI gave the USD some support after a soft start to the North American session. Gains built after the initial response, USD/JPY rose to around108.50 and EUR/USD slid to around 1.1255. Comments from Fed's Barkin and Bostic were less than dovish too, but there was no change in tone from Powell who was later echoed by Williams. AUD/CAD moved back above .91, the CAD slipping after the US CPI and a 0.1% decline in May Canadian house prices, though USD/CAD failed to reach 1.31, and erased most of its gains in late trade. EUR/GBP was relatively steady with the Bank of England Financial Stability Report producing nothing market moving, but did note the likelihood of a no deal Brexit had risen.

Data Overnight:

Jun's core CPI was surprisingly strong with a 0.3% increase to follow 4 straight gains of 0.1%, the rise being 0.2942% before rounding.
Data Ahead:
We expect US Jun PPI to rise by 0.1% with a 0.2% increase ex food and energy. Gasoline prices slipped in Jun but food may provide some offset if bad weather has an impact.

- VIX index: 12.93 (-0.77%)

- Gold Spot: $1,404.71/oz (+0.07%)

- ICE Brent front contract: $66.52 ($-0.49)

- Nymex WTI front contract: $60.38 (+$0.18)

- Reuters/Jefferies Commodities Index: 183.68 (-0.27%)

- 10y UST: 2.138% (+8bp) (Asia morning)

- DJI: 27,088.08 (+0.85%); S&P: 2,999.91 (+0.23%); Nasdaq: 8,196.04 (-0.08%)

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


FX Highlights:

Asian currencies did not change much during Thursday NY session, as they stabilized following Powell's comments. Expect more moves to test support levels as the first US rate cut looms closer.

USD/CNH remained range bound during Thursday NY session at 6.8764 last. We continue to see pair within the range of 6.8731-6.9000.

USD/CNY 1M NDFs consolidated after a bid tone during Thursday, last at 6.9155. PBoC fixed mid-point at 6.8677 vs. previous close of 6.8750 on Thursday. USD/CNY opened on Thursday lower but not by much, last at 6.8669. The onshore pair is still likely to trade within range of 6.8500-6.9000 for the time being, in the absence of significant drivers.

USD/SGD did not deviated much from Asia Thursday's range, last at 1.3571. Return of risk-on sentiments is likely to see pair eye the 1.3545 support.

USD/IDR 1M NDFs last at 14130. USD/IDR started Thursday with a gap lower, then moved in an offered tone to 14065 last. US Powell hinted that a rate cut is looming due to uncertain global outlook. This weakened the USD. Watch the support of 14000 from 18 April low.

USD/INR 1M NDFs last at 68.69, remaining stable. On Thursday, USD/INR onshore spot opened at 68.32 from 68.57, and found support at 68.30. The Indian Rupee strengthens against the dollar along with other EM Asian currencies, after Powell's testimony came across as dovish, cementing a July ease, hence boosted market easing expectations. However gains in oil prices might have partially offset some of Rupee's strength. The opening gap below 68.40 support is seen as bearish and opens the door towards testing the next strong support at 68.26, which will likely hold the line.

Data/Events Highlights:

Singapore GDP will be the first to be released on 12 July, where we expect a weak number. China trade data will likely dominate market attention. We expect contraction in both exports and imports. Its trade balance will likely improve slightly in our view. Meanwhile, expect India's inflation to increase slightly while industrial production slow.

Data/Events Ahead:

00:00 GMT - CN: Imports (Jun) 4cast: -7.7% y/y (Mkt: -4.6 Prev: -8.5)

00:00 GMT - CN: Trade Balance (Jun) 4cast: 48.1USD bn (Mkt: 45 Prev: 41.66)

00:00 GMT - CN: Exports (Jun) 4cast: -4.1% y/y (Mkt: -1.4 Prev: 1.1)

00:00 GMT - SG: GDP () 4cast: 0.9 (Mkt: 1 Prev: 1.2)

04:00 GMT - MY: Industrial Production (May) 4cast: 3.5% y/y (Mkt: 3.5 Prev: 4)

04:30 GMT - JP: Capacity Utilisation (May) 4cast: % m/m (Mkt: Prev: 1.6)

04:30 GMT - JP: Industrial Production (May F) 4cast: % m/m (Mkt: Prev: 2.3)

04:30 GMT - JP: Industrial Production (May F) 4cast: % y/y (Mkt: Prev: -1.8)

05:00 GMT - SG: Retail Sales (May) 4cast: -2.7% y/y (Mkt: -3 Prev: -1.8)

09:00 GMT - EU: Industrial production (May) 4cast: % y/y (Mkt: -1.6 Prev: -0.4)

12:00 GMT - IN: CPI (Jun) 4cast: 3.2% y/y (Mkt: 3.17 Prev: 3.05)

12:00 GMT - IN: Industrial Production (May) 4cast: 3.8% y/y (Mkt: 2.9 Prev: 3.4)

12:30 GMT - US: PPI (Jun) 4cast: 0.1% m/m (Mkt: 0 Prev: 0.1)

12:30 GMT - US: PPI (ex Food & Energy) (Jun) 4cast: 0.2% m/m (Mkt: 0.2 Prev: 0.2)


- 03:30 GMT - JP: 3mth Bills Auction

- 08:30 GMT - UK: BoE's Vlieghe speaks in London

- 10:00 GMT - UK: 182 days Bills Auction (GBP 3bn)

- 10:00 GMT - UK: 28 days Bills Auction (GBP 0.5bn)

- 10:00 GMT - UK: 91 days Bills Auction (GBP 2.5bn)

- 14:00 GMT - US: Fed's Evans speaks in Chicago

Forex - China Flows: USD/CNH remains within range, as key data releases later the week provide fresh clues on economy

 02:40 (GMT) 09 Jul

 [Forex Flows]

USD/CNH remained relatively calm on Tuesday. Pair last at 6.8888. CPI, PPI and trade data key to watch this week. We see higher inflation, although PPI is likely to remain subdued. Weak trade data may cause further upsides to the pair, even though we suspect much is priced in. A move beyond the 6.9000 can trigger further upside momentum towards the 6.9102 resistance.

PBoC fixed mid-point at 6.8853 vs. previous close of 6.8827. USD/CNY last at 6.8829, with 1Y NDFs also staying range-bound at 6.9244. Without fresh developments, 6.9000 big figure remains key to watch, on whether expectations shift next towards the 6.9300 resistance.

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