Forex - Asia Open - Overnight Highlights

 23:50 (GMT) 15 Jan

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Asia Overnight Highlights - 16 Jan 2020


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

FX Highlights

The Bloomberg dollar spot index was softer in NY on Wednesday after the phase one U.S./China trade deal was signed as it had been priced in. Weaker wholesale inflation data underpinned.

USD/JPY however peaked around 110.00. EUR/USD advanced above 1.1150, a report Trump could tariff European autos over lack of backing on Iran bringing only a marginal correction.

GBP fell back on weak UK CPI but was firmer in NY and rose to 1.3060 in early Asian hours. MPC member Saunders reiterated his support for a rate cut, but had little impact, GBP later recovering its losses.

There was some early weakness in the commodity currencies, but AUD and CAD erased their losses and more as equities advanced, even with a dip in oil.

Data/Events Highlights:

- US Dec PPI +0.1% vs 0.2% exp, ex food and energy +0.1% vs 0.2% exp.

- US Jan Empire State survey rise to 4.8 from 3.3 vs 3.6 exp.

- UK CPI fell to a 3 year low of 1.4% y/y on the core measure, 1.3% y/y on the headline, increasing expectations of a rate cut in January.

- German real GDP rose by 0.6% y/y in 2019, sharply lower than the 1.5% y/y recorded in 2018 and 2.5% y/y in 2017.

- In November, Eurozone industrial production rose by 0.2% m/m after declining by 0.9% m/m in October.

- VIX index: 12.42 (+0.24%)

- Gold Spot: $1,555.23/oz (-0.07%)

- ICE Brent front contract: $64.00 ($-0.49)

- Nymex WTI front contract: $58.11 (+$0.30)

- Reuters/Jefferies Commodities Index: 182.69 (-0.52%)

- 10y UST: 1.783% (-3bp) (Asia morning)

- DJI: 29,030.22 (+0.31%); S&P: 3,289.29 (+0.19%); Nasdaq: 9,258.70 (+0.08%)

Data/Events Ahead:

U.S. Dec retail sales are expected to rise by 0.3% overall with a stronger 0.5% gain ex food and energy. Philly Fed survey is also due. Housing signals will come from Jan's NAHB homebuilders' survey. Weekly initial claims, Nov business inventories and Nov TICS capital flows are also scheduled.

Japan's core machinery orders are likely to remain weak in November. We expect a further decline of 7.5% y/y in November following a drop of 6.1% y/y earlier. December PPI will be out today as well.

Germany's final reading of December HICP inflation should confirm the flash reading of 1.5% y/y, thus bringing the 2019 average inflation at 1.4%.

The BoE Credit Conditions Survey may prove to be an important ingredient to the looming MPC meeting at the end of the month. RICS housing market survey report will also be released.


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

FX Highlights:

Majority of the Asian currencies traded with a cautious undertone and were roughly stable in Wednesday's Asian session ahead of the official signing of the U.S./China 'phase one' trade deal. However, risk appetite curtailed slightly following reports stating that further cuts in existing U.S. tariffs on China goods were only likely to happen after November's U.S. presidential elections. PHP was the only distinct loser, down 0.32% against the dollar. The biggest sell-off of Philippine equities by foreign investors since 23 December weighed on the Philippine Peso.

USD/CNH traded mostly horizontally around 6.8900 in eth overnight session even as the trade deal was signed and details released as the news was generally priced in. Potentials remain for the pair to pull back and move toward six-month lows of 6.8600, ahead of the Lunar New Year and if risk-on sentiment continues. USD/CNY onshore spot rose on Wednesday amid reports that US will not remove China tariffs until the Nov 2020 elections, but 6.9000 still remained intact and pair returned to 6.8900 levels into the close. More downside bias expected after yuan's removal from the currency manipulator list, with eyes now on next support at 6.8320 for USD/CNY. 1Y NDFs reversed from Asia session highs of 6.9824 and traded close to 6.9700 in NY.

USD/SGD remained capped at 1.3485 resistance for a third day even as risk sentiment deteriorated in Asia on Wednesday on reports that US will keep tariffs on China until the November elections and phase 2 talks. Pair however traded with a downside bias to 1.3460 levels in NY as the phase one trade deal was signed and details released. Support level of 1.3444 still holds, with resistance at 1.3510. A downward momentum could bring the pair to the lows of 1.3300.

USD/IDR 1M NDFs traded horizontally around 13720 in the overnight session after touching highs of 13758 earlier in Asia. USD/IDR onshore spot traded with an upside bias on Wednesday morning and rose to 13720 highs from previous close of 13680. Reports saying the US will keep tariffs on Chinese imports until the November elections and phase 2 talks dented the optimism around the phase one trade deal. BI's presence however possibly stalled further gains in the pair. A positive surprise in December's exports and balanced trade brought the pair back to sub-13700 levels in the afternoon. Pair sees supports at 13645 and 13600, but we believe the doors to 13500 are now open if positive trade sentiment is sustained. Further geopolitical tensions could however bring the pair back to 13800 levels.

USD/INR 1M NDFs traded bearishly to sub-70.950 levels in NY from highs of 71.200 earlier in the day as sentiment regenerated with the signing of the phase one trade deal. USD/INR onshore spot gapped higher to open at 70.990 on Wednesday from previous close of 70.880 amid a deterioration in risk sentiment after reports that US will keep China tariffs until Nov 2020. Pair however traded with a downside bias and break of the 71 handle proved temporary, with prices seen dropping to lows of 70.800 in the afternoon. Bond traders are expecting another leg of Operation Twist by the RBI, and that may be supporting the rupee for now. We however maintain our view that break below the 71 handle will likely remain temporary given a host of domestic challenges.

Data/Events Highlights:

Indonesia's December exports turned positive after 13 consecutive months of decline, coming in at 1.28% y/y. Imports however remained weak at -5.62% y/y which helped to narrow the trade deficit to $30mn from -$1330mn previously.

India's December exports slid by 1.8% y/y, slightly worse than last month's -0.3% y/y but better than our expectations. Imports were down -9.0% y/y much like we had expected and trade deficit narrowed to $11.25bn.

Philippines' November overseas remittance growth was slower than expected at 2.0% y/y.

Data/Events Ahead:

No tier 1 data is reported in EM Asia on Thursday.


23:50 GMT / 07:50 SGT - JP: PPI (Dec) [Mkt: 0.1, Prev: 0.2]

23:50 GMT / 07:50 SGT - JP: PPI (Dec) [Mkt: 0.9, Prev: 0.1]

23:50 GMT / 07:50 SGT - JP: Core Machine orders (Nov) 4cast: -7.5% y/y [Mkt: -5.4, Prev: -6.1]

00:01 GMT / 08:01 SGT - UK: RICS Housing Survey (Dec) [Mkt: -8, Prev: -12]

00:30 GMT / 08:30 SGT - AU: Home Loans (Nov) [Mkt: 1.4, Prev: 2]

13:30 GMT / 21:30 SGT - US: Initial Claims (Jan 11) [Mkt: 217, Prev: 214]

13:30 GMT / 21:30 SGT - US: Philadelphia Fed Survey (Jan) [Mkt: 3.4, Prev: 2.4]

13:30 GMT / 21:30 SGT - US: Retail Sales (ex Autos) (Dec) 4cast: 0.5% m/m [Mkt: 0.5, Prev: 0.1]

13:30 GMT / 21:30 SGT - US: Import Price Index (Dec) [Mkt: 0.4, Prev: 0.2]

13:30 GMT / 21:30 SGT - US: Retail Sales (Dec) 4cast: 0.3% m/m [Mkt: 0.3, Prev: 0.2]

15:00 GMT / 23:00 SGT - US: Business Inventories (Nov) 4cast: -0.2% m/m [Mkt: -0.1, Prev: 0.2]

15:00 GMT / 23:00 SGT - US: NAHB Builders survey (Jan) [Mkt: 74, Prev: 76]

21:00 GMT / 05:00 SGT - US: Net Long-term TICS Flows (Nov) [Prev: 32.5]

21:30 GMT / 05:30 SGT - NZ: Business NZ Manufacturing PMI (Dec) [Prev: 51.4]


18:00 GMT / 02:00 SGT - EU: ECB's Lagarde Speaks in Frankfurt

21:00 GMT / 05:00 SGT - NZ: NZ Government's 5-Month Financial Statements

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