Forex - Asia Open - Overnight Highlights


 23:44 (GMT) 14 May

  [Forex Highlights]

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

Asia Overnight Highlights - 15 May 2018

ASIA OUTLOOK

Trump's comments on helping China's ZTE gave early support to equities while UST yields edged higher, but Commerce Secretary Ross was less conciliatory, seeing equities off their highs. Bond yields were lifted by comments from ECB's Villeroy but EUR/USD gains were fully erased as the USD tone improved late in what was generally a subdued session.

Majors FX Highlights

The Bloomberg dollar index remained soft earlier on Monday, and slid to a low of 92.243 before upside pressures returned and took the index back up to 92.600+ levels after US Commerce Secretary Ross was critical of Europe as well as China on trade. Data calendar was light, with no tier 1 data in sights before eyes turn to retail sales today. EUR/USD remained bid on hawkish comments from ECB Villeroy as he said the end of asset purchases is a matter of months rather than years away, but gains stalled short of the 1.2000 handle and focus turned back to the downside on Com Sec Ross' comments and the attempts to form a populist government in Italy still struggling to come to a conclusion. Pair slid all the way back below 1.1930 into NY close/Asian open as ECB's Coeure saw rates remaining low well after asset purchases ended. Cable pushed above 1.3600 to a high of 1.3608 but EUR/GBP nudged down to around .88. Traders are looking to employment data with earnings again in focus. USD/JPY seen with a modest bid tone, although still in familiar ranges, last seen inching up above 109.70. Quiet on the commodity currencies, with modest losses late as the USD picked up. NZD still struggling as AUD/NZD heads towards 1.0900. The CAD is marginally the better, regaining some of the ground lost to the AUD after Friday's jobs data even as USD/CAD advanced to 1.28.

Majors Data Highlights

After a quiet start to the week, US retail sales today is likely to be the most watched, expected to see a modest 0.3% m/m gain on the headline, a more solid 0.5% ex-autos and ex-autos and gasoline. The May Empire State and NAHB homebuilders survey are also due, as too March business inventories. Q1 GDP is due from both Germany and the Eurozone today, the first estimate for the former expected to post 0.4% q/q, down from 0.6% in Q4 and bringing y/y growth down to 2.4% from 2.9%. It's the second estimate for the Eurozone and should confirm the preliminary 0.4% q/q, 2.5% y/y. The May ZEW survey is also due where we expect a modest rebound to a still negative -4 on the headline, only recovering a small part of the sharp April fall to -8.2. UK employment data and average earnings numbers will also take some focus. We anticipate a slide in the headline rate to 2.5% from 2.8%. The unemployment rate is likely to remain at a cycle low of 4.2%. Q1 productivity data will be released alongside the jobs numbers, a fresh fall likely after surprisingly strong growth in the last two quarters.

Emerging Asia FX Highlights

USD/Asians traded in a range bound manner at the start of the week, but picked up traction in late NY hours. USD/CNY 1Y NDFs saw some upside momentum as US Commerce Sec Ross spoke about China's unfair trade practices, and a break above 6.4400 was seen in the NY afternoon with gains extending to 6.4460 in the Asian morning hours today. USD/SGD slid earlier on Monday from 1.3350+ levels to a low of 1.3305 but gains returned later in the NY hours with pair inching back to 1.3360-levels. USD/IDR 1M NDFs traded on either side of 14070 earlier on Monday, but remained mostly bid in late NY hours. USD/INR 1M NDFs traded with a clear bullish bias overnight, touching the 68 handle at last check as April inflation came in slightly higher than expectations, raising the chances of a hawkish bias by the RBI.

Emerging Asia Data Highlights

India April consumer prices rise 4.58% vs 4.28% in March.

A heavy data calendar is seen ahead in Asia today, led by China's April IP and retail sales data in the morning. April trade numbers for India and Indonesia will also be due, as will be Mar overseas remittances for Filipinos.

OVERNIGHT NEWS HIGHLIGHTS

- Fed's Mester said economy slightly beyond full employment, doesn't expect inflation to pick up sharply, see l-t Fed Funds at 3%.

- Fed's Bullard sees risk of inverted curve late 2018 or early 2019.

- VIX index: 12.93 (+2.21%)

- Gold Spot: $1,314.06/oz (+0.04%)

- ICE Brent front contract: $78.23 (+$1.11)

- Nymex WTI front contract: $71.13 (+$0.17)

- Reuters/Jefferies Commodities Index: 203.83 (+0.13%)

- 10y UST: 3.002% (+3bp) (Asia morning)

- DJI: 24,899.41 (+0.27%); S&P: 2,730.13 (+0.09%); Nasdaq: 7,411.32 (+0.11%)

ASIA NEWS

China: US Commerce Secretary Ross says China and Europe are highly protectionist. - BBG

China: China's 2018 GDP growth is expected to be above 6.5 percent target, the Securities News reported, citing blue book from Chinese Academy of Social Sciences. - BBG

India: India's Railways Minister Piyush Goyal will hold the additional charge of finance ministry until incumbent Arun Jaitley's recovers, a statement from the president's house said. - BBG

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

CURRENCIES

EUR/USD managed to edge the recovery to as high as 1.1996 in the absence of any major data. ECB's Villeroy was seen as hawkish as he said the end of asset purchases is a matter of months rather than years away. However gains were fully erased back to a low of 1.1932 with US Commerce Secretary Ross critical of Europe as well as China on trade, and attempts to form a populist government in Italy still struggling to come to a conclusion. ECB's Coeure saw rates remaining low well after asset purchases ended.

USD/JPY continues to tread water around 109.50 despite 10yr US yields heading back towards 3%, picking up a little late despite equities coming off their highs. EUR/JPY failed to hold a move above 1.31.

Cable failed to hold above 1.36 but EUR/GBP nudged down to around .88. Traders are looking to employment data with earnings again in focus. .

EUR/CHF sticking close to the middle of 1.19/1.20, though more attention being paid to USD/CHF now as CFTC shows a big step up in short CHF 'speculative' positioning.

Quiet on the commodity currencies, with modest losses late as the USD picked up. NZD still struggling as AUD/NZD heads towards 1.0900. The CAD is marginally the better, regaining some of the ground lost to the AUD after Friday's jobs data even as USD/CAD advanced to 1.28.

Modest bounces seen in EUR/SEK and EUR/NOK, the latter despite a firmer Brent, though only a small recovery from the recent fall.

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

BONDS

USTs see yields lifted slightly overnight by the bund action, but US-DE narrowing also cushions. 10s test back to around 3% again but all pretty quiet in the US session. 2s +0.6bps @ 2.54%, 5s +1.2bps @ 2.85%, 10s +2.4bps @ 2.99%, 30s +2.3bps @ 3.13%.

Agency Spreads: Freddie/Fannie 5s +0.2/-1.2 bps, 10s -1.0/+0.4 bps.

Swap Spreads: 2s -0.75bps, 5s -0.53bps, 10s -0.50bps.

EQUITIES

Equities had support from an apparently softer stance from Trump towards China as he sought to help Chinese company ZTE which had been hit by US sanctions. However Commerce Secretary Ross later sounded quite hawkish on trade and helped equites come off their highs. Middle East tensions supported energy.

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

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw some upside momentum as US Commerce Sec Ross spoke about China's unfair trade practices, and a break above 6.4400 was seen in the NY afternoon with gains extending to 6.4460 in the Asian morning hours today. On Monday, PBoC fixed mid-point at 6.3345 vs. previous close of 6.3323. Onshore spot USD/CNY opened at 6.3318 and then moved slightly up to 6.3414 while trading mostly in a range-bound manner. For USD/CNY, it is likely to stay above 6.3200 support for now, but find it difficult to break 6.3600 resistance.

USD/CNH: Pair traded choppily earlier on Monday, but a bid tone was seen in late NY hours as US-China trade spat continued, and pair rallied towards 6.3400 handle at last look. Focus on April economic data out today. We expect slight slowdowns for IP and retail sales. For USD/CNH, we watch for 6.3400 as an important immediate resistance level and 6.3150 as the support.

USD/SGD: Pair slid earlier on Monday from 1.3350+ levels to a low of 1.3305 but gains returned later in the NY hours with pair inching back to 1.3360-levels as US comments on China's trade practices returned risking another trade spat. Support at the 1.3300 handle still supporting the downside, and gains to 1.3400 still remain in the cards.

USD/IDR: 1M NDFs traded on either side of 14070 earlier on Monday, but remained mostly bid in late NY hours. Onshore spot saw a firm opening at 13963 on Monday vs. last close of 13958 as the dollar index softened from its YTD highs on Friday in the NY hours. Pair however saw upside pressures return in the morning as blast reports from Surabaya continued, and a high of 13993 was printed before the pair turned back lower to 13970-levels. Bank Indonesia is giving clear signals of a rate hike at their meeting this week, which should keep the gains in check, but the 14000 handle still remains at risk.

USD/INR: 1M NDFs traded with a clear bullish bias overnight, touching the 68 handle at last check as April inflation came in slightly higher than expectations, raising the chances of a hawkish bias by the RBI. Onshore spot gapped lower to open at 67.2450 on Monday vs. last close of 67.3250 as the US dollar softened in the NY hours on Friday and oil prices corrected slightly lower. Pair however charted on a bullish run, and eventually printed a fresh 15-month high of 67.6200. Immediate resistance now seen at 67.6800, which remains at risk amid Karnataka election result jitters.

DATA RELEASES DUE TODAY

- n/a GMT - PH: Overseas Remittances (Mar) [Prev: 4.5]

- n/a GMT - PH: Overseas Remittances (Mar) [Prev: 2.267]

- n/a GMT - IN: Exports (Apr) [Prev: -0.7]

- n/a GMT - IN: Imports (Apr) [Prev: 7.2]

- n/a GMT - IN: Trade Balance (Apr) [Mkt: -14.75, Prev: -13.69]

- 02:00 GMT - CN: Industrial Production (Apr) [Mkt: 6.4, Prev: 6]

- 02:00 GMT - CN: Retail Sales (Apr) [Mkt: 10.1, Prev: 10.1]

- 04:00 GMT - ID: Exports (Apr) [Prev: 6.14]

- 04:00 GMT - ID: Imports (Apr) [Prev: 9.07]

- 04:00 GMT - ID: Trade Balance (Apr) [Prev: 1090]

- 04:30 GMT - JP: METI Tertiary activity index (Mar) [Mkt: -0.2, Prev: 0]

- 08:30 GMT - UK: Average Earnings (incl. bonus) (Mar) [Prev: 2.8]

- 08:30 GMT - UK: Claimant Count Change (Apr) [Prev: 11.6]

- 08:30 GMT - UK: Claimant Count Rate (Apr) [Prev: 2.4]

- 08:30 GMT - UK: ILO Unemployment Rate (Mar) [Prev: 4.2]

- 09:00 GMT - EU: GDP (SA) (Q1 P) [Prev: 0.4]

- 09:00 GMT - EU: GDP (SA) (Q1 P) [Prev: 2.5]

- 09:00 GMT - EU: Industrial production (Mar) [Prev: 2.9]

- 09:00 GMT - EU: ZEW (Economic Sentiment) (May) 4cast:4 index [Prev: 1.9]

- 12:30 GMT - US: Empire State Survey (May) [Mkt: 15, Prev: 15.8]

- 12:30 GMT - US: Retail Sales (Apr) 4cast:0.5 % m/m [Mkt: 0.3, Prev: 0.6]

- 12:30 GMT - US: Retail Sales (ex Autos) (Apr) 4cast:0.3 % m/m [Mkt: 0.6, Prev: 0.2]

- 12:30 GMT - CA: Existing Home Sales (Apr) 4cast:2.5 % m/m [Prev: 1.3]

- 14:00 GMT - US: Business Inventories (Mar) [Mkt: 0.2, Prev: 0.6]

- 14:00 GMT - US: NAHB Builders survey (May) [Mkt: 70, Prev: 69]

- 20:00 GMT - US: Net Long-term TICS Flows (Mar) [Prev: 49]

- 23:00 GMT - KR: Unemployment (sa) (Mar) [Prev: 4]

EVENTS & AUCTIONS

- 00:30 GMT - AU: RBA Meeting Minutes

- 17:10 GMT - US: Fed's Williams Speaks in Minneapolis


Forex - Asia Open - Overnight Highlights


 23:38 (GMT) 02 May

 [Forex Highlights]

Asia Overnight Highlights - 03 May 2018

ASIA OUTLOOK

The USD was stronger ahead of the FOMC, despite equites struggling and UST yields seeing a relief dip after the refunding announcement. The FOMC provided few surprises but the USD saw an upward correction that subsequently faded. Equities failed to hold a recovery and the UST curve steepened marginally.

Majors FX Highlights

The Bloomberg dollar index was stronger ahead of the FOMC aided by a stronger than expected ADP report, although a quick dip was seen as the Fed conveyed a less-hawkish-than-expected message that it's willing to accept some degree of above-target inflation by letting it "run near" the central bank's 2% objective. The dollar however reversed the losses later and print fresh highs of 92.834 later. EUR/USD oscillated around 1.2000 handle for most part of the day on Wednesday, before selling to 1.1960 ahead of FOMC and then reversing a spike to 1.200+ later to be offered to 1.1938 low. Cable also remained broadly offered despite a few hits above 1.3650, and an eventual fresh low of 1.3555 was printed after the FOMC statement was processed by the markets. EUR/GBP could not hold below .8800 and GBP/JPY fell to 149.00. USD/JPY saw a brief nudge above 110.00 before the FOMC but there found sellers, falling to a low of 109.57 after the FOMC before correcting within the day's range as the USD picked up again despite weakness on Wall Street and US 10yr yields shying away from a return to 3.0%. AUD and NZD saw modest gains after the FOMC after being quiet before, but the gains were erased. USD/CAD again tried both directions but is basically stuck on the 1.28 handle, AUD/CAD still above .9600.

Majors Data Highlights

The FOMC did not raise its target fed funds rate today, but did freshen up the policy statement. Worries that inflation is running below target, and insistence that inflation be carefully monitored, have gone away. ADP employment data sees a slightly slower 204k increase in Apr, though still maintaining strong tend and in line with expectations. While ADP is not always a reliable guide we expect Apr's non-farm payroll to show something similar. The final April Eurozone manufacturing PMI was revised marginally higher to 56.2 from the flash reading of 56, but it is lower than 56.6 in March.

In the US today, weekly initial claims should correct higher from a very low l209k. Q1 productivity and costs, and March's trade balance are also due, the latter confirming a sharp narrowing in the deficit to USD49.9bn from USD57.6bn. March factory orders will be released with the ISM non-manufacturing data. UK services PMI is likely to see a bounce to 53.0 which will only recover around half of the 2.8 point tumble to 51.7 seen in March which was the weakest reading since the referendum on Brexit.

Emerging Asia FX Highlights

USD/Asians mostly saw gains in late NY hours after the greenback recovered from the FOMC kneejerk. USD/CNY 1Y NDFs remained in consolidation around 6.4650 for most of Wednesday, but was bid up towards 6.4900 into the close of the NY session. USD/SGD could barely go above the Asia session high, and remained contained at 1.3370 on Wednesday despite fresh highs in the greenback in the late NY hours. USD/IDR 1M NDFs saw some gains above 14100 in the Asian hours on Wednesday which were reversed later but an upward trend was seen and pair inched back above 14100 in late NY hours. USD/INR 1M NDFs remained in broad consolidation around the 67 handle, mostly shrugging off the gains in the greenback, although gains to 67.2500 were seen in early Asian morning today.

Emerging Asia Data Highlights

Indonesia's April inflation accelerated only mildly to 3.41% y/y from 3.40% y/y in the preceding month. China Caixin manufacturing PMI improved slightly to 51.1, despite the official index coming off. India's PMI was also higher at 51.6 in April from 51.0 in March. Singapore's April PMI fell to 52.9 from 53.0 previously with electronics PMI slipping to 52.2. A quiet data day ahead in Asian markets.

OVERNIGHT NEWS HIGHLIGHTS

- US Apr ADP employment +204k vs 198k exp.

- FOMC left rates unchanged as expected, says inflation has moved close to 2% and is expected to run near this symmetric objective in the medium term.

- VIX index: 15.97 (+3.10%)

- Gold Spot: $1,306.15/oz (+0.09%)

- ICE Brent front contract: $73.36 (+$0.23)

- Nymex WTI front contract: $67.73 ($-0.20)

- Reuters/Jefferies Commodities Index: 201.60 (+0.17%)

- 10y UST: 2.966% (+0bp) (Asia morning)

- DJI: 23,924.98 (-0.72%); S&P: 2,635.67 (-0.72%); Nasdaq: 7,100.90 (-0.42%)

ASIA NEWS

China: China won't succumb to "threats" from the U.S., a senior government official said, hours before talks are set to begin Thursday with a delegation of the Trump administration's top trade policy officials. - BBG

Indonesia: Bank Indonesia will increase its ownership of sovereign bonds as a weakening currency spurs foreign investors to dump local notes in favor of higher U.S. Treasury yields and a stronger dollar. - BBG

CURRENCIES

After a brief respite early in the European session the USD rallied ahead of the FOMC, bringing EUR/USD down to 1.1950, still some way shy of the YTD low at 1.1914. There was no obvious catalyst, ADP private payrolls proving a shade disappointing once the amendment to March data was factored in. The FOMC provided few surprises. EUR/USD bounced on the statement, but could not regain the 1.2032 European high, and fresh lows followed.

USD/JPY saw a brief nudge above 110.00 before the FOMC but there found sellers, falling to a low of 109.57 after the FOMC before correcting within the day's range as the USD picked up again despite weakness on Wall Street and US 10yr yields shying away from a return to 3.0%.

GBP managed a rally aided by a better than expected construction PMI (not usually a mover but a rare above consensus number just now), but could not hold above 1.3650 and was back around 1.3600 ahead of the FOMC. The post-FOMC bounce stalled at 1.3650 leading to fresh lows. EUR/GBP could not hold below .8800 and GBP/JPY fell to 149.00.

AUD and NZD saw modest gains after the FOMC after being quiet before, but the gains were erased. USD/CAD again tried both directions but is basically stuck on the 1.28 handle, AUD/CAD still above .9600.

Riksbank Gov Ingves said it's OK for the SEK to appreciate slowly, but also that the Bank is 'not at the end of the road' in using monetary policy to boost inflation. EUR/SEK remains near the highs around 10.66. EUR/CHF is a little lower on the 1.19 handle as USD/CHF reached parity.

BONDS

USTs continued on the defensive overnight and into early US trade into the day's events. However, the ADP came in on market and more importantly the quarterly refunding announcement proved unthreatening, giving way to some relief flattening. After squaring up into the FOMC across the curve, reaction was again one of mild relief, yields marginally lower in the front end. 2s -1.2bps @ 2.49%, 5s -1.0bps @ 2.80%, 10s +0.2bps @ 2.97%, 30s +1.0bps @ 3.14%.

Agency Spreads: Freddie/Fannie 5s +0.6/-1.7 bps, 10s -0.6/-0.2 bps.

Swap Spreads: 2s +1.57bps, 5s +1.09bps, 10s +0.32bps.

EQUITIES

While Apple supported the tech sector and energy was firmer, equities were softer ahead of the FOMC. A modest bounce was seen on the statement but fresh lows were seen late in the session.

ASIA CURRENCIES

USD/CNY: 1Y NDFs remained in consolidation around 6.4650 for most of Wednesday, but was bid up towards 6.4900 into the close of the NY session. PBoC fixed mid-point at 6.3670 on Wednesday vs. previous close of 6.3310. This was significantly weaker ahead of trade talks. USD/CNY gapped higher with a 6.3524 and was bid up further in the day to print an over 2-month high of 6.3652. Pair remains on an upmove and we are looking at a "far-away" next resistance of 6.4000.

USD/CNH: Pair continued to see upside momentum in the day, but remained stuck in consolidation around 6.3600 handle. Some gains to 6.3800 were however seen in late NY hours after the FOMC statement. Break of resistance at 6.3773 exposes further upside, and we see gains towards next resistance of 6.3870.

USD/SGD: Pair could barely go above the Asia session high, and remained contained at 1.3370 on Wednesday despite fresh highs in the greenback in the late NY hours. Break of 1.3339 strong resistance exposes further upside and we continue to see the pair break through next resistance at 1.3369.

USD/IDR: 1M NDFs saw some gains above 14100 in the Asian hours on Wednesday which were reversed later but an upward trend was seen and pair inched back above 14100 in late NY hours. Onshore spot opened higher again at 13918 after the Labour Day holiday vs. last close of 13913 and surged to fresh 27-month highs of 13968 in the afternoon as the US dollar index was bid ahead of the FOMC statement. Restrained April CPI also keeps Bank Indonesia's tightening in question. No risk is seen to 13780 strong support despite BI's changing tone, and upside pressures remain intact. Central bank presence however will keep the move towards 14000 sluggish.

USD/INR: 1M NDFs remained in broad consolidation around the 67 handle, mostly shrugging off the gains in the greenback, although gains to 67.2500 were seen in early Asian morning today. Onshore spot gapped higher to open at 66.7500 after the long weekend vs. last close of 66.6600 but slid to a low of 66.6400 in early trading. Upside pressures however returned soon after, despite some resistance at 66.7500 which was breached but the pair returned to trade around the day's lows again in the afternoon. Risk stays on the upside, and we see a possibility of break above the 67 handle as long as the 66.4700 support remains intact.

DATA RELEASES DUE TODAY

- 01:00 GMT - NZ: ANZ Commodity Price (Apr) [Prev: 1.2]

- 01:30 GMT - AU: Building approvals (Mar) [Mkt: 1, Prev: -6.2]

- 01:30 GMT - AU: Trade Balance (Mar) [Mkt: 865, Prev: 825]

- 03:30 GMT - TH: Consumer Confidence (Apr) [Prev: 79.9]

- 03:30 GMT - TH: Consumer Confidence (Economic) (Apr) [Prev: 66.8]

- 08:30 GMT - UK: CIPS / Markit Services PMI (Apr) 4cast:53 index [Mkt: 53.5, Prev: 51.7]

- 08:30 GMT - HK: Retail Sales (Value) (Mar) [Mkt: 10.9, Prev: 29.8]

- 08:30 GMT - HK: Retail Sales (Volume) (Mar) [Mkt: 8.6, Prev: 28.2]

- 09:00 GMT - EU: HICP - Core (Apr A) [Mkt: 0.9, Prev: 1]

- 09:00 GMT - EU: PPI (Mar) [Mkt: 0.1, Prev: 0.1]

- 12:30 GMT - US: Initial Claims (Apr 28) [Mkt: 224, Prev: 209]

- 12:30 GMT - US: Non Farm Productivity (Q1 P) [Mkt: 0.9, Prev: 0]

- 12:30 GMT - US: Trade Balance (Mar) 4cast:-48.9 USD bn [Mkt: -50, Prev: -57.6]

- 12:30 GMT - US: Unit Labor Costs (Q1 P) [Mkt: 3, Prev: 2.5]

- 12:30 GMT - CA: Merchandise Trade (Mar) 4cast:-2.2 [Mkt: -2.25, Prev: -2.69]

- 14:00 GMT - US: Factory Orders (Mar) [Mkt: 1.4, Prev: 1.2]

- 14:00 GMT - US: ISM Non-Manufacturing (Apr) 4cast:58.5 index [Mkt: 58, Prev: 58.8]

- 23:00 GMT - KR: Current Account Balance (Mar) [Prev: 4.027]

EVENTS & AUCTIONS

- US: US Treasury Secretary Mnuchin hold trade Talks in China

- JP: Market Holiday - Constitution Memorial Day

- 07:00 GMT - EU: ECB's Villeroy de Galhau Speaks in Paris

- 09:00 GMT - TW: Central Bank March Minutes

- 09:30 GMT - UK: 2023 0.75% Bond Auction (GBP 3bn)

- 12:00 GMT - EU: ECB's Constancio and Coeure Speak in Frankfurt


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