Forex - Asia Open - Overnight Highlights


 23:39 (GMT) 13 Feb

  [Forex Highlights]

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

Asia Overnight Highlights - 14 February 2018

ASIA OUTLOOK

Equities recovered from early weakness in subdued North American trade was subdued ahead of Wednesday's CPI. USD/JPY stabilized at lower levels while EUR/JPY moved higher. Modest moves in USTs saw the curve flatter.

Majors FX Highlights

The dollar index was bearish again on Tuesday, and slid to a low of 89.609, driven by a plunge in both yen and euro. USD/JPY saw a sharp decline in late Asian hours from 108.70-levels to 107.41 on expectations that BoJ may start to taper soon even as BoJ Governor Kuroda may be reappointed for a second term. JPY strengthened to a fresh five-month high against the greenback before paring gains amid a broader rebound in risk appetite after Fed Chairman Jerome Powell said the central bank will remain alert to financial stability risks while gradually normalizing rates. EUR/USD meanwhile traded higher, printing an eventual high of 1.2371 with the resistance at 1.2370 still holding up, but clearly at risk. Cable got only a minor support which strayed near 5-year highs, and was bid up to 1.3924 with EUR/GBP seeing a dip fail to trouble .8850 support and edge back up to .8900. CAD slipped again as Crude pushed lower again on fears of US production being up again in Wed's EIA data. The NZD maintains the edge against the AUD as AUD/NZD prove reluctant to hold any return to the 1.08/1.10 range, at least ahead of Australian jobs data on Thursday.

Majors Data Highlights

Bounce back towards the highs for the NFIB small business survey as expected, boosted anew by the fiscal boost optimism. Details show net prices up to a new post 2014 high of 11, as well a confirming the previously released details that the compensation index is up to a new high of 31, only last bettered back in 2000. UK CPI inflation failed to fall the expected notch, instead staying at 3.0% y/y in January, an outcome that was in line with the BoE projection made in the recently-released February Inflation Report but still below the 3.1% rate witnessed in November.

Today is key in the US, with January CPI and retail sales. For CPI we expect a 0.4% rise overall with a 0.2% gain ex food and energy, though the core rate at 0.24% before rounding so risk to the upside. Retail sales should see a pause after a strong Q4 when spending outpaced income. We expect a flat figure overall, with gains of 0.3% ex auto and 0.2% ex auto and gasoline. December business inventories are also due. Today is also busy in the Eurozone. We expect the first estimate of German Q4 GDP to show a 0.6% q/q, 3.0% y/y expansion. Final January inflation data at the same time should confirm the flash HICP estimate of 1.0% m/m, 1.4% y/y. The second release of EZ Q4 GDP is expected to match the flash estimate 0.6% q/q, 2.7% y/y.

Emerging Asia FX Highlights

USD/Asians traded mixed overnight even as the dollar was lower on yen and euro gains, but hawkish Fed commentary supported. USD/CNY 1Y NDFs were broadly resilient to the weaker USD in the NY hours overnight, and traded tightly around 6.4700 after coming off 6.4850 high earlier in the day. USD/SGD remained lower on Tuesday, and printed a fresh low of 1.3202 with the 1.3200 handle supporting for now. USD/IDR 1M NDFs rallied to 13693 on oil prices slip, but retreated to 13660-levels later. USD/INR 1M NDFs traded on either side of 64.5000 on Tuesday.

Emerging Asia Data Highlights

Final print of Taiwan's Q4 GDP remained unchanged at 3.28% y/y.

A bunch of important data due in the day ahead, including final Singapore Q4 GDP and Malaysia Q4 GDP. Due in the afternoon will be India's January WPI and Bank of Thailand interest rate decision.

OVERNIGHT NEWS HIGHLIGHTS

- Fed's Mester said supports tightening at similar pace to last year, recent volatility far away from having any influence on the outlook.

- VIX index: 24.97 (-2.50%)

- Gold Spot: $1,330.05/oz (+0.03%)

- ICE Brent front contract: $62.72 (+$0.13)

- Nymex WTI front contract: $58.91 ($-0.28)

- Reuters/Jefferies Commodities Index: 189.84 (+0.40%)

- 10y UST: 2.829% (-3bp) (Asia morning)

- DJI: 24,640.45 (+0.16%); S&P: 2,662.94 (+0.26%); Nasdaq: 7,013.51 (+0.45%)

ASIA NEWS

China: The People's Bank of China appointed JPMorgan Chase Bank N.A. as a yuan clearing bank in the U.S., the first non-Chinese lender for such a roleglobally and a further step to promote international use of the currency. - BBG

China: Jan. outbound investment rises 30.5% y/y in yuan. - BBG

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

CURRENCIES

JPY strength the main story Tuesday as USD/JPY broke below 108 to 107.40, EUR/JPY down to 132.50, and GBP/JPY consolidating the break below 150 as equities again weighed. Equities turning positive saw only a limited response. MoF's Asakawa said he will check to see if recent JPY strength is speculative, though CFTC data suggests that what we are seeing is mainly an unwind of speculative trades!

EUR/USD is less encumbered by positioning it seems as it broke above 1.2335 resistance to 1.2370.

GBP got no real lift from CPI holding steady against expectations of a small dip. Cable is holding up if well behind EUR/USD, EUR/GBP seeing a dip fail to trouble .8850 support and edge back up to .8900.

EUR/CHF extended its rally to 1.1550 but looks to have limited upside from here. EUR/SEK and EUR/NOK have both pushed a little higher, though the former still shy of a repeat of Friday's visit to 10.00 ahead of the Riksbank on Wednesday.

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

BONDS

USTs long end improvement on the recent better dip buying interest shifted to curve flattening as the gilt data reaction and caution into the upcoming key US data saw the short end trade more defensively, even while equities remained negative. 2s +2.7bps @ 2.10%, 5s -1.5bps @ 2.54%, 10s -2.6bps @ 2.83%, 30s -2.4bps @ 3.12%

- Agency Spreads: Freddie/Fannie 5s +1.5/+2.0 bps, 10s -0.5/-0.9 bps.

- Swap Spreads: 2s -2.14bps, 5s -0.13bps, 10s -0.44bps.

EQUITIES

Equities opened weaker in response to the Nikkei but after that it was subdued trade ahead of key CPI data on Wednesday. The indices turned positive in mid-afternoon.

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

ASIA CURRENCIES

USD/CNY: 1Y NDFs were broadly resilient to the weaker USD in the NY hours overnight, and traded tightly around 6.4700 after coming off 6.4850 high earlier in the day. PBoC fixed mid-point at 6.3247 on Tuesday vs. previous close of 6.3268. Onshore pair traded tightly around 6.3300 but rose up to 6.3520 in late trading hours. For USD/CNY, we see range-bound movement even as the pair could test 6.3000 support later on.

USD/CNH: Pair was bid up to 6.3485 in the European hours on Tuesday, but saw a mild retreat to 6.3300-levels later in the NY session. Focus on any official measures on liquidity close to the LNY, along with US CPI on Wednesday. With the upward correction now faltering, we see some downside pressures for USD/CNH to move towards 6.3200 support.

USD/SGD: Pair remained lower on Tuesday, and printed a fresh low of 1.3202 with the 1.3200 handle supporting for now. Prices returned slightly back up to 1.3230 at last look. Break of support at 1.3235 likely to increase downside pressures, and we see risk of break at 1.3200 handle. Singapore Q4 (F) GDP and NODX data will be on the wires on Wednesday and Thursday respectively.

USD/IDR: 1M NDFs rallied to 13693 on oil prices slip, but retreated to 13660-levels later. USD/IDR onshore spot gapped lower to open at 13638 on Tuesday vs. previous close of 13658 and traded below 13650 in the morning, although Monday's 1.5-year high of 13658 was printed again in the afternoon. Break of 13645 resistance exposes further upside, but we still expect the authorities to intervene, and see no risk to strong resistance at 13700 as BI decision approaches.

USD/INR: 1M NDFs traded on either side of 64.5000 on Tuesday. Onshore markets remained closed on Tuesday for a local festival. Upside still remains in focus, and next strong resistance is only at 64.6300, so pair still has some runway, but we see no risk of a break. Eyes on January WPI and trade data due later in the week.

DATA RELEASES DUE TODAY

- 23:50 GMT - JP: GDP (Q4 P) 4cast:1.2 % q/q ann [Mkt: 1, Prev: 2.5]

- 00:00 GMT - SG: GDP (Q4 A) 4cast:3.5 % y/y [Mkt: 2.9, Prev: 3.1]

- 00:00 GMT - SG: GDP (saar) (Q4 A) [Mkt: 2, Prev: 2.8]

- 04:00 GMT - MY: GDP (Q4) 4cast:5.6 % y/y [Mkt: 5.8, Prev: 6.2]

- 06:30 GMT - IN: WPI (Jan) 4cast:3.2 % y/y [Mkt: 3.2, Prev: 3.58]

- 07:05 GMT - TH: BoT - Benchmark Interest Rate (43145) 4cast:1.5 % [Mkt: 1.5, Prev: 1.5]

- 10:00 GMT - EU: GDP (SA) (Q4 A) 4cast:0.6 % q/q [Mkt: 0.6, Prev: 0.6]

- 10:00 GMT - EU: GDP (SA) (Q4 A) 4cast:2.7 % y/y [Mkt: 2.7, Prev: 2.7]

- 10:00 GMT - EU: Industrial production (Dec) [Mkt: 0.1, Prev: 1]

- 10:00 GMT - EU: Industrial production (Dec) [Mkt: 4.2, Prev: 3.2]

- 13:30 GMT - US: CPI (Jan) 4cast:0.4 % m/m [Mkt: 0.3, Prev: 0.2]

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

- 13:30 GMT - US: Retail Sales (Jan) 4cast:0 % m/m [Mkt: 0.2, Prev: 0.4]

- 13:30 GMT - US: Retail Sales (ex Autos) (Jan) 4cast:0.3 % m/m [Mkt: 0.5, Prev: 0.4]

- 15:00 GMT - US: Business Inventories (Dec) [Mkt: 0.3, Prev: 0.4]

- 23:50 GMT - JP: Key Machinery Orders (Dec) [Mkt: -2.3, Prev: 5.7]

- 23:50 GMT - JP: Key Machinery Orders (Dec) 4cast:4.3 % y/y [Mkt: 1.8, Prev: 4.1]

EVENTS & AUCTIONS

- 10:20 GMT - EU: ECB's Mersch Speaks in Frankfurt


Forex - Singapore Flows: USD/SGD was consolidative at 1.3230


 04:05 (GMT) 13 Feb

 [Forex Flows]

After bearish movement overnight, USD/SGD settled at around 1.3230+ as Asia session started on Tuesday. Eyes are on Q4 (Final) GDP due tomorrow, which we expect an increase to 3.5% y/y from 3.1% y/y prior. We expect upside bias to gather and likely to target resistance at 1.3264. According to our estimates, SGD NEER is now +0.75% compared to the midpoint. STI last seen in gains of 1.42% as Asian stocks recovered.


Forex - Chart USD/MYR Update: Corrective upmove stays in play


 00:53 (GMT) 13 Feb

 [Forex Charts]

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Forex - Asia Close Highlights


 08:49 (GMT) 12 Feb

 [Forex Highlights]

12 February 2018

Regional Backdrop:

Asian currencies mostly gained against the USD on Monday Asian hours. This comes as stock markets consolidated. KRW (+0.69%), THB (0.37%), INR (0.25%) and SGD (0.23%) were the significant gainers. Singapore retail sales eased to 4.6% y/y in December from 5% a month ago. TWD (0.07%), MYR (0.04%), IDR (0.02%) were more flat, as were CNY (-0.05%) and CNH (-0.07%). PHP lost 0.45% against the USD as an exception.

USD/CNH started the week in more firm footing. This was helped by a rebound in Asia stock markets. Watch for any liquidity pressures ahead of LNY period. Pair moved from a 6.3112 open to 6.3143 at last look, despite having a brief look at 6.3329. PBoC fixed mid-point at 6.3001 vs. previous close of 6.2969. USD/CNY opened at 6.2959 and moved slightly higher to 6.3072 at last look. 1Y NDFs were mostly just higher the 6.4400 handle, at 6.4455 at last look.

USD/SGD traded with an offered tone and slid to an intra-day low of 1.3246 during early trading and remained below the key 1.3300 handle. According to our estimates, SGD NEER is now +0.50% compared to the midpoint. Singapore Q4 (F) GDP and NODX data will be on the wires on Wednesday and Thursday respectively. We expect GDP to rise to 3.5% y/y from 3.1% y/y. For NODX, we see it surging to 8.7% y/y from 3.1% y/y. STI last seen in gains of 0.30% as Asian stocks recovered.

USD/IDR onshore spot gapped lower to open at 13615 on the first day of the new week vs. previous close of 13629 and slid to a low of 13603 in early trading, still remaining above the key 13600 even as emerging Asian stocks entered a correction mode. A slight rebound in oil prices on Monday however possibly kept the pair supported, and gains to13630+ returned in the afternoon.

USD/INR onshore spot gapped lower to open at 64.2900 on Monday vs. last close of 64.3975 and slid to a low of 64.2400 in early trading as risk appetite improved with a rebound in global stocks overnight on Friday and Asian stocks on Monday. Pair however remains far from targeting the 64.1450 support, and entered consolidation around 64.2750, before gains to 64.3000 at last look.

Market Psychology

USD/CNH - Focus on US CPI data out later this week. With the upward correction now faltering, chance of testing 6.2548 support returning, if USD/CNH moves below 6.2950 again. For USD/CNY, range-bound movement likely even as we think the pair could see some test of 6.2800 resistance.

USD/SGD - Downside pressure remains in play, and support at 1.3235 is likely to hold.

USD/IDR - We expect the strong 13645 resistance to continue to hold as the focus turns to BI's tone in the week ahead.

Upside still remains in focus, and next strong resistance is only at 64.6300, so pair still has some runway, but we see no risk of a break.


Forex - Asia Close Highlights


 08:49 (GMT) 12 Feb

 [Forex Highlights]

12 February 2018

Regional Backdrop:

Asian currencies mostly gained against the USD on Monday Asian hours. This comes as stock markets consolidated. KRW (+0.69%), THB (0.37%), INR (0.25%) and SGD (0.23%) were the significant gainers. Singapore retail sales eased to 4.6% y/y in December from 5% a month ago. TWD (0.07%), MYR (0.04%), IDR (0.02%) were more flat, as were CNY (-0.05%) and CNH (-0.07%). PHP lost 0.45% against the USD as an exception.

USD/CNH started the week in more firm footing. This was helped by a rebound in Asia stock markets. Watch for any liquidity pressures ahead of LNY period. Pair moved from a 6.3112 open to 6.3143 at last look, despite having a brief look at 6.3329. PBoC fixed mid-point at 6.3001 vs. previous close of 6.2969. USD/CNY opened at 6.2959 and moved slightly higher to 6.3072 at last look. 1Y NDFs were mostly just higher the 6.4400 handle, at 6.4455 at last look.

USD/SGD traded with an offered tone and slid to an intra-day low of 1.3246 during early trading and remained below the key 1.3300 handle. According to our estimates, SGD NEER is now +0.50% compared to the midpoint. Singapore Q4 (F) GDP and NODX data will be on the wires on Wednesday and Thursday respectively. We expect GDP to rise to 3.5% y/y from 3.1% y/y. For NODX, we see it surging to 8.7% y/y from 3.1% y/y. STI last seen in gains of 0.30% as Asian stocks recovered.

USD/IDR onshore spot gapped lower to open at 13615 on the first day of the new week vs. previous close of 13629 and slid to a low of 13603 in early trading, still remaining above the key 13600 even as emerging Asian stocks entered a correction mode. A slight rebound in oil prices on Monday however possibly kept the pair supported, and gains to13630+ returned in the afternoon.

USD/INR onshore spot gapped lower to open at 64.2900 on Monday vs. last close of 64.3975 and slid to a low of 64.2400 in early trading as risk appetite improved with a rebound in global stocks overnight on Friday and Asian stocks on Monday. Pair however remains far from targeting the 64.1450 support, and entered consolidation around 64.2750, before gains to 64.3000 at last look.

Market Psychology

USD/CNH - Focus on US CPI data out later this week. With the upward correction now faltering, chance of testing 6.2548 support returning, if USD/CNH moves below 6.2950 again. For USD/CNY, range-bound movement likely even as we think the pair could see some test of 6.2800 resistance.

USD/SGD - Downside pressure remains in play, and support at 1.3235 is likely to hold.

USD/IDR - We expect the strong 13645 resistance to continue to hold as the focus turns to BI's tone in the week ahead.

Upside still remains in focus, and next strong resistance is only at 64.6300, so pair still has some runway, but we see no risk of a break.


Forex - Asia Close Highlights


 08:49 (GMT) 12 Feb

 [Forex Highlights]

12 February 2018

Regional Backdrop:

Asian currencies mostly gained against the USD on Monday Asian hours. This comes as stock markets consolidated. KRW (+0.69%), THB (0.37%), INR (0.25%) and SGD (0.23%) were the significant gainers. Singapore retail sales eased to 4.6% y/y in December from 5% a month ago. TWD (0.07%), MYR (0.04%), IDR (0.02%) were more flat, as were CNY (-0.05%) and CNH (-0.07%). PHP lost 0.45% against the USD as an exception.

USD/CNH started the week in more firm footing. This was helped by a rebound in Asia stock markets. Watch for any liquidity pressures ahead of LNY period. Pair moved from a 6.3112 open to 6.3143 at last look, despite having a brief look at 6.3329. PBoC fixed mid-point at 6.3001 vs. previous close of 6.2969. USD/CNY opened at 6.2959 and moved slightly higher to 6.3072 at last look. 1Y NDFs were mostly just higher the 6.4400 handle, at 6.4455 at last look.

USD/SGD traded with an offered tone and slid to an intra-day low of 1.3246 during early trading and remained below the key 1.3300 handle. According to our estimates, SGD NEER is now +0.50% compared to the midpoint. Singapore Q4 (F) GDP and NODX data will be on the wires on Wednesday and Thursday respectively. We expect GDP to rise to 3.5% y/y from 3.1% y/y. For NODX, we see it surging to 8.7% y/y from 3.1% y/y. STI last seen in gains of 0.30% as Asian stocks recovered.

USD/IDR onshore spot gapped lower to open at 13615 on the first day of the new week vs. previous close of 13629 and slid to a low of 13603 in early trading, still remaining above the key 13600 even as emerging Asian stocks entered a correction mode. A slight rebound in oil prices on Monday however possibly kept the pair supported, and gains to13630+ returned in the afternoon.

USD/INR onshore spot gapped lower to open at 64.2900 on Monday vs. last close of 64.3975 and slid to a low of 64.2400 in early trading as risk appetite improved with a rebound in global stocks overnight on Friday and Asian stocks on Monday. Pair however remains far from targeting the 64.1450 support, and entered consolidation around 64.2750, before gains to 64.3000 at last look.

Market Psychology

USD/CNH - Focus on US CPI data out later this week. With the upward correction now faltering, chance of testing 6.2548 support returning, if USD/CNH moves below 6.2950 again. For USD/CNY, range-bound movement likely even as we think the pair could see some test of 6.2800 resistance.

USD/SGD - Downside pressure remains in play, and support at 1.3235 is likely to hold.

USD/IDR - We expect the strong 13645 resistance to continue to hold as the focus turns to BI's tone in the week ahead.

Upside still remains in focus, and next strong resistance is only at 64.6300, so pair still has some runway, but we see no risk of a break.


Forex - Asia Close Highlights


 08:49 (GMT) 12 Feb

 [Forex Highlights]

12 February 2018

Regional Backdrop:

Asian currencies mostly gained against the USD on Monday Asian hours. This comes as stock markets consolidated. KRW (+0.69%), THB (0.37%), INR (0.25%) and SGD (0.23%) were the significant gainers. Singapore retail sales eased to 4.6% y/y in December from 5% a month ago. TWD (0.07%), MYR (0.04%), IDR (0.02%) were more flat, as were CNY (-0.05%) and CNH (-0.07%). PHP lost 0.45% against the USD as an exception.

USD/CNH started the week in more firm footing. This was helped by a rebound in Asia stock markets. Watch for any liquidity pressures ahead of LNY period. Pair moved from a 6.3112 open to 6.3143 at last look, despite having a brief look at 6.3329. PBoC fixed mid-point at 6.3001 vs. previous close of 6.2969. USD/CNY opened at 6.2959 and moved slightly higher to 6.3072 at last look. 1Y NDFs were mostly just higher the 6.4400 handle, at 6.4455 at last look.

USD/SGD traded with an offered tone and slid to an intra-day low of 1.3246 during early trading and remained below the key 1.3300 handle. According to our estimates, SGD NEER is now +0.50% compared to the midpoint. Singapore Q4 (F) GDP and NODX data will be on the wires on Wednesday and Thursday respectively. We expect GDP to rise to 3.5% y/y from 3.1% y/y. For NODX, we see it surging to 8.7% y/y from 3.1% y/y. STI last seen in gains of 0.30% as Asian stocks recovered.

USD/IDR onshore spot gapped lower to open at 13615 on the first day of the new week vs. previous close of 13629 and slid to a low of 13603 in early trading, still remaining above the key 13600 even as emerging Asian stocks entered a correction mode. A slight rebound in oil prices on Monday however possibly kept the pair supported, and gains to13630+ returned in the afternoon.

USD/INR onshore spot gapped lower to open at 64.2900 on Monday vs. last close of 64.3975 and slid to a low of 64.2400 in early trading as risk appetite improved with a rebound in global stocks overnight on Friday and Asian stocks on Monday. Pair however remains far from targeting the 64.1450 support, and entered consolidation around 64.2750, before gains to 64.3000 at last look.

Market Psychology

USD/CNH - Focus on US CPI data out later this week. With the upward correction now faltering, chance of testing 6.2548 support returning, if USD/CNH moves below 6.2950 again. For USD/CNY, range-bound movement likely even as we think the pair could see some test of 6.2800 resistance.

USD/SGD - Downside pressure remains in play, and support at 1.3235 is likely to hold.

USD/IDR - We expect the strong 13645 resistance to continue to hold as the focus turns to BI's tone in the week ahead.

Upside still remains in focus, and next strong resistance is only at 64.6300, so pair still has some runway, but we see no risk of a break.


Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - Chart Levels Snapshot: Current Levels Summary [SG TH ID KR TW PH MY CN]


 01:24 (GMT) 12 Feb

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Forex - India Flows: USD/INR still below 64.5000


 04:32 (GMT) 09 Feb

 [Forex Flows]

USD/INR onshore spot gapped higher to open at 64.4200, an over 7-weeks high, on Friday vs. last close of 64.2550 as the global stocks plummeted again overnight, rattling financial markets. Pair however could not go further higher and drifted below 64.4000 in early trading. Next strong resistance only at 64.6300 so pair still has some runway, but we see no risk of a break. 1M NDFs meanwhile rallied to a high of 64.8600 overnight before slipping to 64.5800 in the Asian session today. SENSEX in red of over 1.2% at last look.


Forex - Asia Open - Overnight Highlights


 23:19 (GMT) 05 Feb

 [Forex Highlights]

Asia Overnight Highlights - 06 February 2018

ASIA OUTLOOK

In wild US session equities plunged triggering a sharp squeeze higher in bonds. In FX the USD was generally firm on expected flows arising from US tax changes, but USD/JPY took a hit on the equity plunge to more than erase a bounce on firm US data. CAD was weak as oil slipped.

Majors FX Highlights

The dollar index was firm overnight and rose to its highest level since Jan. 24 of 89.699, as the S&P 500 plummeted as much as 4.5%, before paring its loss to 4.1%, and the yield on the benchmark 10-year Treasury note slid 12bps to 2.72%; the greenback was up against all G-10 peers save the yen; VIX index more than doubled during peak stock sell-off, posting highest one-day gain on record. USD/JPY resumed its decline amid cross selling as equities tumbled, the currency pair fell sharply in the New York afternoon as the rout in risk assets intensified and slid to a low of 108.99 until last check. GBP/JPY saw the steepest decline and slipped to a low of 152.234, and EUR/JPY dipped to 134.91 before inching slightly above 135 again. Cable broke below 1.4000 handle and printed a low of 1.3955, weighed by a weaker GBP/JPY. EUR/USD broke below 1.2400 to dip to a low of 1.2363 but inched back slightly higher to 1.2370 at last look. USD/CAD picked up as Crude prices headed lower, eventually overcoming sellers at 1.2500. AUD/CAD touched above .9900 ahead of the RBA policy decision.

Majors Data Highlights

Jan's ISM non-manufacturing index of 59.9 is a sharp rebound from Dec's weaker 56.0 and the highest since Aug 2005. Broad based gains in the breakdown, particularly employment which at 61.6 is at a record high. The final Eurozone Jan services PMI has been revised higher to 58 from the flash reading of 57.6, and is also higher than the 56.6 in December. The composite PMI has at the same time risen to 58.8 (flash 58.6, Dec: 58.1). UK January Services PMI, dropped 1.2 points, to 53.0, a 16-month low.

Today in the US, see Dec's trade deficit at $52.0bn, up from $50.5bn in Nov and the widest since Oct 2008. Australia's December retail sales and trade data will be due today morning.

Emerging Asia FX Highlights

USD/Asians saw some weakness in the London hours but edged back higher in NY with dollar on a firmer footing. USD/CNY 1Y NDFs were sold off to a low of 6.4123 in early NY hours before a slightly firmer USD brought the pair back up to 6.4350+ levels in the NY afternoon. USD/SGD saw a u-shaped recovery on Monday, slipping from Asia session high of ~1.3220 to a low of 1.3155 in London hours only to bounce back higher again to 1.3220 at last look. USD/IDR 1M NDFs traded firmer, and were bid up to 13575 in the NY hours on Monday. USD/INR 1M NDFs traded choppily on either side of 64.4000 in the London hours but rallied to 64.6000 with dollar gains in the NY hours.

Emerging Asia Data Highlights

Indonesia's Q4 GDP growth came in slightly better than our and consensus expectations at 5.19% y/y, and was the best in 16 quarters even as it continued to hover around the 5%-mark. Focus today will be on Philippines' January CPI scheduled for today morning, before the BSP decision later in the week.

OVERNIGHT NEWS HIGHLIGHTS

- US Jan ISM non-manufacturing rose to 59.9 from 56.0 vs 56.7 exp, highest since Aug 2005, employment record high of 61.6.

- Fed's Kashkari said need more data on inflationary pressures, surprised how much optimism tax cuts have generated.

- Fed's Q1 senior loan officer survey showed stronger demand for C+I loans.

- VIX index: 37.32 (+115.60%)

- Gold Spot: $1,338.87/oz (-0.06%)

- ICE Brent front contract: $66.93 ($-1.65)

- Nymex WTI front contract: $64.15 ($-1.30)

- Reuters/Jefferies Commodities Index: 195.67 (-1.35%)

- 10y UST: 2.706% (-14bp) (Asia morning)

- DJI: 24,345.75 (-4.60%); S&P: 2,648.94 (-4.10%); Nasdaq: 6,967.53 (-3.78%)

ASIA NEWS

Indonesia: Regional elections and Asian games to support economic growth this year as domestic consumption is set to improve, Coordinating Minister for Economic Affairs Darmin Nasution tells reporters in Jakarta. - BBG

India: GST has "broadly settled down"; tariffs and tariff structure to be further rationalized: Jaitley. - BBG

CURRENCIES

EUR/USD saw a high at 1.2475 before dipping onto the 1.23 handle. Reports from both the ZEW and ECB - the latter to be included in Thursday's Bulletin - are said to flag the US tax changes to flag a potential reversal of flows between the US and Eurozone in the former's favour. Strong US data failed to attract fresh selling which assisted some stabilization around 1.24. ECB's Draghi was positive on the economy but in seeing inflation headwinds from FX volatility gave no support to the EUR. The late equity fireworks generated little response.

USD/JPY bounced through 110 on the strong ISM non-manufacturing report, though as equities plunged the pair approached 109.00. EUR/JPY's bounce on the US data failed to regain 137, later falling well below 135.50.

GBP had a bad day, a soft service PMI starting the ball rolling with a break above .8832 on EUR/GBP likely drawing in model buyers. Cable had a dip below 1.40, with little subsequent bounce. With Brexit the focus ahead of the BoE on Thursday GBP overall looks vulnerable.

EUR/CHF saw a run over 1.16 after spending the European morning on the 1.15 handle but ended back below the figure; Swiss reserves are released on Wednesday but won't cover the Feb to date period.

BONDS

After getting hammered on Friday, USTs saw follow through selling in Asia before some short-covering kicked in during London, mainly in the belly. After levelling in early NY, a storming NM ISM survey saw fresh selling, but focus soon shifted to equity weakness. The front end led the move to fresh highs for the day but gains were seen across the curve, with a dramatic squeeze seen late in the day as equity losses escalated. 2s -10.1bps @ 2.04%, 5s -13.1bps @ 2.46%, 10s -11.9bps @ 2.72%, 30s -6.9bps @ 3.02%

- Agency Spreads: Freddie/Fannie 5s 0.0/+0.5 bps, 10s +1.4/+0.1 bps.

- Swap Spreads: 2s +2.57bps, 5s +0.17bps, 10s -2.07bps.

EQUITIES

Equities opened weaker and while strong ISM non-manufacturing data brought a brief bounce it failed to hold, and another sharp slide was seen, accelerating dramatically in late trade with a correction off the lows struggling to hold. Energy and financials were particularly weak on price losses and regulatory concerns for Wells Fargo respectively.

ASIA CURRENCIES

USD/CNY: 1Y NDFs were sold off to a low of 6.4123 in early NY hours before a slightly firmer USD brought the pair back up to 6.4350+ levels in the NY afternoon. PBoC fixed mid-point at 6.3019 on Monday vs. previous close of 6.2990. Onshore pair gapped higher and inched up to 6.3100 in early trading but slid lower thereafter and ended near the day's lows of 6.2823. If USD/CNY breach the low of 6.2699 hit on 2 February, we see further movement towards 6.2500.

USD/CNH: Pair was offered to a low of 6.2830 in early NY hours but picked up momentum thereafter as USD was firmer despite a crash in the stock markets, which saw pair come back higher to 6.3100+ at last look. For USD/CNH, resistance likely at 6.3300. We watch for 6.2718 as the next support level.

USD/SGD: Pair saw a u-shaped recovery on Monday, slipping from Asia session high of ~1.3220 to a low of 1.3155 in London hours only to bounce back higher again to 1.3220 at last look. Gains are likely to be capped at 1.3275 but dollar-driven movements remain likely ahead of the budget announcement amid lack of domestic data.

USD/IDR: 1M NDFs traded firmer, and were bid up to 13575 in the NY hours on Monday. USD/IDR onshore spot gapped higher to open at 13493 vs. last close of 13452 and was bid up to near-13500 levels in early trading, buoyed by the upbeat dollar sentiment after a bullish US NFP report last Friday. The key 13500 was broken only later in the day, with fresh over 1-month high at 13528 into the close. Lower oil prices and weak equities also underpinning, but modest GDP growth was broadly shrugged off. Upside momentum picking up with break of 13500. Support at 13255 to continue to hold.

USD/INR: 1M NDFs traded choppily on either side of 64.4000 in the London hours but rallied to 64.6000 with dollar gains in the NY hours. Onshore spot gapped higher to open at a 1-month high of 64.2000 at the start of the fresh week vs. last close of 64.0550 given a bid tone in the US dollar on Friday night from bullish US NFP report. Fiscal deficit breach and weak equities also weighed on the rupee, but a mild bearish trend was seen with pair slipping to 64.0075. Focus is likely to shift to the RBI decision in the week, but resistance at 64.2750 likely at risk ahead of the decision.

DATA RELEASES DUE TODAY

- 00:30 GMT - AU: Retail trade (Dec) 4cast:-0.4 % m/m [Mkt: -0.2, Prev: 1.2]

- 00:30 GMT - AU: Trade Balance (Dec) [Mkt: 200, Prev: -628]

- 01:00 GMT - PH: CPI (Jan) [Mkt: 0.6, Prev: 0.3]

- 01:00 GMT - PH: CPI (Jan) 4cast:3.4 % y/y [Mkt: 3.6, Prev: 3.3]

- 03:30 GMT - AU: RBA - Overnight Rate (Feb 6) 4cast:1.5 % [Mkt: 1.5, Prev: 1.5]

- 08:00 GMT - TW: CPI (Jan) [Mkt: 1, Prev: 1.21]

- 08:00 GMT - TW: WPI (Jan) [Prev: 0.24]

- 13:30 GMT - US: Trade Balance (Dec) 4cast:-52 USD bn [Mkt: -52.1, Prev: -50.5]

- 13:30 GMT - CA: Merchandise Trade (Dec) 4cast:-2.6 [Prev: -2.54]

- 15:00 GMT - CA: Ivey PMI (Jan) [Prev: 60.4]

- 22:30 GMT - AU: AIG Construction PMI (Jan) [Prev: 52.8]

EVENTS & AUCTIONS

- EU: ECB Conference on Improved Payment System in Frankfurt

- NZ: Market Holiday - Waitangi Day

- 09:00 GMT - EU: ECB's Weidmann and BIS' Carsten Speak in Frankfurt

- 11:30 GMT - EU: ESM 91-Day Bills Auction (EUR 2bn)

- 13:50 GMT - US: Fed's Bullard Speaks in Lexington, Kentucky

- 15:45 GMT - JP: 10yr (CPI Linked) Bond Auction

- 16:30 GMT - US: 4wk Bills Auction

- 18:00 GMT - US: 3yr Notes Auction (USD 26bn)


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