Forex - Asia Open - Overnight Highlights

 23:57 (GMT) 16 Jun

  [Forex Highlights]

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Asia Overnight Highlights - 17 Jun 2019

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


FX Highlights:

The Bloomberg dollar spot index traded with a bid tone overnight on Friday, rising to 97.500+ levels from near the 97 handle earlier amid a surge in U.S. May retail sales. This came after weak inflation reports and rising jobless claims earlier in the week, which coupled with trade tension continued to boost chances of a Fed rate cut.

The Fed meeting, along with BoJ and BoE meetings, is the highlight of the week and will set the tone of the markets for the coming weeks.

GBP reversed Thursday's gains against the EUR seen after the announcement of the first round results from the Tory leadership election, with EUR/GBP approaching Thursday's pre-result high of 0.8920 by mid-morning Friday, but still unable to get through.

EUR/USD tested the downside at 1.1200 but could not break through but erased all gains since the June 6 ECB meeting. Cable is near the May low after braking below 1.2600. USD/JPY rose to 108.50+ on US retail sales data.

AUD/USD and NZD/USD also lower, but AUD rebounded early this morning although NZD still below 0.6500 handle.

Data/Events Highlights:

- US May Retail Sales 0.5% m/m (Prev: 0.3R Mkt: 0.6), +1.1pp with revisions

- US Apr Industrial Production +0.4%, Manufacturing +0.2%

- US Jun P Univ of Mich Sentiment 97.9 (Prev: 100.0 Mkt: 98), 5yr inflation expectations down to low of 2.2%

- Trump - 'doesn't matter' if Xi agrees to meet at G20. 'If he shows up, good. If he doesn't in the meantime they are paying billions of dollars'. On Trump - disagree with him entirely.

- VIX index: 15.28 (-3.41%)

- Gold Spot: $1,341.40/oz (-0.03%)

- ICE Brent front contract: $62.15 (+$0.14)

- Nymex WTI front contract: $52.60 (+$0.09)

- Reuters/Jefferies Commodities Index: 174.81 (+0.22%)

- 10y UST: 2.080% (-1bp) (Asia morning)

- DJI: 26,089.61 (-0.07%); S&P: 2,886.98 (-0.16%); Nasdaq: 7,796.66 (-0.52%)

Data/Events Ahead:

In the U.S. Jun manufacturing survey from the Empire State is due. From the housing sector we will see Jun's NAHB homebuilders' survey.


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

FX Highlights:

Asian currencies were broadly in the red against the greenback on Friday amid trade and geopolitical tensions. INR (-0.41%), SGD (-0.35%), IDR (-0.31%) and PHP (-0.30%) led the decline. Only THB (+0.29%) saw modest gains amid persistent fund inflows.

USD/CNH were unable to move towards 6.9400 on Friday despite the sluggish IP report and retreated towards 6.9300 handle this morning. The road to 7.00 remains hindered by 6.9698 resistance at the moment. 1Y NDFs likewise unable to see a meaningful break above the 7 handle. USD/CNY onshore spot's gains were also limited by strong government intervention even as the pair headed to 6.9200+ levels. Focus is on 6.9350 handle to discern if USD/CNY catch up with USD/CNH pull.

USD/SGD traded in a bullish pattern following the US retail sales print, breaking above 1.3700 handle to highs of 1.3723. NODX and Electronics exports are expected to see further contraction to -20.8% y/y and -26.0% y/y respectively in May. Pair may break above the 1.3731 resistance next.

USD/IDR 1M NDFs trade with an upside bias to 14420+ levels on Friday. Onshore spot also traded higher on Friday, breaking above 14300 to highs of 14325 in the afternoon. Eyes on the BI meeting this week and the June 28-29 G20 meetings where President Trump and President Xi are likely to meet. Eyes on 14350 resistance level in case of any weakness.

USD/INR 1M NDFs were seen with a bullish bias rising to 70+ levels overnight on Friday. Onshore spot also drifted higher to 69.80+ levels. RBI's dovishness at the June meeting helped the markets, but expect a slip below the 69 handle to be tough amid the economic challenges.

Data/Events Highlights:

China data was a mixed bag. Industrial production and fixed asset investment growths slowed to 5.0% y/y and 5.6% y/y respectively. Retail sales rebounded more than expected, inflated by favourable base effects. It grew by 8.6% y/y in May. Exports was positive on frontloading while food inflation pushed headline figures up.

India's WPI slipped to about two-year low at 2.45% y/y in May compared to 3.07% y/y for the previous month and 4.78% y/y during the corresponding month of the previous year.

Data/Events Ahead:

Focus for the week ahead will be Singapore's NODX and Electronics on Monday.

Philippines' April remittances data is also due.


n/a GMT - PH: Overseas Remittances (Apr) 4cast: 4.5% y/y [Prev: 6.6]

n/a GMT - PH: Overseas Remittances (Apr) USD bn [Prev: 2.514]

00:30 GMT - SG: NODX (May) 4cast: -20.8% y/y (Mkt: -19.4 Prev: -10)

00:30 GMT - SG: NODX - Electronics (May) 4cast: -26.0% y/y (Prev: -16.3)

01:30 GMT - AU: House Price Index (Q1) % q/q (Prev: -2.4)

12:30 GMT - US: Empire State Survey (Jun) index (Mkt: 12 Prev: 17.8)

13:00 GMT - CA: Existing Home Sales (May) 4cast: -1% m/m (Prev: 3.6)

14:00 GMT - US: NAHB Builders survey (Jun) index (Mkt: 67 Prev: 66)

20:00 GMT - US: Net Long-term TICS Flows (Apr) [Prev: -28.4]


- 15:30 GMT - US: 3mth Bills Auction

- 15:30 GMT - US: 6mth Bills Auction

- 23:15 GMT - AU: RBA's Kearns Speaks in Canberra

Forex - India Flows: Rupee slips further

 04:36 (GMT) 14 Jun

 [Forex Flows]

USD/INR onshore spot extends the rally on Thursday, rebounds from the dip following the higher open. Firmer oil prices amid geopolitical tension over tanker attack providing some support for the pair. Spot is inching towards the 69.670 resistance and a sustained move above latter will trigger gain to next target at 70.090. 1M NDFs continues to edge higher, seeking out Monday high at 69.90. SENSEX slips 0.32% thus far on Friday.

Forex - Malaysia Flows: USD/MYR remains in consolidation between 4.1520 and 4.1660

 04:07 (GMT) 13 Jun

 [Forex Flows]

USD/MYR opened higher at 4.1580 and rose to an intra-day high at 4.1630 at the beginning of Thursday's Asian session. Pair has since reversed just before the 4.1660 WTD high, slipping slightly to 4.1605 at last look. Pair remains in consolidation and range bound between 4.1520 and 4.1660 on a broader perspective. Pair is approaching the lower limit of the range. We expect pair to eye the 4.1520 support. If broken, attention will be on the 4.1450 support next. Falling oil prices and the current political scandal surrounding Malaysia's economic minister Azmin Ali are likely to provide upside support for USD/MYR and 4.1450 support is likely to be safe. 1M NDFs was trading at 4.1606 at last sight, while KLCi was down 0.20% at last look.

Forex - Asia Open - Overnight Highlights

 00:32 (GMT) 07 Jun

 [Forex Highlights]

Asia Overnight Highlights - 07 Jun 2019


FX Highlights:

The ECB adjusted its forward guidance by indicating that rates would remain unchanged until mid-2020, and announced details of the new TLTRO3, which were slightly less generous than TLTRO2, with the base at 10bp above the refi rate. The EUR rose on the news, helped by a modest rise in short term yields. EUR/USD peaked at 1.1308 and after slipping back to near 1.1250 stabilized a little below 1.13.

EUR/GBP ended firmer but without threatening .89, EUR/CHF however slipped back after being rebuffed at 1.12. In a largely news less session ahead of the ECB meeting in the afternoon. German industrial orders for April showed a modest 0.3% gain, and a small upward revision to the March rise, but of little significance after sharp declines in Jan and Feb.

US data was overshadowed by the ECB, with its most notable feature being a significant downward revision to Q1 unit labor costs. Equities were resilient and USD/JPY dips failed to test 108.00. A bounce above 108.50 came on a report that the US was considering a delay to tariffs on Mexico, breaking the day's range but in reality a modest move. The move was subsequently more or less retraced after the White House said that the US will proceed with tariffs on Mexico as planned, USD/JPY stabilised around 108.35. The situation still appears to have room for a deal before tariffs kick in on Monday as talks will resume on Friday. Mexico Foreign Minister Ebrard confirmed to send 6,000 troop to Southern border, which gave JPY pairs a nudge higher as things look to be shaping up for a deal at this time, though still short of the NY high.

Apr's Canadian trade deficit was lower than expected at C$0.97bn. While there was no strong instant reaction to the data USD/CAD fell as low as 1.3356 while AUD/CAD edged lower with AUD/USD unable to reach .70.

Data/Events Highlights:

- US Apr trade deficit $50.8bn vs $50.7bn exp from $51.7bn in Mar.

- US initial claims unchanged at 218k vs 215k exp.

-US Q1 unit labor costs revised to -1.6% from -0.9% vs -0.9% exp, non-farm productivity revised to 3.4% from 3.6% vs 3.5% exp.

- Fed's Williams said the outlook for the U.S. economy remains solid but downside risks have risen

- President Trump to decide on further tariffs on China after the G-20 Summit at the end of June

- U.S. Vice President Mike Pence said Mexico tariffs still on track for Monday as Mexico seeks to reach a trade resolution before deadline

- VIX index: 15.93 (-0.99%)

- Gold Spot: $1,334.17/oz (-0.09%)

- ICE Brent front contract: $62.27 (+$0.60)

- Nymex WTI front contract: $53.16 (+$0.57)

- Reuters/Jefferies Commodities Index: 173.87 (+0.89%)

- 10y UST: 2.123% (+1bp) (Asia morning)

- DJI: 25,720.66 (+0.71%); S&P: 2,843.49 (+0.61%); Nasdaq: 7,615.55 (+0.53%)

Data/Events Ahead:

- The US employment report will be the primary focus on Friday, with market attention increased after the much-weaker-than-expected ADP report on Wednesday, which typically provides some sort of lead (albeit not a terribly accurate one) on the official employment numbers. We look for a number slightly below market forecasts at 155k, as most other indicators of employment have remained quite solid, though May numbers do have a tendency to suffer from seasonal weakness. There will be as much interest in the average earnings data as in the employment numbers, but our forecast is line with the median at 0.3%, and this would leave the y/y rate at 3.2%, which isn't going to change anyone's view of Fed policy.

- Theresa May to step down as Conservative Party leader on Friday

- ECB's President Draghi and Coeure will be attending the G7 Finance Ministers and Central Bank Governors meeting in Fukuoka, Japan

- Fed's Daly speaks with students and faculty at Singapore Management University at 12:00 SGT


FX Highlights:

Asian currencies gained against the USD overnight, before dollar recovered slightly.

USD/CNH slid to a 6.9228 overnight but rebounded to 6.9287 subsequently. Pair, however, remains stuck in a broader consolidation range, we expect 6.9000 support and 6.9500 resistance to hold. 1Y NDFs slipped to 6.9775 during NY hours before rebounding to 6.9780. USD/CNY onshore spot traded with a slight downside bias before closing at 6.9037. Onshore markets are closed for market holiday: Dragon Boat Day on Friday.

USD/SGD retested the 1.3626 low on Wednesday, but rebounded slightly to 1.3647. We expect further recovery and pair to eye the 1.3670 resistance next

USD/IDR 1M NDFs fell to 14255 but were bid up again to 14262 in NY close. Onshore markets remain closed this week for Ramadan. We continue to see limited downside below 14300 and a worsening trade rhetoric can lead the pair towards 14500 levels again.

USD/INR 1M NDFs rebounded after touching 69.30 support on Thursday and closing higher at 69.37. USD/INR rebounded slightly towards the 69.2813 at the end of Thursday, focus now turning to July 5 budget announcement. Some rupee strengthening to 68.8000 may be warranted, but we continue to see limited room for rupee strength as economic conditions remain challenging.

Data/Events Highlights:

Reserve Bank of India (RBI) decided to cut interest rates again for a third straight time to bring the repo rate to 5.75% and reverse repo rate to 5.50%. This came along with a change in stance from neutral to accommodative, which signals that the easing cycle has room to run. The CRR was however left unchanged at 4.00%.

Data/Events Ahead:

China's May Foreign Reserves will be of interest in the Asia session. We expect a slight slip to 3090 CNY bn from April figures of 3094.95 CNY bn.


- n/a GMT - CN: Foreign Reserves (May) 4cast: 3090CNY bn (Mkt: 3090 Prev: 3094.95)

- 01:30 GMT - AU: Housing Finance (Apr) [Mkt: -1, Prev: -2.8]

- 05:00 GMT - JP: Leading Indicator (Apr P) 4cast: index (Mkt: 95.8 Prev: 95.9)

- 07:30 GMT - UK: Halifax House Price Index (May) 4cast: % 3m y/y (Mkt: 5 Prev: 5)

- 07:30 GMT - UK: Halifax House Price Index (May) 4cast: % m/m (Mkt: 0 Prev: 1.1)

- 12:30 GMT - US: Average Hourly Earnings (May) 4cast: 0.3% m/m (Mkt: 0.3 Prev: 0.2)

- 12:30 GMT - US: Non-farm Payrolls (May) 4cast: 155k (Mkt: 195 Prev: 263)

- 12:30 GMT - US: Private Payrolls (May) 4cast: 155k (Mkt: 178 Prev: 236)

- 12:30 GMT - US: Unemployment (May) 4cast: 3.7% (Mkt: 3.6 Prev: 3.6)

- 12:30 GMT - CA: Capacity Utilization (Q1) 4cast: % (Mkt: 81 Prev: 81.7)

- 12:30 GMT - CA: Net Change in Employment (May) 4cast: 15k (Mkt: -5 Prev: 106.5)

- 12:30 GMT - CA: Unemployment (May) 4cast: 5.7% (Mkt: 5.7 Prev: 5.7)

- 14:00 GMT - US: Wholesale Inventories (Apr F) [Mkt: 0.2, Prev: 0.7]

- 19:00 GMT - US: Consumer Credit (Apr) 4cast: USD bn (Mkt: 12 Prev: 10.281)


- EU: ECB's Coeure speaks in Fukuoka

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

- 04:00 GMT - US: Fed's Daly speaks in Singapore (12:00 SGT)

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