Forex - Flows: PBOC fixed USD/CNY mid-point at 6.6399 vs. previous close of 6.6398


 01:17 (GMT) 14 Nov

  [Forex Flows]   [Central Banks]

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Flows: PBOC fixed USD/CNY mid-point at 6.6399 vs. previous close of 6.6398 (0100-TZFK-C01)

Forex - Asia Open - Overnight Highlights


 23:44 (GMT) 12 Nov

 [Forex Highlights]

Asia Overnight Highlights - 13 November 2017

ASIA OUTLOOK

Friday was a quiet day in FX but bond yields saw some upward pressure, led by Europe. Equities remained pressured, but losses were contained.

Majors FX Highlights

The dollar index traded to a low of 94.258 in the NY hours on Friday amid growing concerns of a delay in the implementation of the US tax reform. Prices however saw a quick recovery towards 94.500 levels into the new Asian session. GBP was the best performing currency last week, and was further boosted by better than expected British manufacturing output data and easing Brexit negotiations, bringing Cable up to a high of 1.3230 in Friday's NY session, before a retreat to 1.3160 early this morning. EUR/USD teased the upside to 1.1678 without finding major stops. Pair however continued to consolidate around 1.1660 into the new week. EUR/GBP sipped to 0.8812 in the NY session on Friday but was last seen inching up to 0.8860+. USD/JPY was heavy in NY, slipping to 113.22 but a modest recovery was seen this morning to 113.70+. The USD made marginal gains against the commodity currencies, but USD/CAD was particularly tight, allowing AUD/CAD to test .9700. AUD/USD dipped to 0.7642 in early trading this morning as investors position more for Prime Minister Malcolm Turnbull now leading a minority government and despite an upbeat investment assessment and outlook by RBA Debelle. NZD/USD seen lower at 0.6917.

Majors Data Highlights

UK Industrial production came in at 0.7%, marginally higher than our 0.6% forecast and August's 0.3% outcome. This pushes the yearly rate higher to 2.5% versus our anticipated 2.3%. The 3m/3m change grew from 0.9% to 1.1% in September. Manufacturing rose by 0.7% from 0.4% in August - with the yearly rate falling marginally to 2.7% from 2.8% in August.

A quiet start to the week is seen in the developed markets.

Emerging Asia FX Highlights

USD/Asians traded mostly with a bid tone on Friday night. USD/CNY 1Y NDFs traded with a bid tone in the NY session on Friday, and inched up to 6.8158 from a low of 6.7950 printed earlier. USD/SGD traded in a sideways manner in the NY session, trading around 1.3605, although a dip to 1.3577 was noted in between. USD/IDR 1M NDFs rallied to 13622 in the early NY hours on Friday before settling lower around 13600. USD/INR 1M NDFs saw a sharp rally to 65.6000+ levels from <65.3000 earlier on Friday and continued to consolidate gains thereafter.

Emerging Asia Data Highlights

India industrial Output rises 3.8% in September but lower than August.

All eyes on India's October CPI scheduled for release after the close of markets today.

OVERNIGHT NEWS HIGHLIGHTS

- US Nov preliminary Michigan CSI fell to 97.8 from 100.7 vs 100.8 exp.

- Fed's Bullard said policy rate about right where it is

- VIX index: 11.29 (+7.52%)

- Gold Spot: $1,274.56/oz (-0.07%)

- ICE Brent front contract: $63.52 ($-0.41)

- Nymex WTI front contract: $56.93 (+$0.19)

- Reuters/Jefferies Commodities Index: 191.65 (-0.12%)

- 10y UST: 2.398% (+6bp) (Asia morning)

- DJI: 23,422.21 (-0.17%); S&P: 2,582.30 (-0.09%); Nasdaq: 6,750.94 (+0.01%)

ASIA NEWS

China: China's plan to ease foreign-ownership limits on financial firms drew praise from IMF chief Christine Lagarde, who described the move as a "very positive development." - BBG

China: The Trans-Pacific Partnership discussions won't affect the progress of negotiations on a 16-nation Asia trade pact known as the RCEP, Zhang Jun, an economic affairs official at China's foreign ministry, says at APEC event in Danang, Vietnam. - BBG

Indonesia: Current-account deficit for July-Sept. period was at 1.65% shrinking from 1.91% of GDP in the previous quarter, Bank Indonesia says in statement on website. - BBG

Indonesia: Indonesia Estimates 4Q GDP Growth at Least 5.3% on Govt Spending. - BBG

India: India slashed levies on most items attracting the highest rate under the new goods and services tax regime as Prime Minister Narendra Modi looks to ease pain of businesses grappling with its chaotic roll-out. - BBG

CURRENCIES

GBP was possibly the most interesting mover of the day, a modest lift from better than expected UK production and trade data that hints the advantages of a weaker GBP are finally being felt, while it also went up on the Brexit press conference with Davis and Barnier even though that was very short on specifics. Cable saw a high of 1.3229.

EUR/USD teased the upside to 1.1678 without finding major stops. EUR/GBP got as low as .8809 but EUR/CHF is back above 1.16.

USD/JPY proved very tight all day and reasonably resistant to further losses in equities. With equities finding a base the pair recovered from a low of 113.20 to move back above 113.50, in the upper end of the day's range.

BONDS

An overnight steepener (probably flattener unwind) trade set the tone for USTs. Yields consolidated just off the day's highs before a late burst of EGB selling into the European close extended the sell-off. 2s +2.1bps @ 1.65%, 5s +4.0bps @ 2.05%, 10s +5.3bps @ 2.39%, 30s +5.9bps @ 2.87%.

- Agency Spreads: Freddie/Fannie 5s -0.2/+0.3 bps, 10s +0.1/+0.1 bps.

- Swap Spreads: 2s +0.02bps, 5s -0.45bps, 10s -0.09bps.

EQUITIES

Worries about tax reform prospects continued to weigh on equities but losses, led by energy and health care were contained. Consumer staples provided support.

ASIA CURRENCIES

USD/CNY: 1Y NDFs traded with a bid tone in the NY session on Friday, and inched up to 6.8158 from a low of 6.7950 printed earlier. PBOC fixed USD/CNY mid-point at 6.6282 vs. previous close of 6.6378 on Friday. The onshore pair also trended up in a zig-zag fashion to a 2-week high of 6.6460. We still see risk to the 6.6500 handle, but a break above could possibly see some intervention from the authorities.

USD/CNH: Pair continued to trade upwards, drifting above the 6.6600 handle and printing a high of 6.6660 in the NY session on Friday. We are likely to see some range-trading for now, between 6.5900 and 6.6500.

USD/SGD: Pair traded in a sideways manner in the NY session, trading around 1.3605, although a dip to 1.3577 was noted in between. Focus on the October NODX data due this week. For USD/SGD, the pair remains well supported and eyes on the next resistance 1.3660.

USD/IDR: 1M NDFs rallied to 13622 in the early NY hours on Friday before settling lower around 13600. Onshore spot also traded with a firm tone on Friday, inching up to 13538 high into the close from near-13515 levels earlier in the day. Gains are likely to be capped at 13550, while strong support is only seen at 13420.

USD/INR: 1M NDFs saw a sharp rally to 65.6000+ levels from <65.3000 earlier on Friday and continued to consolidate gains thereafter. Onshore spot gapped higher on Friday and after a brief dip to 64.9950, pair rallied to an over 2-week high of 65.1900. Focus now on the October inflation data due later today. Break of 65.2000 resistance is needed to put the focus back on the upside.

DATA RELEASES DUE TODAY

- n/a GMT - IN: Exports (13th-15th) (Oct) [Prev: 25.7]

- n/a GMT - IN: Imports (13th-15th) (Oct) [Prev: 18.1]

- n/a GMT - IN: Trade Balance (13th-15th) (Oct) 4cast:-9.922 USD bn [Mkt: -11, Prev: -8.984]

- 12:00 GMT - IN: CPI (Oct) 4cast: 3.45% y/y [Prev: 3.28]

EVENTS & AUCTIONS

- JP: BoJ Kuroda Speaks in Zurich

- 00:10 GMT - US: Fed's Harker Speaks in Tokyo

- 09:00 GMT - EU: ECB's Constancio Speaks in Frankfurt

- 16:30 GMT - US: 3mth Bills Auction

- 16:30 GMT - US: 6mth Bills Auction


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