Forex - Asia Open - Overnight Highlights

 23:51 (GMT) 14 Jan

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Asia Overnight Highlights - 15 Jan 2020


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

FX Highlights

The Bloomberg dollar spot index edged a little firmer in a quiet European morning, gaining ground against the EUR, CAD and GBP but moving little against the JPY. The movement in North America was however in the opposite direction. A soft US CPI got little response but may have weighed on USD sentiment.

USD/JPY was never very far from 110 but fell to the day's lows on a report that US tariffs on China would persist through the election.

GBP/USD outperformed pushing above 1.30 while EUR/USD failed to fully erase earlier losses that bottomed a little above 1.11. Early in the session EUR/GBP broke the December high, but fell back after that, though the bund/gilt spread narrowed to its lowest level since May 2018.

Early weakness in equities coincided with USD gains against the riskier currencies, but did not persist. USD/CAD fully reversed early gains but AUD/CAD held above .90.

Data/Events Highlights:

- US Dec CPI +0.2% vs 0.3% exp, ex food and energy +0.1% vs 0.2% exp.

- VIX index: 12.39 (+0.57%)

- Gold Spot: $1,548.84/oz (+0.16%)

- ICE Brent front contract: $64.49 (+$0.29)

- Nymex WTI front contract: $58.20 ($-0.03)

- Reuters/Jefferies Commodities Index: 183.64 (+0.35%)

- 10y UST: 1.811% (-3bp) (Asia morning)

- DJI: 28,939.67 (+0.11%); S&P: 3,283.15 (-0.15%); Nasdaq: 9,251.33 (-0.24%)

Data/Events Ahead:

U.S. Dec PPI on Wednesday should see 0.3% gains both overall and ex food and energy, the core rate correcting from a below trend Nov.

Insight on manufacturing will come from Jan's Empire State today.

Eurozone November industrial production is expected to rise by 0.4% m/m but still be some 0.1% q/q lower compared to the three months ending in August. On the same day, November trade balance data will be released.

We anticipate no further fall in the UK CPI inflation rate in December, instead once again staying at 1.5% y/y, still a 3-year low, but further consolidating the drop from 2%-plus seen since the middle of last year.


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

FX Highlights:

A mixed day for Asian currencies on Tuesday following the announcement of the U.S. Treasury currency manipulator list, which were largely in favour to Asia. PHP reopened for trading on Tuesday, after markets closed due to Taal volcanic eruption on Monday. PHP was the biggest winner, up 0.30% against the dollar as pair caught up with the gains seen in Asia emerging markets. CNY was up 0.13%, as U.S. removed China's label as a currency manipulator. TWD was up 0.12% against the dollar. Meanwhile, both MYR and THB were down 0.25% and 0.19% respectively against the greenback.

USD/CNH traded mostly below 6.8900 overnight but upside pressures to 6.9000 returned in early Asian hours on Wednesday following a report that China tariffs will stay until the US Nov elections. Further downside toward six-month lows of 6.8600 levels remains likely, ahead of the trade deal and Lunar New Year. USD/CNY onshore spot also remained depressed below 6.9000 on Tuesday as trade deal optimism persisted and sentiment was boosted by China being de-labeled as a currency manipulator. Fresh 5-month lows of 6.8661 were printed. 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 saw sharp gains early this morning to 6.9802 at last look after trading below 6.9700 in NY.

USD/SGD reversed gains from the European session to trade below 1.3470 in NY but upside pressures returned in early Asian hours on Wednesday and pair touched 1.3480 highs at last check. Return of the tariff thread weighed on Asian currencies again as reports suggested US will keep tariffs on China until the November elections and phase 2 talks. 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 saw gains to 13720+ levels in late NY hours from sub-13680 levels seen in Tuesday's Asian session. USD/IDR onshore spot gapped lower again on Tuesday to open at 13655 from previous close of 13673 and traded horizontally around 13650 in the morning. Trade optimism and US treasury relief underpinned. Meanwhile, BI's non-intervention and UAE's investment are further boosting rupiah sentiment. Pair however reversed slightly higher to 13680 into the close. Supports seen at 13645 and 13600, but we believe the doors to 13500 are now open if positive trade sentiment is sustained.

USD/INR 1M NDFs traded higher to 71.150+ levels in late Asian hours on Tuesday and traded mostly sideways thereafter. USD/INR onshore spot gapped lower again to open at 70.740 on Tuesday from previous close of 70.860 amid further improvement in sentiment after US Treasury removed China's labeling as a currency manipulator. However gains in the rupee could not catch up with Asian peers and pair traded back above 70.900 in the afternoon given the surge in headline inflation to over 5-year highs in December. Food price gains underpinned the surge in inflation, and this will likely delay any further easing by the RBI. We maintain our view that break below the 71 handle will likely remain temporary given a host of domestic challenges.

Data/Events Highlights:

China's December exports and imports both came in stronger-than-expected. Exports rose 7.6% y/y in December after four consecutive months of contraction, while imports climbed 16.3% y/y from 0.3% y/y in November partly due to base effects.

India's December WPI also came in stronger than expected at 2.59% y/y from 0.58% y/y previously.

Data/Events Ahead:

December trade data for both India and Indonesia is due in Asia today, and we expect narrower trade deficits for both.


PH: Overseas Remittances (Nov) 4cast: 3.5% y/y [Mkt: 4, Prev: 8]

PH: Overseas Remittances (Nov) 4cast: 2.407USD bn [Mkt: 2.436, Prev: 2.671]

IN: Exports (Dec) 4cast: -3% y/y [Prev: -0.3]

IN: Imports (Dec) 4cast: -9% y/y [Prev: -12.7]

IN: Trade Balance (Dec) 4cast: -10.224USD bn [Mkt: -11.6, Prev: -12.12]

23:50 GMT / 07:50 SGT - JP: M2 Money Supply (Dec) [Prev: 2.8]

04:00 GMT / 12:00 SGT - ID: Exports (Dec) 4cast: -3.3% y/y [Mkt: -2.2, Prev: -5.67]

04:00 GMT / 12:00 SGT - ID: Imports (Dec) 4cast: -7% y/y [Mkt: -5, Prev: -9.24]

04:00 GMT / 12:00 SGT - ID: Trade Balance (Dec) 4cast: -430USD mn [Mkt: -430, Prev: -1330]

09:30 GMT / 17:30 SGT - UK: CPI (Dec) [Mkt: 0.2, Prev: 0.2]

09:30 GMT / 17:30 SGT - UK: Output Prices Core (unadj.) (Dec) [Mkt: 0, Prev: -0.2]

09:30 GMT / 17:30 SGT - UK: Input Prices (nsa) (Dec) [Mkt: 0.2, Prev: -0.3]

09:30 GMT / 17:30 SGT - UK: CPI (Dec) 4cast: 1.5% y/y [Mkt: 1.5, Prev: 1.5]

09:30 GMT / 17:30 SGT - UK: Output Prices (unadj.) (Dec) [Mkt: 1, Prev: 0.5]

09:30 GMT / 17:30 SGT - UK: Input Prices (nsa) (Dec) [Mkt: -0.9, Prev: -2.7]

09:30 GMT / 17:30 SGT - UK: Retail Sales (inc Auto Fuel) (Dec) 4cast: 0.5% m/m [Mkt: 0.6, Prev: -0.6]

09:30 GMT / 17:30 SGT - UK: Retail Sales (ex Auto Fuel) (Dec) [Mkt: 0.8, Prev: -0.6]

09:30 GMT / 17:30 SGT - UK: Retail Sales (ex Auto Fuel) (Dec) [Mkt: 3, Prev: 0.8]

09:30 GMT / 17:30 SGT - UK: Retail Sales (inc Auto Fuel) (Dec) [Mkt: 2.7, Prev: 1]

10:00 GMT / 18:00 SGT - EU: Trade Balance (sa) (Nov) [Mkt: 22, Prev: 24.5]

10:00 GMT / 18:00 SGT - EU: Industrial production (Nov) [Mkt: -1, Prev: -2.2]

13:30 GMT / 21:30 SGT - US: PPI (ex Food & Energy) (Dec) 4cast: 0.3% m/m [Mkt: 0.2, Prev: -0.2]

13:30 GMT / 21:30 SGT - US: PPI (Dec) 4cast: 0.3% m/m [Mkt: 0.2, Prev: 0]

13:30 GMT / 21:30 SGT - US: Empire State Survey (Jan) [Mkt: 3.6, Prev: 3.5]

14:00 GMT / 22:00 SGT - CA: Existing Home Sales (Dec) [Prev: 0.6]

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: 0.5, 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]


00:30 GMT / 08:30 SGT - JP: BoJ's Kuroda Speaks at Branch Managers' Meeting

08:40 GMT / 16:40 SGT - UK: BoE's Saunders Speaks in Bangor, Northern Ireland

16:00 GMT / 00:00 SGT - US: Fed's Harker speaks in New York

17:00 GMT / 01:00 SGT - US: Fed's Kaplan speaks in New York

19:00 GMT / 03:00 SGT - US: Fed Releases Beige Book

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