Forex - Asia Open - Overnight Highlights


 00:29 (GMT) 12 Aug

  [Forex Highlights]

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

Asia Overnight Highlights - 12 Aug 2019

MAJORS

FX Highlights:

The USD has recovered after a temporary dip last Friday. USD/JPY saw a low of 105.25 but EUR/USD saw only modest gains to around 1.1220, Italian political risks persisting. A report that a Trump remark on not doing business with Huawei referred only to the Federal government saw equities and the USD move off the lows.
EUR/CHF kept to a tight range near 1.09. The NOK managed a modest recovery after stronger than expected CPI data, and the SEK also rallied, though the EUR corrected some of its losses against both later.
USD/CAD bounced to 1.3274 on a decline in Canadian employment, but with wages firmer and oil up the bounce was fully erased. The equity slide saw a modest bounce to around 1.3245 before slipping back near 1.32. AUD was subdued, with AUD/CAD unable to hold above .90.

Data/Events Highlights:

- US Jul PPI +0.2% as exp, ex food and energy -0.1% vs +0.2% exp.

- Canada Jul employment -24.2k vs +15k exp, unemployment rose to 5.7% from 5.5% vs 5.5% exp, hourly wages to 4.5% yr/yr from 3.6% vs 3.8% exp.

- Japan's economy grew 1.8% q/q SAAR and 0.4% q/q in Q2 according to advance estimates. This performance is modest but not too bad compared to that of Q1. This bettered market expectations. Growth was supported by domestic demand even though export growth was weak.

-Q2 UK GDP unexpectedly fell by 0.2%, below market expectations of no change. The decline was due primarily to weakness in manufacturing output, which itself likely reflected destocking after the inventory build in Q1 which anticipated Brexit.

- VIX index: 17.97 (+6.27%)

- Gold Spot: $1,499.36/oz (+0.47%)

- ICE Brent front contract: $58.21 ($-0.32)

- Nymex WTI front contract: $54.21 ($-0.29)

- Reuters/Jefferies Commodities Index: 172.09 (+1.04%)

- 10y UST: 1.745% (+3bp) (Asia morning)

- DJI: 26,287.44 (-0.34%); S&P: 2,918.65 (-0.66%); Nasdaq: 7,959.14 (-1.00%)

Data/Events Ahead:

A quiet day ahead in terms of data releases.

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

EMERGING ASIA

FX Highlights:

Asian currencies had a cautious start to the new week. Signs of further escalation of US-China trade war still weighed on markets. Currency movements in the region are limited as several markets are closed for holiday.

USD/CNH was consolidative around 7.1000 as the new week started. Trade concerns still weighed on markets. Although unlikely for now, a breach of the 7.1400 high on 6 August could prompt further move towards the 7.2000 big figure. 1Y NDFs eased slightly to 7.1400 at last look. Markets have priced chances of no trade deal and are now stabilising on China policy consistency. For USD/CNY, a move above 7.0500 big figure will next have markets testing 7.0670 resistance.

USD/SGD extended gains after the new week started, and was seen at a high of 1.3880. Trade actions taken by both U.S. and China, along with the Fed's decision, will continue to drive future price action. Focus for the week ahead will be on Singapore's Q2 GDP final print on Tuesday. We expect Q2 GDP to be revised down to 0.0% y/y from 0.1% y/y. Break of 1.3873 resistance turn our attention to the 1.3889 resistance next.

USD/IDR 1M NDFs rebounded slightly to 14300 Friday night, and was seen lower to 14283 at last look. The onshore spot inched lower to 14200 last Friday. For USD/IDR, 14122 support likely to hold and some vulnerability towards 14360 resistance should persist.

Onshore USD/INR recovered somewhat after hitting a low of 70.450 last Friday, and closed at 70.800. Pair will likely continue to be affected by US-China trade tensions and domestic Kashmir volatility. Pair will need to lift above 71.000 to resume upmove.1M NDFs still held onto gains, and were trading at 70.320 into Asia hours on Monday.

Data/Events Highlights:

A bad set for China price data last Friday. Inflation climbed further to 2.8% y/y even as market expectations were for some stability. This also meant 0.4% m/m increase (we were expecting none). Food inflation remains a major concern - it climbed a staggering 9.1% y/y in July. Meanwhile PPI fell 0.3% y/y, the first since August 2016. This is bad for factory profits. Malaysia industrial production eased slightly to 3.9% y/y in June from 4.0% y/y prior. India industrial production also came in weaker in June, at 2.0% y/y from 4.6% y/y in May.

Data/Events Ahead:

No key data releases due in the day ahead as several markets are closed for holiday.

DATA RELEASES DUE TODAY

- 18:00 GMT / 02:00 SGT - US: Monthly Budget Statement (Jul) [Mkt: -111, Prev: -8.5]

- 23:50 GMT / 07:50 SGT - JP: PPI (Jul) [Mkt: 0.1, Prev: -0.5]

- 23:50 GMT / 07:50 SGT - JP: PPI (Jul) [Mkt: -0.5, Prev: -0.1]

EVENTS & AUCTIONS

- IN/PH: Market Holiday - Eid al-Adha

-MY/ SG: Market Holiday - Hari Raya Haji

-TH: Market Holiday - Queen Mother's Birthday

15:30 GMT / 23:30 SGT - US: 3mth Bills Auction (USD 42bln)

15:30 GMT / 23:30 SGT - US: 6mth Bills Auction (USD 42bln)

22:00 GMT / 06:00 SGT - AU: RBA's Kent speaks in Sydney


Forex - Philippines Flows: Peso supported by China stability


 04:12 (GMT) 09 Aug

 [Forex Flows]

USD/PHP gapped lower and stayed there, last at 51.934. This comes as DXY remains relatively range bound and markets digested BSP's rate cut and thoughts on further easing. GDP growth slowdown did not further impact on the peso, as it is likely helped by China's stable CNY fixing prints in recent days. Support of 51.88 and 51.55 next levels to watch. 1M NDF last at 52.02. PSEI up 0.16% on similar trends with FX.


Forex - REVIEW- Philippines Q2 GDP growth missed expectations, eased to a 4-year low


 02:26 (GMT) 08 Aug

 [Economic Data]

The Philippines economy slowed down further in the second quarter. Q2 GDP missed market expectations and rose by only 5.5% y/y, the lowest in about four years. Government spending growth remained soft, as impact of delay in budget approval dragged on. Gross fixed capital extended the downtrend, and fell by 4.5% y/y in Q2 following a rise of 6.4% y/y in Q1. Export growth slowed down further to 4.4% y/y, while import growth was flat.

Disappointing Q2 growth added to economic growth concerns in the Philippines. Bangko Sentral ng Pilipinas (BSP) will announce policy decision later today, with a 25-bps reduction already seen by the markets. However, the recent turn of events such as escalating US-China trade war and prospect of further easing by the Fed have increased the odds of more easing by the Bank. We think that bigger cut such as a 50 bps rate cut is also not ruled out.


Forex - Chart USD/INR Update: Focus stays on the upside


 04:19 (GMT) 07 Aug

 [Forex Charts]

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