Forex - Asia Open - Overnight Highlights


 23:27 (GMT) 22 Apr

  [Forex Highlights]

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

Asia Overnight Highlights - 23 April 2019

ASIA OUTLOOK

On a subdued Easter Monday gains in oil price as the US stated it would eliminate waivers on purchases of Iranian oil the main story, giving a modest lift to the CAD. Elsewhere EUR/USD corrected higher but Cable remained weak.

Majors FX Highlights

The Bloomberg dollar spot index was little changed on Monday, and traded quietly around 97.400 before dipping slightly to 97.300 in the NY session. Trade was quiet with Europe closed for Easter Monday. The main story of the day being higher oil prices on the US stating it would eliminate waivers on oil purchases from Iran after the May 2 expiration. This saw USD/CAD fall below 1.3350. With AUD/USD slightly lower AUD/CAD fell to a level not seen since Apr 12, though still on the .95 handle.

EUR/USD saw a modest correction of its Thursday losses edging back above 1.1250. With no progress seen on Brexit negotiations over Easter, Cable extended its move below 1.30 to touch 1.2975, as EUR/GBP pushed up to .8675. USD/JPY stayed in a very tight range marginally below 112.00. US existing home sales fell slightly short of consensus while Fed nominee Herman Cain withdrew from consideration, with no market response.

Majors Data Highlights

US Mar existing home sales at 5.21m are fairly close to the average of Feb's strong 5.48m and Jan's weak 4.93m. While a little above Q4's average they are close to levels seen in Sep, Oct, and Nov. The picture is of a housing market stabilizing, perhaps modestly improving, after trending lower through most of 2018.

New home sales are due in the US, expected to correct lower by 3.3% to 645k. Europe remains quiet but UK MPs return to the parliament. This week therefore is one in which a new parliamentary process could begin in an attempt to find a consensus. This could by either through new indicative votes or the government introducing the bill, which MPs could amend, either to add a confirmatory referendum or soft Brexit options such as a customs union.

Emerging Asia FX Highlights

USD/Asians traded mostly higher earlier on Monday before retreating slightly and entering consolidation. USD/CNY 1Y NDFs shot up again to 6.7600 handle in late Asian hours on Monday and traded horizontally around 6.7550 thereafter as liquidity was thin. USD/SGD was bid up to fresh over 1-week highs of 1.3570 earlier on Monday but later retreated subtly to 1.3560-levels into the NY session as the USD remained quiet. USD/IDR 1M NDFs extended its gains to 14193 earlier on Monday but was offered subsequently and returned to sub-14160 levels. USD/INR 1M NDFs broke above the 70 handle but it didn't appear firm, with highs capped at 70.2800 before a slip back to the big figure.

Emerging Asia Data Highlights

Singapore's March CPI will be on focus today - the first one after the MAS decided to keep policy on hold.

OVERNIGHT NEWS HIGHLIGHTS

- US Mar existing home sales -4.9% to 5.21m vs 5.30m exp.

- VIX index: 12.42 (+2.73%)

- Gold Spot: $1,275.18/oz (+0.02%)

- ICE Brent front contract: $74.04 (+$2.07)

- Nymex WTI front contract: $64.00 (+$0.24)

- Reuters/Jefferies Commodities Index: 187.92 (+0.42%)

- 10y UST: 2.589% (+3bp) (Asia morning)

- DJI: 26,511.05 (-0.18%); S&P: 2,907.97 (+0.10%); Nasdaq: 8,015.27 (+0.22%)

ASIA NEWS

China: China will use "high-level" opening up measures to push for reforms, Xinhua reports, citing a meeting of the Central Committee for Financial and Economic Affairs chaired by President Xi Jinping. - BBG

Indonesia: Indonesia's 2019 budget deficit at 0.63% of GDP as of March compared to 0.58% in same period last year, according to statement from Finance Ministry. - BBG

India: Indian state refiners have firmed up oil supplies from alternate sources to replace Iran oil volumes for next month as contingency plan for non-renewal of U.S. waivers, a govt official says. - BBG

Asia Open - Overnight Highlights (0101-KMVP-C03)

CURRENCIES

Trade was quiet with Europe closed for Easter Monday. The main story of the day being higher oil prices on the US stating it would eliminate waivers on oil purchases from Iran after the May 2 expiration. This saw USD/CAD fall below 1.3350. With AUD/USD slightly lower AUD/CAD fell to a level not seen since Apr 12, though still on the .95 handle.

EUR/USD saw a modest correction of its Thursday losses edging back above 1.1250. With no progress seen on Brexit negotiations over Easter, Cable extended its move below 1.30 to touch 1.2975, as EUR/GBP pushed up to .8675.

USD/JPY stayed in a very tight range marginally below 112.00. US existing home sales fell slightly short of consensus while Fed nominee Herman Cain withdrew from consideration, with no market response.

Asia Open - Overnight Highlights (0101-KMVP-C04)

BONDS

USTs predictably quiet given the European holiday although the o/n move higher in yields does leak out further into the US session as oil bounce takes root. Lift in oil on the US Iran waiver end story encouraged USTs to trim back Friday's short covering burst. Existing homes data drops back broadly as expected, shrugged off. Curve a touch steeper despite the pending short end supply. 2s +0.6bps @ 2.39%, 5s +1.7bps @ 2.39%, 10s +3.1bps @ 2.59%, 30s +3.3bps @ 2.99%.

Agency Spreads: Freddie/Fannie 5s -0.7/-0.8 bps, 10s 0.0/-0.7 bps.

Swap Spreads: 2s -1.18bps, 5s -0.60bps, 10s -0.69bps.

EQUITIES

Equities saw a quiet day with strength in energy as oil prices increased balanced by modest losses in most sectors. A fairly light earnings calendar had little impact. Haliburton was subdued after announcing its results.

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

ASIA CURRENCIES

USD/CNY: 1Y NDFs shot up again to 6.7600 handle IN LATE Asian hours on Monday and traded horizontally around 6.7550 thereafter as liquidity was thin. On Monday, PBoC fixed mid-point at 6.7035 vs. previous close of 6.7049. Onshore spot traded with an upside bias as well, and inched up to 6.7150 highs on Monday. We expect pair to eye the 6.7233 resistance next.

USD/CNH: Pair peaked at 6.7192 earlier on Monday before trading horizontally around 6.7150 again in the overnight session. China's politburo reiterated the need for a prudent monetary policy and remained cautiously optimistic, despite stronger than expected Q1 economic growth. We expect pair to eye the 6.7300 handle. If broken, will turn our attention to the 6.7500 resistance next.

USD/SGD: Pair was bid up to fresh over 1-week highs of 1.3570 earlier on Monday but later retreated subtly to 1.3560-levels into the NY session as the USD remained quiet. Focus for today will be on Singapore's March CPI. We expect headline inflation at 0.6% y/y in March (0.5% in February) and core inflation at 1.5% (1.5% prior). Pair is likely to eye the 1.3581 resistance next, before seeing a reversal to the 1.3510 support.

USD/IDR: 1M NDFs extended its gains to 14193 earlier on Monday but was offered subsequently and returned to sub-14160 levels. Onshore spot traded with a slight upside bias after the long weekend and opening flat at 14045. Pair inched up to over 1-week highs of 14096 as opponent Prabowo challenged Jokowi's victory in the presidential elections, which keeps threats of protests still alive. Oil prices were also on an uptrend, weighing on the rupiah but upside for USD/IDR possibly seemed capped and pair dropped back to 14080 into the close. We expect 13890 support to stand firm for now unless a Jokowi victory is confirmed, and a firmer break above 14090 remains likely.

USD/INR: 1M NDFs broke above the 70 handle but it didn't appear firm, with highs capped at 70.2800 before a slip back to the big figure. Onshore spot gapped higher to open at 69.7500 after the long weekend vs. last close of 69.3550 as oil prices rallied on reports that US could end Iran sanction waivers. Pair traded to fresh 6-week highs of 69.8700 in early trading, before retreating to sub-69.7000 levels in the afternoon. Risk of break to the 70 handle has arisen due to oil price gains amid the election uncertainties, but we do not see much upside above it as the RBI has kept the door open for more rate cuts.

DATA RELEASES DUE TODAY

00:30 GMT - JP: Nikkei PMI Mfg (Apr P) index (Mkt: Prev: 49.2)

05:00 GMT - SG: Core CPI (Mar) 4cast: 1.5% y/y (Mkt: 1.7 Prev: 1.5)

05:00 GMT - SG: CPI (Mar) 4cast: 0.6% y/y (Mkt: 0 Prev: 0.5)

08:00 GMT - TW: Industrial Output (Mar) % y/y (Mkt: -1.5 Prev: -1.8)

08:30 GMT - HK: CPI (Mar) % y/y (Mkt: 2.2 Prev: 2.1)

12:30 GMT - CA: Wholesale Sales (Feb) [Prev: 0.6]

13:00 GMT - US: FHFA House Price Index (Feb) [Prev: 0.6]

13:00 GMT - EU: Consumer Sentiment (Apr A) [Prev: -7.2]

14:00 GMT - US: New Home Sales (Mar) 4cast: 645k (Mkt: 650 Prev: 667)

EVENTS & AUCTIONS

- UK: Parliament Returns from Easter Recess

- 04:35 GMT - JP: 2yr Bills Auction

- 10:30 GMT - EU: ECB Main Refinancing Operation Result

- 16:30 GMT - US: 52wk Bills Auction

- 18:00 GMT - US: 2yr Notes Auction


Forex - Flows: Strong China GDP triggering 1 big figure move downwards for USD/CNH, while USD/CNY also moved lower


 02:19 (GMT) 17 Apr

 [Forex Flows]

USD/CNH saw a sharp move down to 6.7045 from 6.7140. This was propelled by a strong China GDP print: 6.4% y/y vs. our expectations of 6.2%. March numbers look well supported by official stimulus with industrial production (8.5% y/y) seemingly back to 2017 boom numbers. Retail sales also rebounded. The 6.7000 psychological support remains a barrier to the technical support of 6.6694.

PBoC fixed mid-point at 6.7110 vs. previous close of 6.7128. USD/CNY was down to 6.7050 before rebounding to 6.7067. 1Y NDFs similarly followed spot movements down to 6.7444. For USD/CNY, moving below the 6.7000 handle should trigger some profit taking.


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