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Forex - Asia Open - Overnight Highlights


 23:43 (GMT) 10 Jan

  [Forex Highlights]

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Asia Open - Overnight Highlights (0100-KDJP-C01)

Asia Overnight Highlights - 11 January 2017

Charu Chanana

ASIA OUTLOOK

Oil was the big story as it slumped again on high production and investor concerns. Gold prices jumped, and focus now on Trump's press conference.

Majors FX Highlights

The dollar index was seen dipping below 101.600 in the Asian session on Tuesday before recovering into Europe, although a mild weakness was seen again at NY open, the index closed above 102.00. That was significant volatility for a day with limited data and central bank speakers, although Fed Lacker, a key proponent of higher interest rates, announced his retirement in October. Focus today will be any headlines about further details on Trump's fiscal policy from the press conference before he takes office on Jan 20. EUR/USD retreated to fall below 1.0560 into the close of overnight session, with eyes now on 1.0550 at last check. French presidential candidate Macron said that euro may not exist in 10 years, pressing for reforms. GBP/USD remained relatively resilient in the day, trading close to 1.2150 levels and was last seen inching up above 1.2170. USD/JPY was bid up to 116.34 just as New York opened but it ran into offers, slipping down to 115.26 before a bounce to 116.00 subsequently. CAD balanced between a softer USD and another drop in the crude price. AUD/USD recovered most of the ground lost on the retail sales data while the NZD came under some early pressure which the much reduced carry advantage is unable to stave off. NOK and SEK both a little weaker after softer than expected Norwegian inflation but both in familiar territory vs EUR and against each other. EUR/CHF looks solid on the 1.07 handle now but with no rush even to try above 1.0750.

Majors Data Highlights

Dec's NFIB small optimism index at 105.8 versus 98.4 surged by 7.5% after a 3.7% Nov gain to take the index to its highest since Dec 2004.

A quirt day is seen ahead in the US on the data front, although headlines should be taken by Trump's Press Conference before he takes office on Jan 20. Only data of note is UK's industrial production which should rebound by 0.8% m/m after the 1.3% fall in October as temporary oilfield closures are reversed. That should lift the y/y to 0.5% from -1.2%. Manufacturing should match the 0.8% m/m gain (+0.7% y/y from -0.5%). November's trade balance will be released at the same time, with NIESR's Q4 GDP estimate due later.

Emerging Asia FX Highlights

USD/Asians mostly saw a consolidative tone despite volatilities in the dollar index ahead of Trump's press conference. USD/CNY 1Y NDFs were seen above 7.2100 in early trading on Tuesday but slid to a low of 7.1820 into the close of Asia before bouncing back up to near 7.2000-levels in NY. USD/SGD continued to trade on either side of 1.4360 in NY, and USD/IDR 1M NDFs were seen consolidating around 13340 in NY trading hours. Only USD/INR 1M NDFs rallied in NY, picking up pace from a low of 68.2000 to edge to a high of 68.6100 at last look.

Emerging Asia Data Highlights

China's producer prices surged past expectations to more than five-year highs in December as prices of coal and other raw materials soared, while consumer inflation remained subdued. The producer price index (PPI) jumped 5.5 per cent in December from a year earlier, the most since Sept 2011, compared with a 3.3 per cent increase in November. A quiet day is seen ahead in Asia.

OVERNIGHT NEWS HIGHLIGHTS

- US Dec NFIB Small Business Optimism 105.8 from 98.4 vs Mkt 99.5, a 12 year high

- US Nov Final Wholesale Inventories 1.0% m/m from 0.9 advance.

- VIX index: 11.49 (-0.61%)

- Gold Spot: $1,187.24/oz (-0.04%)

- ICE Brent front contract: $53.64 ($-1.30)

- Nymex WTI front contract: $50.86 (+$0.04)

- Reuters/Jefferies Commodities Index: 191.14 (+0.28%)

- 10y UST: 2.376% (+1bp) (Asia morning)

- DJI: 19,855.53 (-0.16%); S&P: 2,268.90 (0.00%); Nasdaq: 5,551.82 (+0.36%)

ASIA NEWS

- China: China's economy may grow about 6.7% in 2016, NDRC says. - BBG

- Indonesia: Two main problems in Indonesia that may hamper economic growth would be poverty and inequality, President Joko Widodo speaks at anniversary of ruling party PDI- P in Jakarta. - BBG

- India: Modi says India shifting from informal economy to formal economy. - BBG

Asia Open - Overnight Highlights (0100-KDJP-C03)

CURRENCIES

- No great progress either way on EUR/USD as a lack of data keeps trade quiet ahead of Trump's press conference on Wednesday. 1.0650 still likely to find some stops but that proving a step too far just now.

- GBP still an easier sell with EUR/GBP having a run higher to .8763 in the European a.m., while GBP/JPY interest also reported but with nothing specific. EUR/GBP is back below .87 into the close but don't expect any great GBP recovery ahead of production data on Wednesday.

- USD/JPY is finding buyers well clear of 115 but upside limited too as the DJIA continues to fight shy of 20k. All the talk of GBP/JPY interest might see some focus on a possible break of 140.00.

BONDS

Very narrow trade with limited incentives & modest volumes. Softer oil briefly supportive. 3yr auction goes well and leaves shorter dates mildly better, curve fraction steeper into longer supply, but really little net change. 2s +0.8bps @ 1.19%, 5s +0.6bps @ 1.88%, 10s +1.3bps @ 2.38%, 30s +1.3bps @ 2.97%.

EQUITIES

Nasdaq still leading things, still stretching new highs, with health care also on a bullish run, but morning gains struggled to hold. Earnings season approaches and the obvious near-term focus.

Asia Open - Overnight Highlights (0100-KDJP-C02)

ASIA CURRENCIES

USD/CNY: 1Y NDFs were seen above 7.2100 in early trading on Tuesday but slid to a low of 7.1820 into the close of Asia before bouncing back up to near 7.2000-levels in NY. Another lower midpoint fixing of 6.9234 vs. yesterday's close of 6.9330 resulted in a gap lower at the open, with onshore spot opening at 6.9280. Further downside was seen subsequently and the pair printed a low of 6.9215 towards the close. Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/CNH: Pair was seen inching higher again to break above the 6.9000 handle, and a high of 6.9129 was printed. The CNY/CNH spread has now narrowed to about 2 big figures as we had expected.

USD/SGD: Pair continued to trade on either side of 1.4360 in NY, with limited traction seen ahead of President Trump's press conference scheduled for later today. Upside potential is still seen. A break above 1.4400 still remains on the cards before the end of the week, but any large moves remain unlikely ahead of Trump's press conference.

USD/IDR: 1M NDFs were seen consolidating around 13340 in NY trading hours. Onshore spot gapped lower to open at 13335 vs. last close of 13365 and slid below 13320 in early trading as the dollar index gave up some gains. A break below support level at 13300 was seen subsequently to a near 1-month low of 13285, although strong bids brought the pair back above the support level. Break of support level at 13300 relieves some upside pressures, although any large moves remain unlikely ahead Trump's press conference later in the week. Any gains towards 13500 are likely to remain guarded by the central bank.

USD/INR: 1M NDFs rallied in NY, picking up pace from a low of 68.2000 to edge to a high of 68.6100 at last look. Onshore spot gapped lower to open at 68.0800 vs. last close of 68.2050 and a slight slip below the 68 handle to a low of 67.9900 was also seen as the dollar index gave up some gains. Bids just below the level however brought the pair quickly above it, and gains towards 68.2000 were seen at last check. 68 remains the key level to watch, and we do not expect the pair to deviate too much from the handle ahead of Trump's press conference and Dec CPI release scheduled for later this week.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 04:00 GMT - MY: Industrial Production (Nov) [Mkt: 5.5, Prev: 4.2]

- 05:00 GMT - JP: Leading indicator (Prelim) (Nov) [Mkt: 102.6, Prev: 100.8]

- 09:30 GMT - UK: Construction Output (sa) (Nov) [Mkt: 0.2, Prev: -0.6]

- 09:30 GMT - UK: Construction Output (sa) (Nov) [Mkt: 2, Prev: 0.6]

- 09:30 GMT - UK: Industrial Production (Nov) 4cast:0.8 % m/m [Mkt: 1, Prev: -1.3]

- 09:30 GMT - UK: Industrial Production (Nov) 4cast:0.5 % y/y [Mkt: 0.7, Prev: -1.1]

- 09:30 GMT - UK: Manufacturing Production (Nov) 4cast:0.8 % m/m [Mkt: 0.5, Prev: -0.9]

- 09:30 GMT - UK: Manufacturing Production (Nov) 4cast:0.7 % y/y [Mkt: 0.4, Prev: -0.4]

- 09:30 GMT - UK: Trade Balance (Non-EU) (Nov) [Mkt: -3.5, Prev: -1.598]

- 09:30 GMT - UK: Visible Trade Balance (World) (Nov) [Mkt: -11.15, Prev: -9.7]

- 15:00 GMT - UK: NIESR GDP Est. (Dec) [Mkt: 0.5, Prev: 0.4]

- 23:50 GMT - JP: Bank Lending Data (Dec) [Prev: 2.4]

- 23:50 GMT - JP: Current Account (Nov) [Mkt: 1481.8, Prev: 1719.9]

EVENTS & AUCTIONS

- 03:45 GMT - JP: 30y JGB auction

- 10:45 GMT - EU: EU's Juncker Speaks in Valletta

- 14:15 GMT - UK: BoE's Carney Testifies to Lawmakers

- 18:00 GMT - US: 10y notes reopening - USD 20.00 Bn (Act)


Forex - Indonesia Chart JAKARTA Comp Update: Upmove showing signs of fatique


 02:25 (GMT) 10 Jan

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Forex - Asia Close Highlights


 09:14 (GMT) 09 Jan

 [Forex Highlights]

09 January 2017

Even a lower midpoint fixing of 6.9262 vs. Friday's close of 6.9330 could not prevent onshore spot from gapping higher to open at 6.9400. The low remained limited to 6.9295 until last check, still above the fixing. 1Y NDFs meanwhile inched above 7.2000 into noon, although gains were limited to 7.2100. SSEC was seen at fresh neat 1-month highs, and was in gains of over 0.5%.

USD/SGD rallied overnight on Friday to break back above 1.4380 as the dollar index registered gains following a strong jobs report which kept up rate hike expectations for 2017. The bounce was extended further above 1.4400 this morning, with pair printing a high of 1.4436 before turning slightly lower towards 1.4415 at last look. Meanwhile, STI inched up to 14-month highs, and was last seen +0.6%.

USD/IDR gapped higher to open at 13393 vs. last close of 13365 and consolidated around 13380 on the first day of the week. A stronger dollar index following the US jobs report which kept up expectations for rate hikes in 2017 underpinned. Meanwhile, JKSE inched up to fresh highs in early trading, but was last seen in red of 0.4%.

USD/INR gapped higher to open above the 68 handle at 68.1700 vs. last close of 67.9600 and traded on either side of 68.2000 until last check on the first day of the week. A stronger dollar index following the jobs report, as well as a weak outlook for India's growth underpinned. Meanwhile, SENSEX was last seen trading near neutral.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Upside potential is still seen as underlying economic conditions remain weak. Eyes are on another break of 1.4500 although the pair is unlikely to extend gains much further above the handle.

USD/IDR - A break of 13400 remains inevitable in the week, with Trump's first press conference scheduled for Wednesday, but any gains towards 13500 are likely to face intervention risks. Support still seen at 13300.

USD/INR - Resistance at 68.3700 is eyed, but should remain intact as authorities calm excessive gains. Focus on Dec CPI data due in the week.


Forex - Asia Close Highlights


 09:14 (GMT) 09 Jan

 [Forex Highlights]

09 January 2017

Even a lower midpoint fixing of 6.9262 vs. Friday's close of 6.9330 could not prevent onshore spot from gapping higher to open at 6.9400. The low remained limited to 6.9295 until last check, still above the fixing. 1Y NDFs meanwhile inched above 7.2000 into noon, although gains were limited to 7.2100. SSEC was seen at fresh neat 1-month highs, and was in gains of over 0.5%.

USD/SGD rallied overnight on Friday to break back above 1.4380 as the dollar index registered gains following a strong jobs report which kept up rate hike expectations for 2017. The bounce was extended further above 1.4400 this morning, with pair printing a high of 1.4436 before turning slightly lower towards 1.4415 at last look. Meanwhile, STI inched up to 14-month highs, and was last seen +0.6%.

USD/IDR gapped higher to open at 13393 vs. last close of 13365 and consolidated around 13380 on the first day of the week. A stronger dollar index following the US jobs report which kept up expectations for rate hikes in 2017 underpinned. Meanwhile, JKSE inched up to fresh highs in early trading, but was last seen in red of 0.4%.

USD/INR gapped higher to open above the 68 handle at 68.1700 vs. last close of 67.9600 and traded on either side of 68.2000 until last check on the first day of the week. A stronger dollar index following the jobs report, as well as a weak outlook for India's growth underpinned. Meanwhile, SENSEX was last seen trading near neutral.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Upside potential is still seen as underlying economic conditions remain weak. Eyes are on another break of 1.4500 although the pair is unlikely to extend gains much further above the handle.

USD/IDR - A break of 13400 remains inevitable in the week, with Trump's first press conference scheduled for Wednesday, but any gains towards 13500 are likely to face intervention risks. Support still seen at 13300.

USD/INR - Resistance at 68.3700 is eyed, but should remain intact as authorities calm excessive gains. Focus on Dec CPI data due in the week.


Forex - Asia Close Highlights


 09:14 (GMT) 09 Jan

 [Forex Highlights]

09 January 2017

Even a lower midpoint fixing of 6.9262 vs. Friday's close of 6.9330 could not prevent onshore spot from gapping higher to open at 6.9400. The low remained limited to 6.9295 until last check, still above the fixing. 1Y NDFs meanwhile inched above 7.2000 into noon, although gains were limited to 7.2100. SSEC was seen at fresh neat 1-month highs, and was in gains of over 0.5%.

USD/SGD rallied overnight on Friday to break back above 1.4380 as the dollar index registered gains following a strong jobs report which kept up rate hike expectations for 2017. The bounce was extended further above 1.4400 this morning, with pair printing a high of 1.4436 before turning slightly lower towards 1.4415 at last look. Meanwhile, STI inched up to 14-month highs, and was last seen +0.6%.

USD/IDR gapped higher to open at 13393 vs. last close of 13365 and consolidated around 13380 on the first day of the week. A stronger dollar index following the US jobs report which kept up expectations for rate hikes in 2017 underpinned. Meanwhile, JKSE inched up to fresh highs in early trading, but was last seen in red of 0.4%.

USD/INR gapped higher to open above the 68 handle at 68.1700 vs. last close of 67.9600 and traded on either side of 68.2000 until last check on the first day of the week. A stronger dollar index following the jobs report, as well as a weak outlook for India's growth underpinned. Meanwhile, SENSEX was last seen trading near neutral.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Upside potential is still seen as underlying economic conditions remain weak. Eyes are on another break of 1.4500 although the pair is unlikely to extend gains much further above the handle.

USD/IDR - A break of 13400 remains inevitable in the week, with Trump's first press conference scheduled for Wednesday, but any gains towards 13500 are likely to face intervention risks. Support still seen at 13300.

USD/INR - Resistance at 68.3700 is eyed, but should remain intact as authorities calm excessive gains. Focus on Dec CPI data due in the week.


Forex - Asia Close Highlights


 09:14 (GMT) 09 Jan

 [Forex Highlights]

09 January 2017

Even a lower midpoint fixing of 6.9262 vs. Friday's close of 6.9330 could not prevent onshore spot from gapping higher to open at 6.9400. The low remained limited to 6.9295 until last check, still above the fixing. 1Y NDFs meanwhile inched above 7.2000 into noon, although gains were limited to 7.2100. SSEC was seen at fresh neat 1-month highs, and was in gains of over 0.5%.

USD/SGD rallied overnight on Friday to break back above 1.4380 as the dollar index registered gains following a strong jobs report which kept up rate hike expectations for 2017. The bounce was extended further above 1.4400 this morning, with pair printing a high of 1.4436 before turning slightly lower towards 1.4415 at last look. Meanwhile, STI inched up to 14-month highs, and was last seen +0.6%.

USD/IDR gapped higher to open at 13393 vs. last close of 13365 and consolidated around 13380 on the first day of the week. A stronger dollar index following the US jobs report which kept up expectations for rate hikes in 2017 underpinned. Meanwhile, JKSE inched up to fresh highs in early trading, but was last seen in red of 0.4%.

USD/INR gapped higher to open above the 68 handle at 68.1700 vs. last close of 67.9600 and traded on either side of 68.2000 until last check on the first day of the week. A stronger dollar index following the jobs report, as well as a weak outlook for India's growth underpinned. Meanwhile, SENSEX was last seen trading near neutral.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Upside potential is still seen as underlying economic conditions remain weak. Eyes are on another break of 1.4500 although the pair is unlikely to extend gains much further above the handle.

USD/IDR - A break of 13400 remains inevitable in the week, with Trump's first press conference scheduled for Wednesday, but any gains towards 13500 are likely to face intervention risks. Support still seen at 13300.

USD/INR - Resistance at 68.3700 is eyed, but should remain intact as authorities calm excessive gains. Focus on Dec CPI data due in the week.


Forex - Singapore Flows: USD/SGD; Minister Yaacob squashes talk of presidential bid


 02:19 (GMT) 09 Jan

 [Forex Flows]

The New Paper: Cabinet minister Yaacob Ibrahim has ruled himself out of the upcoming presidential election, which will be reserved for Malay candidates. In an interview with Malay newspaper Berita Minggu published yesterday, the Minister for Communications and Information said he does not see himself running for president and is happy in his current role. Dr Yaacob, 61, has been touted as a potential candidate for the presidential election that must be held by August. He is one of several Malay individuals who meet the eligibility criteria based on public sector experience. He acknowledged that he was initially "very uneasy" with the idea of a reserved election, but noted it is necessary for all Singaporeans, as a reminder that this is a multiracial nation. On the international front, he is worried about the shift in attention from global problems such as climate change and poverty to "petty politics, hatred politics, misogynistic ideas like what Donald Trump is peddling".

USD/SGD rallied overnight on Friday to break back above 1.4380 as the dollar index registered gains following a strong jobs report which kept up rate hike expectations for 2017. The bounce was extended further above 1.4400 this morning, with pair printing a high of 1.4411 until last look. More upside potential is seen, and eyes remain on the 1.4500 handle. SGD NEER last seen 0.26% below the midpoint. STI eying 8th Dec high of 2980.77, up by nearly 0.4% at last check. CC


Forex - Chart USD/MYR Update: Corrective pullback still in play


 01:24 (GMT) 09 Jan

 [Forex Charts]

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Forex - Asia Close Highlights


 08:46 (GMT) 06 Jan

 [Forex Highlights]

06 January 2017

Onshore spot traded to a high of 6.9628 at the start of new year trading before authorities stepped in to bring the pair down with a series of lower fixings. A break below the 6.9000 handle was seen on Thursday to print an over 3-week low of 6.8683, but prices edged higher on the last day of the week to inch above 6.9300 at last look as easing overnight rates weakened offshore yuan. 1Y NDFs similarly rallied to a high of 7.3412 before slipping below 7.1500 into the end of the week only to rebound towards 7.2000 at last check.

USD/SGD broke above the 1.4500 handle at the start of the new year, and despite some deceleration to 1.4455 from a strong 4Q GDP print, a fresh 7-year high of 1.4545 was printed earlier in the week. However, prices retreated later in the week as dollar index eased, and slid below 1.4300 into Friday, recovering only slightly above the level at last look. Meanwhile, STI inched above 2950, and was last seen in gains of over 0.2% on Friday and 2.8% in the week.

USD/IDR remained bid above 13450 earlier in the week as dollar index was strong into the new year. Prices however slid below 13400 later in the week and pair printed a fresh 3-week low of 13315 before consolidating around 13350 on the last day. Meanwhile, JKSE was last seen in gains of over 0.2% on Friday and 0.8% in the week.

USD/INR broke above the key 68 handle earlier in the week despite gains being guarded ahead of this level into the end of last year. Pair printed a 1-month high of 68.3450 before tracking dollar index lower and breaking back below the 68 handle. The downside also however remained limited at 67.7575 into the end of the week. Meanwhile, SENSEX touched 27k, but was last seen trading near neutral on Friday and +0.9% in the week.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Risk of deeper pullback to 1.4200 prevails with the break below 1.4350. Upside potential is still seen as underlying economic conditions remain weak.

USD/IDR - Lack of domestic catalysts in the week ahead should increase reliance on dollar movements following the NFP release. Support is seen at 13300, and gains should continue to be capped below 13500.

USD/INR - Downside should continue to remain limited, with a series of support levels seen from 67.6000. Focus on Dec CPI data in the week ahead.


Forex - Asia Close Highlights


 08:46 (GMT) 06 Jan

 [Forex Highlights]

06 January 2017

Onshore spot traded to a high of 6.9628 at the start of new year trading before authorities stepped in to bring the pair down with a series of lower fixings. A break below the 6.9000 handle was seen on Thursday to print an over 3-week low of 6.8683, but prices edged higher on the last day of the week to inch above 6.9300 at last look as easing overnight rates weakened offshore yuan. 1Y NDFs similarly rallied to a high of 7.3412 before slipping below 7.1500 into the end of the week only to rebound towards 7.2000 at last check.

USD/SGD broke above the 1.4500 handle at the start of the new year, and despite some deceleration to 1.4455 from a strong 4Q GDP print, a fresh 7-year high of 1.4545 was printed earlier in the week. However, prices retreated later in the week as dollar index eased, and slid below 1.4300 into Friday, recovering only slightly above the level at last look. Meanwhile, STI inched above 2950, and was last seen in gains of over 0.2% on Friday and 2.8% in the week.

USD/IDR remained bid above 13450 earlier in the week as dollar index was strong into the new year. Prices however slid below 13400 later in the week and pair printed a fresh 3-week low of 13315 before consolidating around 13350 on the last day. Meanwhile, JKSE was last seen in gains of over 0.2% on Friday and 0.8% in the week.

USD/INR broke above the key 68 handle earlier in the week despite gains being guarded ahead of this level into the end of last year. Pair printed a 1-month high of 68.3450 before tracking dollar index lower and breaking back below the 68 handle. The downside also however remained limited at 67.7575 into the end of the week. Meanwhile, SENSEX touched 27k, but was last seen trading near neutral on Friday and +0.9% in the week.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Risk of deeper pullback to 1.4200 prevails with the break below 1.4350. Upside potential is still seen as underlying economic conditions remain weak.

USD/IDR - Lack of domestic catalysts in the week ahead should increase reliance on dollar movements following the NFP release. Support is seen at 13300, and gains should continue to be capped below 13500.

USD/INR - Downside should continue to remain limited, with a series of support levels seen from 67.6000. Focus on Dec CPI data in the week ahead.


Forex - Asia Close Highlights


 08:46 (GMT) 06 Jan

 [Forex Highlights]

06 January 2017

Onshore spot traded to a high of 6.9628 at the start of new year trading before authorities stepped in to bring the pair down with a series of lower fixings. A break below the 6.9000 handle was seen on Thursday to print an over 3-week low of 6.8683, but prices edged higher on the last day of the week to inch above 6.9300 at last look as easing overnight rates weakened offshore yuan. 1Y NDFs similarly rallied to a high of 7.3412 before slipping below 7.1500 into the end of the week only to rebound towards 7.2000 at last check.

USD/SGD broke above the 1.4500 handle at the start of the new year, and despite some deceleration to 1.4455 from a strong 4Q GDP print, a fresh 7-year high of 1.4545 was printed earlier in the week. However, prices retreated later in the week as dollar index eased, and slid below 1.4300 into Friday, recovering only slightly above the level at last look. Meanwhile, STI inched above 2950, and was last seen in gains of over 0.2% on Friday and 2.8% in the week.

USD/IDR remained bid above 13450 earlier in the week as dollar index was strong into the new year. Prices however slid below 13400 later in the week and pair printed a fresh 3-week low of 13315 before consolidating around 13350 on the last day. Meanwhile, JKSE was last seen in gains of over 0.2% on Friday and 0.8% in the week.

USD/INR broke above the key 68 handle earlier in the week despite gains being guarded ahead of this level into the end of last year. Pair printed a 1-month high of 68.3450 before tracking dollar index lower and breaking back below the 68 handle. The downside also however remained limited at 67.7575 into the end of the week. Meanwhile, SENSEX touched 27k, but was last seen trading near neutral on Friday and +0.9% in the week.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Risk of deeper pullback to 1.4200 prevails with the break below 1.4350. Upside potential is still seen as underlying economic conditions remain weak.

USD/IDR - Lack of domestic catalysts in the week ahead should increase reliance on dollar movements following the NFP release. Support is seen at 13300, and gains should continue to be capped below 13500.

USD/INR - Downside should continue to remain limited, with a series of support levels seen from 67.6000. Focus on Dec CPI data in the week ahead.


Forex - Asia Close Highlights


 08:46 (GMT) 06 Jan

 [Forex Highlights]

06 January 2017

Onshore spot traded to a high of 6.9628 at the start of new year trading before authorities stepped in to bring the pair down with a series of lower fixings. A break below the 6.9000 handle was seen on Thursday to print an over 3-week low of 6.8683, but prices edged higher on the last day of the week to inch above 6.9300 at last look as easing overnight rates weakened offshore yuan. 1Y NDFs similarly rallied to a high of 7.3412 before slipping below 7.1500 into the end of the week only to rebound towards 7.2000 at last check.

USD/SGD broke above the 1.4500 handle at the start of the new year, and despite some deceleration to 1.4455 from a strong 4Q GDP print, a fresh 7-year high of 1.4545 was printed earlier in the week. However, prices retreated later in the week as dollar index eased, and slid below 1.4300 into Friday, recovering only slightly above the level at last look. Meanwhile, STI inched above 2950, and was last seen in gains of over 0.2% on Friday and 2.8% in the week.

USD/IDR remained bid above 13450 earlier in the week as dollar index was strong into the new year. Prices however slid below 13400 later in the week and pair printed a fresh 3-week low of 13315 before consolidating around 13350 on the last day. Meanwhile, JKSE was last seen in gains of over 0.2% on Friday and 0.8% in the week.

USD/INR broke above the key 68 handle earlier in the week despite gains being guarded ahead of this level into the end of last year. Pair printed a 1-month high of 68.3450 before tracking dollar index lower and breaking back below the 68 handle. The downside also however remained limited at 67.7575 into the end of the week. Meanwhile, SENSEX touched 27k, but was last seen trading near neutral on Friday and +0.9% in the week.

Market Psychology

USD/CNY - Authorities should continue to guard gains ahead of the key 6.9500 handle in onshore spot.

USD/SGD - Risk of deeper pullback to 1.4200 prevails with the break below 1.4350. Upside potential is still seen as underlying economic conditions remain weak.

USD/IDR - Lack of domestic catalysts in the week ahead should increase reliance on dollar movements following the NFP release. Support is seen at 13300, and gains should continue to be capped below 13500.

USD/INR - Downside should continue to remain limited, with a series of support levels seen from 67.6000. Focus on Dec CPI data in the week ahead.


Forex - Flows: Net Foreign Equity Flows on Wed


 00:56 (GMT) 05 Jan

Please view the story for more information...


Forex - Flows: Net Foreign Equity Flows on Wed


 00:56 (GMT) 05 Jan

Please view the story for more information...


Forex - Flows: Net Foreign Equity Flows on Wed


 00:56 (GMT) 05 Jan

Please view the story for more information...


Forex - Flows: Net Foreign Equity Flows on Wed


 00:56 (GMT) 05 Jan

Please view the story for more information...


Forex - Asia Open - Overnight Highlights


 23:42 (GMT) 03 Jan

 [Forex Highlights]

Asia Overnight Highlights - 04 January 2017

Charu Chanana

ASIA OUTLOOK

Interesting day as mkt tried to jump two footed back into post Trump / `2017 consensus trades` (dollar, yields, equities up) but ended up seeing some late Europe paring, as oil especially reversed lower from the top

Majors FX Highlights

The dollar index resumed its upward trajectory on the first full trading day of 2017, and printed fresh 14-year highs of 103.820 after strong factory output and construction spending data (details below) and continued expectations that President Trump will provide a boost to public spending and growth. Focus today will be on December's Fed FOMC minutes where a steeper dot plot for 2017 was announced. EUR/USD meanwhile slid to a fresh 14-year low of 10.341, helped by strong US PMI and ISM data before a late European squeeze that saw it regain the 1.04 handle. GBP/USD shrugged off the strong UK manufacturing activity data (details below) and re-printed its December low of 1.2200. The sell-off came around the time that the resignation of the UK's Ambassador to the EU was announced. USD/JPY pushed to a high at 118.60 before European equities turned lower, but the gains were fully erased to a low of 117.19 before moving back to around 117.70, the DJIA still positive if still failing to clear 20k. USD/CAD saw only a limited response to a sell-off in WTI, though the move ensured a marginal dip below 1.3400 was very brief. AUD/USD found buyers around .7200, though the NZD lost out as the first GDT dairy auction of the year saw the index off 3.9%.

Majors Data Highlights

Dec ISM manufacturing at 54.7 is stronger than expected and up from 53.2 in Nov to the highest since Dec 2014, consistent with the majority of regional surveys. New orders and production both above 60, while prices paid see a sharp bounce to 65.5 from 54.5. The UK manufacturing PMI survey rose to 56.1 in December from 53.6 in November (revised from 53.4), which is notably stronger than market expectations of 53.3 (4cast: 53.8) and a two-and-a-half year high. The flash estimate of French December CPI is 0.3m/m, translating to 0.6%y/y (November: 0.5%y/y). Flash German CPI inflation arrived at 0.7%m/m and 1.7%y/y in December (prev: 0.8%y/y). HICP inflation meanwhile came in at 1.0%m/m and 1.7%y/y (prev: 0.7%y/y). Minutes from the December FOMC are due today, as well as Eurozone service and composite PMIs.

Emerging Asia FX Highlights

USD/Asians saw mixed trading overnight despite a stronger dollar index. USD/CNY 1Y NDFs printed a fresh 8-year high of 7.3412 in the Asia morning on Tuesday as the spot gapped higher at the open, but retreated to fall below 7.3000 subsequently, and traded mostly below the 7.30 handle in NY. USD/SGD drifted to a low of 1.4455 on Tuesday after a strong 4Q GDP report but underlying weakness and dollar strength brought the pair back up to a fresh 8-year high of 1.4545 in NY before retreating back to 1.4500 levels on possible central bank intervention. USD/IDR 1M NDFs saw a slightly offered tone and slipped from 13560 to a low of 13505 in NY despite a stronger dollar. USD/INR 1M NDFs edged higher to 68.6300 in NY before retreating below 68.5000 levels subsequently.

Emerging Asia Data Highlights

Singapore's Q4 GDP (adv. est.) growth accelerated to 1.8% y/y and 9.1% q/q (saar) from the revised Q3 GDP of 1.2% y/y and -1.9% q/q (saar) and above the market expectation of 0.3% y/y and 4.0% q/q (saar). This brings the whole of 2016 growth to 1.8%, above the government forecast of over 1-1.5% growth and higher than our 1.4% estimate. However, this compares to growth rate of 2% seen in 2015 and was the slowest pace of growth seen since 2009. Indonesia December consumer prices rose by 3.02% y/y compared to market consensus of an increase of 3.04% y/y. This is softer than the previous print of 3.58% y/y and the latest number translated to a monthly rise of 0.42% m/m. Rest of the week looks quiet in Asia.

OVERNIGHT NEWS HIGHLIGHTS

- US Dec ISM Manufacturing 54.7 from 53.2 vs Mkt 53.7. New orders, prices paid strong

- US Nov Construction Spending 0.9% m/m from 0.6R vs Mkt 0.5

- VIX index: 12.85 (-8.48%)

- Gold Spot: $1,158.70/oz (-0.01%)

- ICE Brent front contract: $55.57 ($-1.25)

- Nymex WTI front contract: $52.33 ($-1.39)

- Reuters/Jefferies Commodities Index: 190.15 (-1.23%)

- 10y UST: 2.444% (+0bp) (Asia morning)

- DJI: 19,881.76 (+0.60%); S&P: 2,257.83 (+0.85%); Nasdaq: 5,429.08 (+0.85%)

ASIA NEWS

- China: At risk of capital flight, China marked the new year with extra requirements for citizens converting yuan into foreign currencies. - BBG

- Singapore: Private residential property prices fell 0.4% in the last four months of 2016, compared to a 1.5% decline in the previous quarter, according to data released by the Urban Redevelopment Authority of Singapore. - BBG

- Indonesia: Economy likely expanded 5% in 2016, household consumption seen growing at 5% in 2016, while the contribution of private consumption remains flat due to budget adjustment, Finance Minister Sri Mulyani Indrawati speaks at a press briefing in Jakarta. - BBG

- India: Federal Reserve seeing limited room for continued accommodation and starting to raise interest rates, I think you will see the pressure on other central banks also come off, as much as it has been over the last few years, to continue accommodation: Rajan. - BBG

CURRENCIES

- The first truly full day of 2017 saw demand for USD, EUR/USD eventually managing to extend December's 14-year low at 1.0350 to 1.0339, helped by strong US PMI and ISM data before a late European squeeze that saw it regain the 1.04 handle.

- USD/JPY pushed to a high at 118.60 before European equities turned lower, the moves looking more spectacular on the charts than in reality. Gains were fully erased to a low of 117.19 before moving back to around 117.70, the DJIA still positive if still failing to clear 20k.

- GBP started strongly enough but slipped later in the session, Cable seeing a low of 1.2198. The sell-off came around the time that the resignation of the UK's Ambassador to the EU was announced, though we have our doubts that too many traders were aware that there is such a position!

BONDS

Pretty lively day with a heavy sell off building through into early NY trade, culminating in the strong ISM, before losses were sharply pared as oil reversed off the top and equities slipped back. US5s roll back from the test of 2%. In short, CTA market enthusiastically tried to re-set post Trump trades and hammer back the thin year end gains before having to bail out intraday as momentum faltered. 2s +3.2bps @ 1.22%, 5s +1.5bps @ 1.94%, 10s +0.4bps @ 2.45%, 30s -2.1bps @ 3 .04%.

EQUITIES

Early upside effort ebbed somewhat as oil reversed to negative on the day from its earlier 18-month highs, though the indices remained in marginally positive territory, regaining some momentum into the close.

ASIA CURRENCIES

USD/CNY: 1Y NDFs printed a fresh 8-year high of 7.3412 in the Asia morning on Tuesday as the spot gapped higher at the open, but retreated to fall below 7.3000 subsequently, and traded mostly below the 7.30 handle in NY. Despite the authorities push to keep onshore spot below the 6.9500 handle with another midpoint fixing of 6.9498, pair gapped higher on Tuesday and traded around 6.9550 in the day, before rallying above 6.9600 levels to a high of 6.9628 into the close. We expect the bid tone in onshore spot to remain intact amid uncertain trade and foreign policies from Trump. Break of 6.9600 puts the focus on 6.9800.

USD/CNH: Pair was seen in consolidation around 6.9750 at the start of the fresh week of the new year, before a slight sell-off towards 6.9600 in NY. The CNH/CNY spread has again been closed to under 1 big figure.

USD/SGD: Pair drifted to a low of 1.4455 on Tuesday after a strong 4Q GDP report but underlying weakness and dollar strength brought the pair back up to a fresh 8-year high of 1.4545 in NY before retreating back to 1.4500 levels on possible central bank intervention. Despite a strong Q4 growth, there is underlying weakness in the Singapore economy, and a bullish USD bias continues to present upside in USD/SGD. Eyes remain on a firm break of 1.4500 handle.

USD/IDR: 1M NDFs saw a slightly offered tone and slipped from 13560 to a low of 13505 in NY despite a stronger dollar. Onshore spot meanwhile was slightly elevated at the start of the week but the pair was still capped under 13500 as the pair traded on either side of 13480. An overall bullish bias still remains intact, and a break above 13500 should be inevitable. Focus also on Fed minutes and US employment data due later in the week.

USD/INR: 1M NDFs edged higher to 68.6300 in NY before retreating below 68.5000 levels subsequently. Onshore spot meanwhile opened slightly lower at 68.1300 vs last close of 68.2225 and after pivoting around 68.1000 in the morning pair gained traction to inch up above 68.3000 into the close. More upside remains in store in 2017 as central bank remains accommodative while Fed stance remains hawkish.

DATA RELEASED TODAY MORNING AND DUE TODAY

- n/a GMT - US: Vehicle Sales (Dec) [Mkt: 17.7, Prev: 17.75]

- 09:00 GMT - EU: Composite PMI (Final) (Dec) [Mkt: 53.9, Prev: 53.9]

- 09:00 GMT - EU: Services PMI (Final) (Dec) [Mkt: 53.1, Prev: 53.1]

- 09:30 GMT - UK: BoE - Mortgage Approvals (Nov) [Mkt: 68.7, Prev: 67.5]

- 09:30 GMT - UK: BoE - Net Consumer Credit (Nov) [Mkt: 1.6, Prev: 4.6]

- 09:30 GMT - UK: BoE - Secured Lending (Nov) [Mkt: 3.3, Prev: 3.3]

- 09:30 GMT - UK: CIPS / Markit Construction PMI (Dec) 4cast:52.1 index [Mkt: 52.6, Prev: 52.8]

- 09:30 GMT - UK: M4 Money Supply (Oct) [Prev: 1.1]

- 09:30 GMT - UK: M4 Money Supply (Oct) [Prev: 6.6]

- 10:00 GMT - EU: Flash HICP (Dec) [Mkt: 1, Prev: 0.6]

- 10:00 GMT - EU: Flash HICP - Core (Dec) [Mkt: 0.8, Prev: 0.8]

- 22:30 GMT - AU: AIG Services PMI (Dec) [Prev: 51.1]

EVENTS & AUCTIONS

- 19:00 GMT - US: Fed's Dec Minutes Released


Forex - Asia Open - Overnight Highlights


 23:42 (GMT) 03 Jan

 [Forex Highlights]

Asia Overnight Highlights - 04 January 2017

Charu Chanana

ASIA OUTLOOK

Interesting day as mkt tried to jump two footed back into post Trump / `2017 consensus trades` (dollar, yields, equities up) but ended up seeing some late Europe paring, as oil especially reversed lower from the top

Majors FX Highlights

The dollar index resumed its upward trajectory on the first full trading day of 2017, and printed fresh 14-year highs of 103.820 after strong factory output and construction spending data (details below) and continued expectations that President Trump will provide a boost to public spending and growth. Focus today will be on December's Fed FOMC minutes where a steeper dot plot for 2017 was announced. EUR/USD meanwhile slid to a fresh 14-year low of 10.341, helped by strong US PMI and ISM data before a late European squeeze that saw it regain the 1.04 handle. GBP/USD shrugged off the strong UK manufacturing activity data (details below) and re-printed its December low of 1.2200. The sell-off came around the time that the resignation of the UK's Ambassador to the EU was announced. USD/JPY pushed to a high at 118.60 before European equities turned lower, but the gains were fully erased to a low of 117.19 before moving back to around 117.70, the DJIA still positive if still failing to clear 20k. USD/CAD saw only a limited response to a sell-off in WTI, though the move ensured a marginal dip below 1.3400 was very brief. AUD/USD found buyers around .7200, though the NZD lost out as the first GDT dairy auction of the year saw the index off 3.9%.

Majors Data Highlights

Dec ISM manufacturing at 54.7 is stronger than expected and up from 53.2 in Nov to the highest since Dec 2014, consistent with the majority of regional surveys. New orders and production both above 60, while prices paid see a sharp bounce to 65.5 from 54.5. The UK manufacturing PMI survey rose to 56.1 in December from 53.6 in November (revised from 53.4), which is notably stronger than market expectations of 53.3 (4cast: 53.8) and a two-and-a-half year high. The flash estimate of French December CPI is 0.3m/m, translating to 0.6%y/y (November: 0.5%y/y). Flash German CPI inflation arrived at 0.7%m/m and 1.7%y/y in December (prev: 0.8%y/y). HICP inflation meanwhile came in at 1.0%m/m and 1.7%y/y (prev: 0.7%y/y). Minutes from the December FOMC are due today, as well as Eurozone service and composite PMIs.

Emerging Asia FX Highlights

USD/Asians saw mixed trading overnight despite a stronger dollar index. USD/CNY 1Y NDFs printed a fresh 8-year high of 7.3412 in the Asia morning on Tuesday as the spot gapped higher at the open, but retreated to fall below 7.3000 subsequently, and traded mostly below the 7.30 handle in NY. USD/SGD drifted to a low of 1.4455 on Tuesday after a strong 4Q GDP report but underlying weakness and dollar strength brought the pair back up to a fresh 8-year high of 1.4545 in NY before retreating back to 1.4500 levels on possible central bank intervention. USD/IDR 1M NDFs saw a slightly offered tone and slipped from 13560 to a low of 13505 in NY despite a stronger dollar. USD/INR 1M NDFs edged higher to 68.6300 in NY before retreating below 68.5000 levels subsequently.

Emerging Asia Data Highlights

Singapore's Q4 GDP (adv. est.) growth accelerated to 1.8% y/y and 9.1% q/q (saar) from the revised Q3 GDP of 1.2% y/y and -1.9% q/q (saar) and above the market expectation of 0.3% y/y and 4.0% q/q (saar). This brings the whole of 2016 growth to 1.8%, above the government forecast of over 1-1.5% growth and higher than our 1.4% estimate. However, this compares to growth rate of 2% seen in 2015 and was the slowest pace of growth seen since 2009. Indonesia December consumer prices rose by 3.02% y/y compared to market consensus of an increase of 3.04% y/y. This is softer than the previous print of 3.58% y/y and the latest number translated to a monthly rise of 0.42% m/m. Rest of the week looks quiet in Asia.

OVERNIGHT NEWS HIGHLIGHTS

- US Dec ISM Manufacturing 54.7 from 53.2 vs Mkt 53.7. New orders, prices paid strong

- US Nov Construction Spending 0.9% m/m from 0.6R vs Mkt 0.5

- VIX index: 12.85 (-8.48%)

- Gold Spot: $1,158.70/oz (-0.01%)

- ICE Brent front contract: $55.57 ($-1.25)

- Nymex WTI front contract: $52.33 ($-1.39)

- Reuters/Jefferies Commodities Index: 190.15 (-1.23%)

- 10y UST: 2.444% (+0bp) (Asia morning)

- DJI: 19,881.76 (+0.60%); S&P: 2,257.83 (+0.85%); Nasdaq: 5,429.08 (+0.85%)

ASIA NEWS

- China: At risk of capital flight, China marked the new year with extra requirements for citizens converting yuan into foreign currencies. - BBG

- Singapore: Private residential property prices fell 0.4% in the last four months of 2016, compared to a 1.5% decline in the previous quarter, according to data released by the Urban Redevelopment Authority of Singapore. - BBG

- Indonesia: Economy likely expanded 5% in 2016, household consumption seen growing at 5% in 2016, while the contribution of private consumption remains flat due to budget adjustment, Finance Minister Sri Mulyani Indrawati speaks at a press briefing in Jakarta. - BBG

- India: Federal Reserve seeing limited room for continued accommodation and starting to raise interest rates, I think you will see the pressure on other central banks also come off, as much as it has been over the last few years, to continue accommodation: Rajan. - BBG

CURRENCIES

- The first truly full day of 2017 saw demand for USD, EUR/USD eventually managing to extend December's 14-year low at 1.0350 to 1.0339, helped by strong US PMI and ISM data before a late European squeeze that saw it regain the 1.04 handle.

- USD/JPY pushed to a high at 118.60 before European equities turned lower, the moves looking more spectacular on the charts than in reality. Gains were fully erased to a low of 117.19 before moving back to around 117.70, the DJIA still positive if still failing to clear 20k.

- GBP started strongly enough but slipped later in the session, Cable seeing a low of 1.2198. The sell-off came around the time that the resignation of the UK's Ambassador to the EU was announced, though we have our doubts that too many traders were aware that there is such a position!

BONDS

Pretty lively day with a heavy sell off building through into early NY trade, culminating in the strong ISM, before losses were sharply pared as oil reversed off the top and equities slipped back. US5s roll back from the test of 2%. In short, CTA market enthusiastically tried to re-set post Trump trades and hammer back the thin year end gains before having to bail out intraday as momentum faltered. 2s +3.2bps @ 1.22%, 5s +1.5bps @ 1.94%, 10s +0.4bps @ 2.45%, 30s -2.1bps @ 3 .04%.

EQUITIES

Early upside effort ebbed somewhat as oil reversed to negative on the day from its earlier 18-month highs, though the indices remained in marginally positive territory, regaining some momentum into the close.

ASIA CURRENCIES

USD/CNY: 1Y NDFs printed a fresh 8-year high of 7.3412 in the Asia morning on Tuesday as the spot gapped higher at the open, but retreated to fall below 7.3000 subsequently, and traded mostly below the 7.30 handle in NY. Despite the authorities push to keep onshore spot below the 6.9500 handle with another midpoint fixing of 6.9498, pair gapped higher on Tuesday and traded around 6.9550 in the day, before rallying above 6.9600 levels to a high of 6.9628 into the close. We expect the bid tone in onshore spot to remain intact amid uncertain trade and foreign policies from Trump. Break of 6.9600 puts the focus on 6.9800.

USD/CNH: Pair was seen in consolidation around 6.9750 at the start of the fresh week of the new year, before a slight sell-off towards 6.9600 in NY. The CNH/CNY spread has again been closed to under 1 big figure.

USD/SGD: Pair drifted to a low of 1.4455 on Tuesday after a strong 4Q GDP report but underlying weakness and dollar strength brought the pair back up to a fresh 8-year high of 1.4545 in NY before retreating back to 1.4500 levels on possible central bank intervention. Despite a strong Q4 growth, there is underlying weakness in the Singapore economy, and a bullish USD bias continues to present upside in USD/SGD. Eyes remain on a firm break of 1.4500 handle.

USD/IDR: 1M NDFs saw a slightly offered tone and slipped from 13560 to a low of 13505 in NY despite a stronger dollar. Onshore spot meanwhile was slightly elevated at the start of the week but the pair was still capped under 13500 as the pair traded on either side of 13480. An overall bullish bias still remains intact, and a break above 13500 should be inevitable. Focus also on Fed minutes and US employment data due later in the week.

USD/INR: 1M NDFs edged higher to 68.6300 in NY before retreating below 68.5000 levels subsequently. Onshore spot meanwhile opened slightly lower at 68.1300 vs last close of 68.2225 and after pivoting around 68.1000 in the morning pair gained traction to inch up above 68.3000 into the close. More upside remains in store in 2017 as central bank remains accommodative while Fed stance remains hawkish.

DATA RELEASED TODAY MORNING AND DUE TODAY

- n/a GMT - US: Vehicle Sales (Dec) [Mkt: 17.7, Prev: 17.75]

- 09:00 GMT - EU: Composite PMI (Final) (Dec) [Mkt: 53.9, Prev: 53.9]

- 09:00 GMT - EU: Services PMI (Final) (Dec) [Mkt: 53.1, Prev: 53.1]

- 09:30 GMT - UK: BoE - Mortgage Approvals (Nov) [Mkt: 68.7, Prev: 67.5]

- 09:30 GMT - UK: BoE - Net Consumer Credit (Nov) [Mkt: 1.6, Prev: 4.6]

- 09:30 GMT - UK: BoE - Secured Lending (Nov) [Mkt: 3.3, Prev: 3.3]

- 09:30 GMT - UK: CIPS / Markit Construction PMI (Dec) 4cast:52.1 index [Mkt: 52.6, Prev: 52.8]

- 09:30 GMT - UK: M4 Money Supply (Oct) [Prev: 1.1]

- 09:30 GMT - UK: M4 Money Supply (Oct) [Prev: 6.6]

- 10:00 GMT - EU: Flash HICP (Dec) [Mkt: 1, Prev: 0.6]

- 10:00 GMT - EU: Flash HICP - Core (Dec) [Mkt: 0.8, Prev: 0.8]

- 22:30 GMT - AU: AIG Services PMI (Dec) [Prev: 51.1]

EVENTS & AUCTIONS

- 19:00 GMT - US: Fed's Dec Minutes Released


Forex - Asia Open - Overnight Highlights


 22:54 (GMT) 27 Dec

 [Forex Highlights]

Asia Overnight Highlights - 28 December 2016

Charu Chanana

ASIA OUTLOOK

Thin markets prevailed, but dollar index edged close to its peaks on strong data and Fed expectations.

Majors FX Highlights

Dollar index edged higher again overnight despite thin liquidity as US consumer confidence data outperformed. The index however saw gains caped at 103.150. Focus today will be on minutes from the December FOMC where a rate hike and steeper dot plot was announced. EUR/USD also recovered from a low of 1.0433 to inch above 1.0450 despite weakness after the ECB Banca Monte dei Paschi di Siena that it needs to plug an €8.8 billion ($9.2 billion) capital shortfall, higher than a previous €5 billion gap estimated by the bank. GBP/USD meanwhile dipped to a low of 1.2241 although still remaining above the 7-week low of 1.2229, and recovered quickly to inch up above 1.2270. USD/JPY was seen at a high of 117.62 before straightlining near 117.450. Consumer prices fell for the ninth straight month in November, and focus today will be on IP and retail sales data. USD/CAD again seeing resistance at 1.3580, still impacted by Friday's October GDP disappointment. AUD trading quietly around 0.7190 and NZD around 0.6890 in holiday-thinned markets.

Majors Data Highlights

US Dec consumer confidence shot to its highest level of 113.7 in more than 15 years as Americans saw more strength ahead in business conditions, stock prices and the job market following the election of Donald Trump as president in November. The S&P Case-Shiller index rose 5.1 percent in October on a year-over-year basis, up from a downwardly adjusted 5.0 percent climb in September

Data scheduled for release today includes November pending home sales, expected to rise by 2.0% and minutes from the December FOMC where a rate hike and steeper dot plot was announced. Over in Asia, focus will be on Japan's Nov IndProd which should improve on a flat October at +0.7% m/m. November retail sales (4CAST +2.9% m/m) and vehicle sales are also due.

Emerging Asia FX Highlights

USD/Asians saw a broadly bid tone overnight despite thin liquidity as the dollar index was boosted from strong data. USD/CNY 1Y NDFs saw a mild bid tone, seeing a slight break of 7.2700 overnight. USD/SGD saw another break of the key 1.4500 handle overnight to print a high of 1.4517 as dollar index gained traction after stronger than expected consumer confidence data. USD/INR 1M NDFs consolidated around 68.2500 overnight after bidding up from near the 68-handle in the Asian hours on Tuesday.

Emerging Asia Data Highlights

It was a quiet start to the last week of the year, and no tier 1 data is scheduled for release today either.

OVERNIGHT NEWS HIGHLIGHTS

- US consumer confidence 113.7 vs 109.0 expected

- US Case-Shiller 5.10% vs 5.03% expected

- VIX index: 11.99 (+4.81%)

- Gold Spot: $1,138.91/oz (+0.01%)

- ICE Brent front contract: $56.13 (+$0.97)

- Nymex WTI front contract: $53.89 (+$0.87)

- Reuters/Jefferies Commodities Index: 192.75 (+1.17%)

- 10y UST: 2.560% (+2bp) (Asia morning)

- DJI: 19,945.04 (+0.06%); S&P: 2,268.88 (+0.22%); Nasdaq: 5,487.44 (+0.45%)

ASIA NEWS

- China: China promoted Yin Yong to deputy governor of the central bank from assistant governor and named Liu Guoqiang as an assistant governor of the monetary authority. - BBG

- Indonesia: Inflation may ease to be below 3% y/y at end of the year, Kontan reports, citing Darmin Nasution, coordinating minister for economic affairs. - BBG

- India: Budget presentation advanced so that expenditure is authorized by the time the new financial year begins, Prime Minister's Office says in statement, citing Modi. - BBG

CURRENCIES

- Dollar index edged higher again overnight despite thin liquidity as US consumer confidence data outperformed.

- EUR/USD also recovered from a low of 1.0433 to inch above 1.0450 despite weakness after the ECB Banca Monte dei Paschi di Siena that it needs to plug an €8.8 billion ($9.2 billion) capital shortfall, higher than a previous €5 billion gap estimated by the bank.

- USD/CAD still impacted by Friday's October GDP disappointment.

BONDS

The yield on the benchmark 10-year Treasury note closed at 2.563%, near the highest level in more than two years, compared with 2.542% Friday as the Treasury sold $26bn of 2-year notes at 1.280%, the highest yield since 2008.

EQUITIES

S&P index +0.22%, NASDAQ +0.45%, Dow Jones industrial average +0.06%

ASIA CURRENCIES

USD/CNY: 1Y NDFs saw a mild bid tone, seeing a slight break of 7.2700 overnight. Another midpoint fixing below 6.95 clearly signals the disinterest of the authorities to allow the pair higher before the end of the year, and onshore spot dutifully wobbled below the handle. Even with 1Y NDF points above 30 big figures, strong bids are coming in and we expect 7.2500 level to be surmounted despite thin year-end markets.

USD/CNH: Pair remained in consolidation around 6.9575, with authorities remaining vigilant about a break in 6.9500 in onshore spot despite quiet trading into the end of the year. The CNH/CNY spread is now less than 1 big figure. Current prices are attractive enough for a medium term long, despite the PBoC driving the pair lower.

USD/SGD: Pair saw another break of the key 1.4500 handle overnight to print a high of 1.4517 as dollar index gained traction after stronger than expected consumer confidence data. Pair however was ssoon seen recovering to the handle, possibly due to state intervention. We continue to expect authorities to guard 1.4500 amid thin year-end markets, and support rests at 1.4400.

USD/IDR: 1M NDFs remained quiet in overnight trading amid thin holiday markets into the end of the year. Onshore markets returned from long weekend, gapping lower to open at 13443 vs. last close of 13452, and remained capped below 13450 in the day. Bullish bias however remains intact, but we expect 13500 to remain guarded by the central bank.

USD/INR: 1M NDFs consolidated around 68.2500 overnight after bidding up from near the 68-handle in the Asian hours on Tuesday. Onshore spot meanwhile gapped higher to open at 67.8400 vs. last close of 67.7350 and surprisingly breached past the key 68 handle in the afternoon, although gains were capped at 68.0800. Upward bias is still seen, but break of the 68 handle looks temporary due to RBI presence.

DATA RELEASED TODAY MORNING AND DUE TODAY

- 23:50 GMT - JP: Industrial Production (Prelim) (Nov) 4cast:0.7 % m/m [Mkt: 1.7, Prev: 0]

- 23:50 GMT - JP: Industrial Production (Prelim) (Nov) [Mkt: 4.7, Prev: -1.4]

- 23:50 GMT - JP: Large Retailers Sales (Nov) [Prev: -1]

- 23:50 GMT - JP: Retail Sales (Nov) 4cast:2.9 % m/m [Mkt: -0.5, Prev: 2.5]

- 23:50 GMT - JP: Retail Sales (Nov) [Mkt: 0.8, Prev: -0.2]

- 04:00 GMT - JP: Vehicle Sales (Dec) [Prev: -3.9]

- 07:00 GMT - UK: Nationwide House Prices (nsa) (28th-3rd) (Dec) [Mkt: 3.9, Prev: 4.4]

- 07:00 GMT - UK: Nationwide House Prices (sa) (28th-3rd) (Dec) [Mkt: 0.3, Prev: 0.1]

- 09:30 GMT - UK: BBA Mortgage Approvals (Nov) [Mkt: 41.5, Prev: 40.851]

- 15:00 GMT - US: Pending Home Sales (Nov) 4cast:2 % m/m [Mkt: 0.5, Prev: 0.1]

- 23:00 GMT - KR: Industrial Production (Nov) [Mkt: 1.5, Prev: -1.6]

EVENTS & AUCTIONS

- No major events scheduled