Asia Roundup: Antipodeans continue to decline, greenback eases as "Trump trade" expectations fade, Asian shares rebound - Tuesday, March 28th, 2017

Market Roundup

• Japan EconMin Ishihara – Closely watching market moves - Reuters.
   
• PBOC to provide financial support for manufacturing upgrades – Reuters.
   
• China banking sector’s total assets +14.6% y/y at end-February – CBRC.
   
• Dallas Fed Kaplan – Will support more rate hikes if growth continues, eyes 2.25% this year, risk for stronger, Fed meeting dual mandate, neutral FF rate 2.75%, tapering should involve balanced shedding of Treasuries, MBS –Reuters.
   
• Chicago Fed Evans – Inflation would have to much stronger for 4 hikes in ’17.
   
• Trump tax plan faces rockier road after bruising healthcare loss – Reuters.
   
• UK debt charity sees demand for help at record high – Reuters.
   
• Transparency Int’l – ECB needs greater oversight, accountability – Reuters.
  ​

Economic Data Ahead

• (0330 ET/0730 GMT) Sweden Feb trade balance; last SEK1.5 bln surplus.
   
• (0330 ET/0730 GMT) Sweden Feb PPI; last +0.6% m/m, +8.2% y/y.
   
• (0330 ET/0730 GMT) Sweden Feb retail sales, +0.3% m/m, +2.4% y/y forecast; last +1.3%, +2.2%.
   
• (0400 ET/0900 GMT) Italy Jan industrial orders; last +2.8% m/m, -0.9% y/y.
   
• (0400 ET/0900 GMT) Italy Jan industrial sales; last +2.6% m/m, +9.4% y/y.
   
• (0900 ET/1300 GMT) United States Jan CaseShiller 20, +0.7% m/m sa, +5.6% y/y forecast; last +0.9%. +5.6%.
   
• (1000 ET/1400 GMT) United States Mar Richmond Fed mfg ship, services, comp indices; last 16, 15, 17.
   
• (1000 ET/1400 GMT) United States Mar consumer confidence index, 114.0 forecast; last 114.8.
   
• (1030 ET/1430 GMT) United States Mar Dallas Fed services rev, sector outlook indices; last 14.1, 15.6.
  ​

Key Events Ahead

• N/A   New Delhi Global Business Summit (final day).
   
• N/A   ECB Coeure speaks in Frankfurt, in Brussels panel discussion.
   
• (0400 ET/0800 GMT) ECB/Irish CB Lane speaks at London event.
   
• (0405 ET/0805 GMT) Riksbank Gov Ingves speaks at Stockholm event.
   
• (0530 ET/0930 GMT) ECB zero% 7-day refi, E30.5 bln allotment forecast, E32.7 bln maturing.
   
• (0600 ET/1000 GMT) Italy E2-2.5 bln 2018 CTZ auction.
   
• (0630 ET/1030 GMT) Germany E4 bln zero% 2019 Schatz auction.
   
• (0630 ET/1030 GMT) UK DMO GBP2.5 bln 0.5% 2022 Gilt auction.
   
• (0800 ET/1200 GMT) ECB/Slovakia CB Makuch press conference.
   
• (1005 ET/1405 GMT) BoC Gov Poloz speaks in Ontario, press conference to follow.
   
• (1245 ET/1645 GMT) KC Fed George speaks at Midwest City, OK conference.
   
• (1250 ET/1650 GMT) FOMC Chair Yellen speaks at Washington, DC conference.
   
• (1300 ET/1700 GMT) Dallas Fed Kaplan in moderated Q&A session in Dallas.
   
• (1630 ET/2030 GMT) Fed Gov Powell speaks in Morgantown, West Virginia.
   

FX Beat

DXY: The dollar stayed within the sight of multi-week lows versus its major peers as concerns over Trump administration and dovish Dallas Fed president Kaplan comments continued to hurt dollar bulls. The greenback against a basket of currencies traded down at 99.20, having hit a low of 98.89 the prior session, its lowest since Nov. 11. FxWirePro's Hourly Dollar Strength Index stood at -68.54 (Bearish) by 0500 GMT.

EUR/USD: The euro edged up after rising to a 4-1/2 month high above the 1.0900 handle, as Trump administration raised renewed concerns over the effectiveness of the Trump’s government, especially after last week’s Healthcare Bill failure. On Monday, the major rose as high as 1.0905, however, it trimmed gains to close at 1.0862 as the greenback recovered versus its main peers after Dallas Fed president Kaplan stated that Fed would be wise to move gradually and patiently. The European currency traded 0.03 percent higher at 1.0866, having touched a high of 1.0905 the day before, its highest since Nov. 11. FxWirePro's Hourly Euro Strength Index stood at 46.30 (Neutral) by 0400 GMT. Investors now await Fed officials' speeches, amid a lack of relevant data from the U.S. docket. Immediate resistance is located at 1.0873 (Dec 8 High), a break above targets 1.0920. On the downside, support is seen at 1.0814 (23.6% retrace of 1.0525 and 1.0905), a break below could drag it near 1.0763 (10-DMA).

USD/JPY: The dollar nudged lower, hovering towards a 4-month low touched in the prior session, as the greenback came under renewed selling pressure and stalled its corrective rally against its major peers following Dallas Fed President Kaplan’s speech. Moreover, concerns surrounding Trump’s presidency and a cautious tone seen in Dallas Fed President Kaplan’s speech continued to weigh on market sentiment. The major traded 0.1 percent down at 110.56, having hit a low of 110.10 the day before, its lowest since Nov. 18. FxWirePro's Hourly Yen Strength Index stood at 39.16 (Neutral) by 0400 GMT. Investors’ will continue to track overall market sentiment, ahead of FOMC members Yellen, George, Kaplan and Powell’s speeches. Immediate resistance is located at 111.26 (78.6% retracement of 115.50 and 110.10), a break above targets 111.80. On the downside, support is seen at 110.00, a break below could take it near 118.55 (Nov. 17 Low).

GBP/USD: Sterling steadied after rallying to an eight-week high against the dollar amid broad based US dollar selling. The major trades 0.1 higher at 1.2569, having hit a high of 1.2615 in the previous session, its highest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 75.51 (Slightly Bullish) by 0400 GMT. Investors’ focus will stay on developments surrounding Brexit process, as the UK data calendar remains absolutely data empty. Immediate resistance is located at 1.2605 (Jan. 27 High), a break above could take it near 1.2638 (Jan. 25 High). On the downside, support is seen at 1.2494 (23.6% retrace 1.2108 and 1.2615), a break below targets 1.2420 (38.2% retrace). Against the euro, the pound traded higher at 86.44 pence, pulling away from a low of 86.73 hit the prior day, its lowest since Mar 22.

AUD/USD: The Australian dollar plunged, extending losses for the sixth consecutive session amid ongoing weakness in copper prices and risk recovery. The Aussie trades 0.06 percent down at 0.7611, having hit a low of 0.7603 last week, it’s lowest since Mar. 15. FxWirePro's Hourly Aussie Strength Index stood at -141.55 (Highly Bearish) by 0500 GMT. Investors will continue to track broad based market sentiment, ahead of FOMC members Yellen, George, Kaplan and Powell’s speeches. Immediate support is seen at 0.7600, a break below targets 0.7577 (Feb 2 Low). On the upside, resistance is located at 0.7646 (5-DMA), a break above could take it over 0.7660 (10-DMA).

NZD/USD: The New Zealand dollar consolidated between narrow ranges despite broad-based U.S. dollar weakness. The Kiwi trades 0.06 percent down at 0.7037, hovering away from a peak of 0.7090 touched last week, it’s strongest since Mar. 2. FxWirePro's Hourly Kiwi Strength Index was at -18.03 (Neutral) by 0500 GMT. Investors’ will continue to track overall market sentiment, ahead of U.S. macro fundamental drivers and Fed speeches. Immediate resistance is located at 0.7070, a break above could take it over 0.7100. On the downside, support is seen at 0.7020 (10-DMA), a break below could drag it near 0.6975 (Mar. 17 Low).

Equities Recap

Asian shares gained as Wall Street steadied, while the greenback stayed near 4-1/2 month lows as investors saw the prospects for a U.S. fiscal spending boost from President Donald Trump significantly fading away.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6 percent.

Tokyo's Nikkei rallied 1.03 percent to 19,179.58 points, Australia's S&P/ASX 200 index rose 1.22 percent to 5,817.00 points and South Korea's KOSPI was trading 0.16 percent up at 2,159.20 points.

Shanghai composite index edged down 0.57 percent to 3,248.31 points, while CSI300 index was trading 0.42 percent lower at 3,463.34 points.

Hong Kong’s Hang Seng was trading 0.50 percent higher at 24,325.98 points. Taiwan shares shed 0.01 percent at 9,876.45 points.

Commodities Recap

Crude oil prices rose, extending gains for the third consecutive sessions, however, surging U.S. production capped upside. International benchmark Brent crude was trading 0.15 percent up at $50.93 per barrel by 0415 GMT, having hit a low of $49.75 last week, its lowest since Nov. 30. U.S. West Texas Intermediate crude rose 0.25 percent to $47.95 a barrel, after tumbling as low as $47.06 in the previous session, its weakest since Nov. 30.

Gold prices steadied after rising to a 1-month high in the previous session as investors await to see if U.S. President Donald Trump would be able to deliver promised tax cuts and infrastructure spending. Spot gold was little changed at $1,254.41 per ounce at 0419 GMT, after hitting a high of $1,260.90 the day before, its highest its Feb. 27. U.S. gold futures inched down 0.2 percent to $1,253.7.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.387 percent higher by 0.012 bps, while 5-year yield was 0.015 bps up at 1.928 percent.

The Australian bonds gained modestly as investors shrugged off the rebound in consumer confidence, led by improved economic outlook by the households. The yield on the benchmark 10-year Treasury note slipped 1 basis point to 2.71 percent, the yield on the 15-year note fell 1-1/2 basis points to 3.09 percent and the yield on short-term 1-year also traded 1-1/2 basis points lower at 1.61 percent.

The New Zealand bonds disappointed, tracking weakness in the U.S. counterpart and as investors moved away from safe haven assets amid gains in riskier classes including equities and oil. In intraday trade, the yield on the benchmark 10-year bond jumped 1-1/2 basis points to 3.21 percent, the yield on 7-year note climbed 2 basis points to 2.81 percent while the yield on short-term 2-year note also traded 2 basis points higher at 2.15 percent.

The Canadian government bond prices were higher across a flatter yield curve, with the 2-year up 4 Canadian cents to yield 0.73 percent and the 10-year rising 33 Canadian cents to yield 1.602 percent. The 10-year yield touched its lowest intraday since Nov. 30. at 1.563 percent.