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Asia Roundup: Antipodeans ease on downbeat Chinese data, dollar declines on heightened U.S.- N. Korea tensions and fading prospects of Fed rate hike, Asian shares rebound - Monday, August 14th, 2017

Market Roundup

  • Japan EconMin Motegi – No need for new stimulus steps now –Reuters
     
  • Japan Q2 GDP +1.0% q/q, +4.0% annualized, +0.6% and +2.5% eyed
     
  • Robust domestic demand, consumption +0.9% q/q, CAPEX +2.4%, housing +1.5%

  • GDP growth best since Q1 ’15, consumption and CAPEX since Q1 ‘14
     
  • China Jul retail sales, +10.4% vs +11.0% and forecast of +10.8%
     
  • Jul Industrial output, +6.4% vs +7.6% and forecast +7.2%
     
  • Jan-Jul urban investment, +8.3% vs +8.6% and forecast +8.6%
     
  • UK employers see measly pay growth ahead, companies turn gloomy
     
  • New Zealand retail sales rise in Q2, boosted by international sports events
     
  • New Zealand service activity falls to 56.0 in July -BNZ survey
     
  • Speculators' net short dollar positions rise to most since Jan. 2013 -CFTC
     

Economic Data Ahead

  • (0500 ET/0900 GMT) Eurozone Jun Industrial Production, -0.50% m/m, 2.80% y/y eyed; last 1.30%, 4.0%

Key Events Ahead

  • (0530 ET/0930 GMT) Germany E2.0 bln for 6-month auction

FX Beat

DXY: The dollar weakened versus most of its major peers as subdued U.S. inflation data released on Friday added to doubts as to whether the Fed would raise interest rates again this year. The greenback against a basket of currencies traded 0.1 percent up at 93.21, having touched a low of 92.93 on the prior session, it’s lowest since Aug 4. FxWirePro's Hourly Dollar Strength Index stood at 18.92 (Neutral) by 0500 GMT.

EUR/USD: The euro rose, extending gains for the fourth consecutive session, as the greenback eased on subdued U.S. inflation data released on Friday. The European currency traded up at 1.1821, having touched a low of 1.1688 on Wednesday, its lowest since Jul. 28. FxWirePro's Hourly Euro Strength Index stood at 115.54 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone industrial production, amid a lack of data from the U.S. data docket. Immediate resistance is located at 1.1845 (July 31 High), a break above targets 1.1900. On the downside, support is seen at 1.1720 (61.8% retracement 1.1370 and 1.1909), a break below could drag it near 1.1638 (50.0% retracement 1.1370 and 1.1909).

USD/JPY: The dollar rebounded from near 3-month lows against the Japanese yen, as risk sentiment continued to improve amid subsiding tensions over the North Korean missile threat. The major was trading 0.3 percent up at 109.54, having hit a low of 108.72 the prior session, its lowest since Apr 20. FxWirePro's Hourly Yen Strength Index stood at -61.85 (Bearish) by 0400 GMT. Investors’ will continue to track broad based market sentiment, as U.S. economic data calendar remains absolutely data empty. Immediate resistance is located at 109.46 (78.6% retracement of 112.19 and 108.90), a break above targets 110.19 (61.8% retracement of 112.19 and 108.90). On the downside, support is seen at 108.72 (Previous Session Low), a break below could take it near 108.13 (April 17 Low).

GBP/USD: Sterling steadied after retreating from a 3-week low in the previous session, as improving risk appetite amid beliefs that the North Korean tensions may have eased, offered some support to the British pound. Moreover, persistent weakness seen in the greenback against its main peers in the wake of Friday’s U.S. CPI disappointment also underpinned the major. Sterling traded flat at 1.3005, having hit a low of 1.2939 on Friday, its lowest since July 20. FxWirePro's Hourly Sterling Strength Index stood at -53.19 (Bearish) by 0400 GMT. Investors’ focus will remain on Tuesday’s UK CPI and US retail sales data, amid a lack of economic data from both the UK and U.S. Immediate resistance is located at 1.3065 (21-DMA), a break above could take it near 1.3082 (10-DMA). On the downside, support is seen at 1.2932 (July 20 Low), a break below targets 1.2893 (July 5 Low). Against the euro, the pound was trading flat at 90.83 pence, having hit a 10-month low of 91.18 on Friday.

AUD/USD: The Australian dollar slightly eased, after rebounding from a 3-week low in the previous session, as disappointing China data including retail sales and industrial production weakened the bid tone around the major.  The Aussie trades flat at 0.7891, having hit a low of 0.7839 on Friday, it’s weakest since July 18. FxWirePro's Hourly Aussie Strength Index stood at -94.28 (Slightly Bearish) by 0500 GMT. Investors will continue to digest downbeat Chinese data, ahead of U.S. retail sales and the FOMC minutes this week. Immediate support is seen at 0.7839 (Previous Session Low), a break below targets 0.7800. On the upside, resistance is located at 0.7927 (21-DMA), a break above could take it near 0.7950.

NZD/USD: The New Zealand dollar declined after the releases of disappointing economic data from China, despite broad based U.S. dollar weakness. Moreover, dovish RBNZ policy outcome combined with downbeat comments by the RBNZ policymakers on the exchange rate also continued to have a negative impact on the major. The Kiwi trades 0.1 percent down at 0.7305, having touched a low of 0.7251 on Thursday, its lowest level since July 13. FxWirePro's Hourly Kiwi Strength Index was at -113.31 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad based market sentiment, ahead of U.S. retail sales and NZ GDT price index due tomorrow. Immediate resistance is located at 0.7369 (61.8% retracement of 0.7558 and 0.7251), a break above could take it near 0.7401 (21-DMA). On the downside, support is seen at 0.7250, a break below could drag it till 0.7200.

Equities Recap

Asian shares rebounded, halting its 3-day losing streak, while the dollar was weighed down by tensions on the Korean peninsula and weak U.S. inflation data which eased expectations of another Federal Reserve interest rate hike this year.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.7 percent. 

Tokyo's Nikkei declined 1.05 percent to 19,522.13 points, Australia's S&P/ASX 200 index gained 0.6 percent to 5,729.70 points and South Korea's KOSPI climbed 0.6 percent to 2,333.64 points.

Shanghai composite index rose 0.9 percent to 3,235.80 points, while CSI300 index was trading 1.3 percent up at 3,693.92 points.

Hong Kong’s Hang Seng was trading 1.1 percent higher at 27,166.56 points. Taiwan shares shed 1.01 percent to 10,225.28 points.

Commodities Recap

Crude oil prices steadied after declining to a 1-week low in the prior session as a slowdown in Chinese refining activity growth cast doubts over its crude demand outlook. International benchmark Brent crude was trading 0.1 percent up at $52.00 per barrel by 0423 GMT, having hit a low of $51.28 on Friday, its weakest since Aug. 2. U.S. West Texas Intermediate was trading 0.1 percent up at $48.79 a barrel, after falling as low as $47.95 last week, its strongest since July 26.

Gold prices slipped from an over two-month high touched in the previous session, as the dollar edged higher against the yen amid geopolitical tensions between the United States and North Korea. Spot gold was down 0.2 percent at $1,286.19 per ounce at 0429 GMT, having touched a high of $1,288.86 an ounce on Friday, it highest level since June 7. U.S. gold futures for December delivery fell 0.13 percent to $1,292.3 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.2080 percent higher by 0.021 bps, while 5-year yield was 0.017 bps up at 1.7576 percent.

The Japanese government bonds continued to gain after a long weekend as investors largely shrugged-off the upbeat reading of the country’s second-quarter gross domestic product, released over the weekend. The yield on the benchmark 10-year Treasury note traded tad 1/2 basis point lower at  0.05 percent, the yield on long-term 30-year note slipped nearly 1 basis point to 0.84 percent and the yield on short-term 2-year traded flat at -0.11 percent.

The Australian bonds slumped as North Korean tensions apparently subsided a little flowing into a better mood for 'risk assets' and less demand for the 'safe haven instruments’. The yield on the benchmark 10-year Treasury note rose 3 basis points to 2.625 percent, the yield on 15-year note also jumped 3 basis points to 2.926 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points higher at 1.798 percent.

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