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Asia Roundup: Antipodeans gain on better-than-expected Chinese new home prices, dollar eases against yen as Trump likely to impose new China tariffs, Asian shares slump - Monday, September 17th, 2018

Market Roundup

  • Trump 'likely' to announce new China tariffs as early as Monday – source
     
  • Accuser of U.S. high-court nominee Kavanaugh goes public
     
  • North Carolina devastated as floodwaters rise from deadly storm Florence
     
  • WSJ: China may reject new trade talks if more tariffs imposed
     
  • China Aug new home prices mm, +1.4% vs 1.1% prev
     
  • China Aug new home prices yy, +7% vs +5.8% prev
     
  • China c.bank unexpectedly injects 265 bln yuan via 1-year MLF, rate unchanged
     
  • China provinces braced for heavy rainfall as typhoon heads west
     
  • London mayor calls for second Brexit referendum
     

Economic Data Ahead

  • (0500 ET/0900 GMT) EZ Aug HICP Final MM, 0.2% f'cast, -0.3% prev
     
  • (0500 ET/0900 GMT) EZ Aug HICP Final YY, 2.0% f'cast, 2.0% prev
     
  • (0500 ET/0900 GMT) EZ Aug HICP-X F, E, A, T MM, 0.2% f'cast, -0.5% prev
     
  • (0500 ET/0900 GMT) EZ Aug HICP-X F,E,A&T Final YY, 1.0% f'cast, 1.0% prev
     

Key Events Ahead

  • (0330 ET/0730 GMT) Swedish Central Bank Minutes from the Monetary Policy will be published in Stockholm
     
  • (0500 ET/0900 GMT) ECB's Benoit Coeure gives Introductory remarks at an event organized by DIW in Berlin, Germany
     
  • (0615 ET/1015 GMT) ECB's Peter Praet speaks on “Economic developments in the euro area” at Société Royale d'Economie in Brussels, Belgium
     
  • (0800 ET/1200 GMT) ECB's Yves Mersch speaks on the occasion of the unveiling of the new €100 and €200 banknote at the ECB in Frankfurt, Germany
     
  • (0900 ET/1300 GMT) Riksbank's Stefan Ingves will participate in a discussion of the lessons learned from the banking crisis of the 1990s in Stockholm
     

FX Beat

DXY: The dollar index slightly eased on a Wall Street Journal report, citing that China may decline to attend trade talks due next week as Beijing won't negotiate under threat. The greenback against a basket of currencies trades 0.1 percent down at 94.88, having touched a low of 94.36 on Friday, its lowest since July 31. FxWirePro's Hourly Dollar Strength Index stood at -86.37 (Slightly Bearish) by 0500 GMT.

EUR/USD: The euro steadied after easing from a 2-week peak in the previous session, as investors awaited the Eurozone final CPI data, which is expected to show consumer price index rose at an annualized rate of 2 percent in August, in line with July's reading.  The European currency traded 0.1 percent up at 1.1633, having touched a high of 1.1721 on Friday, its highest since Aug 30. FxWirePro's Hourly Euro Strength Index stood at 15.49 (Neutral) by 0500 GMT. Investors’ attention will remain on EZ CPI and speeches by ECB Coeure, Praet and Mersch, ahead of the Fed's New York Empire State Manufacturing Index. Immediate resistance is located at 1.1718 (August 30 High), a break above targets 1.1747 (July 31 High). On the downside, support is seen at 1.1584 (August 31 Low), a break below could drag it till 1.1542 (September 5 Low).

USD/JPY: The dollar edged down from a near 2-month peak touched in the prior session, as investors’ cautiously awaited news on the implementation of U.S. tariffs on an additional $200 billion of Chinese imports. However, expectations of faster U.S. rate hikes cushioned the downside. The major was trading 0.1 percent down at 111.97, having hit a high of 112.16 on Monday, its highest since July 20. FxWirePro's Hourly Yen Strength Index stood at -112.66 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the Fed's New York Empire State Manufacturing Index. Immediate resistance is located at 112.17 (July 11 High), a break above targets 112.62 (July 12 High). On the downside, support is seen at 111.59 (5-DMA), a break below could take it lower 111.31 (August 2 Low).

GBP/USD: Sterling nudged higher after declining from a 1-1/2 month peak in the previous session, as investors expect Britain would eventually sign a Brexit trade deal with the European Union. However, domestic political uncertainty continued to dent investor sentiment. The major traded 0.1 percent up at 1.3082, having hit a high of 1.3143 earlier; it’s highest since August 1. FxWirePro's Hourly Sterling Strength Index stood at 80.87 (Slightly Bullish) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3140 (July 20 High), a break above could take it near 1.3213 (July 26 High). On the downside, support is seen at 1.3026 (September 13 Low), a break below targets 1.2928 (21-DMA). Against the euro, the pound was trading flat at 88.91 pence, having hit a high of 88.76 last week, it’s highest since August 2.

AUD/USD: The Australian dollar rose on better-than-expected China August new home prices, however, news that the U.S. President Donald Trump is likely to announce the new levies today dented the bid tone around the major. The Aussie trades 0.2 percent up at 0.7162, having hit a high of 0.7229 on Thursday; it’s highest since September 4. FxWirePro's Hourly Aussie Strength Index stood at 0.15 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7125, a break below targets 0.7085 (September 11 Low). On the upside, resistance is located at 0.7224 (50.0% retracement of 0.7362 and 0.7085), a break above could take it near 0.7257 (61.8% retracement).

NZD/USD: The New Zealand dollar surged after data showed China's new home prices rose 1.4 percent in August from 1.1 percent in July. The Kiwi trades 0.2 percent up at 0.6556, having touched a high of 0.6595 on Friday, its highest level since September 6. FxWirePro's Hourly Kiwi Strength Index was at 40.13 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6613 (50.0% retracement of 0.6727 and 0.6500), a break above could take it near 0.6639 (61.8% retracement). On the downside, support is seen at 0.6528 (September 7 Low), a break below could drag it below 0.6500 (September 11 Low).

Equities Recap

Asian shares tumbled on news that U.S. President Donald Trump is likely to announce new tariffs on about $200 billion on Chinese imports today.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped 1.0 percent.

Australia's S&P/ASX 200 index rose 0.3 percent to 6,185.00 points, and South Korea's KOSPI declined 0.6 percent to 2,303.90 points.

Shanghai composite index fell 0.9 percent to 2,656.28 points, while CSI300 index traded 0.9 percent down at 3,209.87 points.

Hong Kong’s Hang Seng traded 1.2 percent lower at 26,965.11 points. Taiwan shares shed 0.4 percent to 10,828.61 points.

Commodities Recap

Crude oil prices declined on concerns that the United States is poised to impose additional tariffs on China, offsetting supply worries from upcoming sanctions on Iran. International benchmark Brent crude was trading 0.2 percent down at $77.96 per barrel by 0532 GMT, having hit a high of $80.08 on Wednesday, its highest since May 22. U.S. West Texas Intermediate was trading 0.2 percent down at $68.86 a barrel, after rising as high as $71.24 on Wednesday, its highest since September 4.

Gold prices surged after declining by 0.6 percent in the previous session, as investors remained cautious on reports that the United States is set impose a new round of tariffs on Chinese imports. Spot gold was 0.1 percent up at $1,194.95 an ounce as of 0535 GMT, having hit a high of $1212.55 on Thursday, its highest since Aug. 28. U.S. gold futures were down 0.2 percent at $1,198.20.

Treasuries Recap

The Australian government bonds traded narrowly mixed during Asian session as investors await U.S. President Donald Trump’s announcement of new tariffs on about $200 billion of Chinese imports. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1 basis point to 2.624 percent, the yield on the long-term 30-year bond traded nearly flat at 3.119 percent and the yield on short-term 2-year remained steady at 2.037 percent.

The New Zealand bonds slumped at the time of closing as investors expect to see a rise in the country’s gross domestic product (GDP) for the second quarter of this year, scheduled to be released on September 19 by 22:45GMT. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped nearly 3 basis points to 2.608 percent, the yield on the long-term 20-year note surged close to 2 basis points to 2.930 percent and the yield on short-term 2-year closed tad higher at 1.665 percent.

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