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Asia Roundup: Aussie eases on soft inflation figures, dollar index slumps ahead of FOMC policy decision, Asian shares off record highs - Wednesday, January 31st, 2018

Market Roundup

  • Trump pushes hardline immigration policies even as he urges unity
     
  • China NBS Jan mfg PMI 51.3 (vs f'cast 51.5, Dec 51.6), lowest since May
     
  • China NBS Jan non-mfg PMI 55.3 (vs Dec 55.0), highest since Sept
     
  • China's small banks face uncertainties under new debt rules
     
  • UK PM May says she wants free trade deal with China
     
  • BoJ Gov Kuroda – Need for continued ease, CPI to meet target in FY ‘19/20
     
  • BoJ DepGov Iwata – Sticks to Kuroda script, powerful easing still needed
     
  • BoJ Policy Board Jan 22-23 meeting– Powerful easing still needed
     
  • Inflation weak, tweaks to QQE/YCC won’t signal change in easy stance
     
  • Japan Dec industrial output +2.7% m/m, +1.6% eyed, Jan/Feb -4.3%/+5.7% eyed
     
  • UK Jan GfK consumer confidence -9, 4-month high, Dec -13, -13 eyed
     
  • UK Jan Lloyds business confidence index to 35%, 9-mo high, Dec 28%
     
  • UK Jan BRC shop prices -0.5% y/y, Dec -0.6%
     
  • UK '17 car production -3% to 1.67 mln units, investment off third

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Dec Retail Sales MM Real f'cast -0.3%, last 2.3%
     
  • (0200 ET/0700 GMT) Germany Dec Retail Sales YY Real f'cast 2.8%, last 4.4%
     
  • (0245 ET/0745 GMT) France Jan CPI (EU Norm) Prelim YY f'cast 1.1%, last 1.2%
     
  • (0300 ET/0800 GMT) Spain Jan HICP Flash YY f'cast 0.8%, last 1.2%
     
  • (0400 ET/0900 GMT) Germany Jan Unemployment Chg SA f'cast -17k, last -29k
     
  • (0400 ET/0900 GMT) Germany Jan Unemployment Rate SA f'cast 5.5%, last 5.5%
     
  • (0400 ET/0900 GMT) Italy Dec Unemployment Rate f'cast 10.9%, last 11.0%

Key Events Ahead

  • (0400 ET/0900 GMT) Riksbank's Stefan Ingves speaks on financial stability risks, monetary policy and the need for macroprudential policy in Oslo
     
  • (0450 ET/0950 GMT) ECB's Benoit Coeure speaks at the European Financial Forum in Ireland
     
  • (1300 ET/1800 GMT) Spanish Economy Minister Luis de Guindos to speak at a book presentation in Madrid
     
  • (1400 ET/1900 GMT) U.S. Federal Reserve's FOMC announces its decision on interest rates, followed by statement in Washington

FX Beat

DXY: The dollar index slumped following economic comments from President Trump at his State of the Union Address. The greenback against a basket of currencies traded 0.2 percent down at 88.98, having touched a low of 88.44 on Friday, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -40.38 (Neutral) by 0500 GMT.

EUR/USD: The euro rose, extending previous day's rebound from 6-day lows, as investors awaited the Eurozone's preliminary consumer price index figures, which are expected to rise at an annualized rate of 1.0 percent in January, after surging 1.1 percent in the prior month. The European currency traded 0.2 percent up at 1.2420, having touched a low of 1.2336 on Tuesday, its lowest since Jan. 24. FxWirePro's Hourly Euro Strength Index stood at -15.29 (Neutral) by 0500 GMT. Investors’ attention will remain on Eurozone preliminary consumer price index and ECB Coeure's speech, ahead of U.S. ADP employment report, pending home sales and FOMC meeting outcome. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2307 (38.2% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2252 (23.6% retracement).

USD/JPY: The dollar eased as focus shifted to the U.S. Federal Reserve's monetary policy statement, where it is widely expected to keep interest rates unchanged, however, investors will be looking to its policy statement for fresh hints on the outlook for interest rates this year. The major was trading 0.05 percent down at 108.73, having hit a low of 108.28 on Friday, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at 9.38 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ADP employment report, pending home sales and FOMC meeting outcome for further momentum. Immediate resistance is located at 109.52 (61.8% retracement of 111.49 and 108.28), a break above targets 109.90 (50.0% retracement). On the downside, support is seen at 108.20, a break below could take it lower 108.00.

GBP/USD: Sterling rose towards the 1.4200 handle after Bank of England Governor Mark Carney on Tuesday stated that the central bank was turning its focus back to bringing down inflation, supporting investors’ expectations that the central bank would rein in monetary policy faster than expected. The major traded 0.2 percent up at 1.4175, having hit a high of 1.4345 on Thursday, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 5.59 (Neutral) by 0500 GMT.  Investors’ focus will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.4263, a break above could take it near 1.4300. On the downside, support is seen at 1.4030 (10-DMA), a break below targets 1.3904 (50.0% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading 0.05 percent down at 87.67 pence, having hit a low of 88.33 pence in the prior session, it’s lowest since Jan. 22.

AUD/USD: The Australian dollar declined, extending losses for the third straight session, as soft domestic inflation reading led investors to push out the likely timing of a hike in interest rates until early next year. The economy's consumer prices rose 1.9 percent in the year to December, just missing forecasts of 2.0 percent. The Aussie trades 0.05 percent down at 0.8079, having hit a high of 0.8135 on Friday; it’s highest since May 2015. FxWirePro's Hourly Aussie Strength Index stood at -109.77 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.8012 (61.8% retracement of 0.7807 and 0.8135), a break below targets 0.7973 (50.0% retracement). On the upside, resistance is located at 0.8150, a break above could take it near 0.8200.

NZD/USD: The New Zealand dollar rose to a 6-day high as the greenback eased versus its major peers following Trump's State of the Union address. The Kiwi trades rose 0.9 percent at 0.7392, having touched a high of 0.7393 earlier, its highest level since Jan. 24. FxWirePro's Hourly Kiwi Strength Index was at 77.71 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7400, a break above could take it near 0.7490. On the downside, support is seen at 0.7288, a break below could drag it lower 0.7245 (Jan 18 Low).

Equities Recap

Asian shares slumped, hovering away from record highs as a rise in global bond yields weighed on equities, while the greenback eased ahead of the Federal Reserve's policy decision.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.2 percent, extending previous session losses.

Tokyo's Nikkei eased 0.7 percent to 23,140.48 points, Australia's S&P/ASX 200 index rose 0.3 percent to 6,037.70 points and South Korea's KOSPI rallied 0.4 percent to 2,577.62 points.

Shanghai composite index declined 0.9 percent to 3,455.13 points, while CSI300 index was trading 0.2 percent down at 4,247.04 points.

Hong Kong’s Hang Seng was trading 0.1 percent lower at 32,581.33 points. Taiwan shares added 0.2 percent to 11,103.79 points.

Commodities Recap

Crude oil prices declined to multi-week lows after an industry report showed crude stocks rose more than expected last week. International benchmark Brent crude was trading 0.7 percent down at $67.99 per barrel by 0455 GMT, having hit a low of $67.82 earlier, its lowest since Jan. 9. U.S. West Texas Intermediate was trading 0.105 percent down at $63.95 a barrel, after falling as low as $63.64 earlier, its weakest since Jan. 22.

Gold prices steadied after falling to a 1-week low in the previous session, as the dollar eased following U.S. President Donald Trump's State of the Union address, while investors awaited the Federal Reserve's two-day meeting. Spot gold was trading 0.2 percent up at $1,340.62 per ounce at 0459 GMT, having hit a low of 1,334.33 the day before, lowest since Jan 23. U.S. gold futures were up 0.2 percent at $1,337.60 per ounce.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.708 percent lower by 0.018 bps, while 5-year yield was 0.015 bps down at 2.492 percent.

The Japanese government bonds gained even as the country’s industrial output grew in December at the fastest pace in eight months, and up for a third straight month, in a sign that its humming factories have likely driven economic expansion for an eighth consecutive quarter. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1 basis point to 0.09 percent, the yield on the long-term 30-year note remained tad lower at 0.81 percent and the yield on short-term 2-year traded 1/2 basis point lower at -0.13 percent.

The Australian government bonds jumped sharply during early Asian session as the country’s fourth-quarter consumer price inflation data disappointed market expectations, although remaining unchanged on a q/q basis. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 4-1/2 basis points to 2.80 percent, the yield on the long-term 30-year note also plunged 4-1/2 basis points to 3.41 percent and the yield on short-term 2-year traded 6 basis points lower at 2.09 percent.

The Canadian government bond prices were lower across a steeper yield curve, with the two-year down 1 Canadian cent to yield 1.831 percent and the 10-year falling 13 Canadian cents to yield 2.297 percent. On Monday, the 10-year yield touched its highest intraday level since September 2014 at 2.314 percent.

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August 21 12:55 UTC Released

USRedbook YY

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4.7 %

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4.5 %

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0.2 %

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0.1 %

January 31 00:00 UTC 292169292169m

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January 22 19:00 UTC 303989303989m

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-1541 %

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2016 bln ARS

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January 22 19:00 UTC 303989303989m

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-1541 %

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2016 bln ARS

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