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Asia Roundup: Aussie hits multi-week high following mixed jobs report, dollar index eases from 1-month peak on profit taking, Asian shares rally - Thursday, February 16th, 2017

Market Roundup

  • BoJ Gov Kuroda – Low rates may sow seeds of new financial crisis – Reuters.
     
  • Japan FinMin Aso, new US TsySec Mnuchin talk over phone, did not discuss FX - Reuters.
     
  • Ex-BoJ Shirai – JPY undervalued if falls to 125-130 vs USD, BoJ policy in line with G20 agreement – Reuters.
     
  • Souring relations with market puts BoJ’s bold experiment to test – Reuters.
     
  • MoF flow data week-ended Feb 11 – Japanese sell net Y96.7 bln foreign stocks, Y297.4 bln bonds, Y38.9 bln bills; foreign investors buy net Y175.6 bln Japanese stocks, sell Y99.2 bln bonds, buy Y161.4 bln bills.
     
  • PBOC DepGov Yi Gang – China should maintain steady monetary policy – Xinhua.
     
  • PBOC Zhu Jun – CNY faces no big adjustment – China Securities Journal.
     
  • China Jan FDI -9.2% y/y to CNY80.1 bln, drop due to high base, holidays; ODI -35.7% to CNY53.27 bln, property ODI -84.3%.
     
  • South Korea FinMin – Monitoring JPY-KRW cross, currency volatility severe, to speak to new US TsySec soon, announce steps to boost growth - Reuters.
     
  • South Korea Jan fx deposits up as exporters lift USD holdings – Reuters.
     
  • NY Fed Dudley – Aiming to hike rates, based on more growth-fiscal stimulus, uncertainties more since administration shift – Reuters. 
     
  • US Dec net capital outflow $42.8 bln, Nov rev $30.2 bln inflow, China Tsy holdings $1.058 trln, Japan $1.091 trln, Nov $1.049 trln, $1.109 trln.
     
  • ECB/Buba Weidmann – Rolling back financial regulation would be mistake.
     
  • RBA AsstGov Ellis – Australians well able to service mortgage debt - Reuters.
     
  • Australia Jan employment +13.5k, unemployment 5.7%, participation 64.6%, +10k, 5.8% and 64.7% eyed, full-time employment -44.8k.
     
  • Australia Feb MI inflation expectations +2.5% WM, +4.1% TM, Jan +2.6%, +4.3%.
     
  • Non-residents holdings of NZ govt debt eases to 60.0% in Jan, Dec 60.3%.
     
  • *New Zealand Feb ANZ/RM consumer confidence index 127.4, Jan 128.7, dip seasonal.

Economic Data Ahead

  • (0330 ET/0830 GMT) Sweden Jan unemployment, 7.3% nsa eyed; last 6.5% nsa, 6.9% sa.
  • (0830 ET/1330 GMT) United States Feb Philly Fed business sentiment index, 18.0 eyed; last 23.6.
     
  • (0830 ET/1330 GMT) United States Jan housing starts, 1.22 mln AR eyed; last 1.23 mln, +11.3% m/m.
     
  • (0830 ET/1330 GMT) United States Jan building permits, 1.23 mln AR eyed; last 1.23 mln, +1.3% m/m.
     
  • (0830 ET/1330 GMT) United States w/e initial jobless claims, 245k eyed; last 234k.
     

Key Events Ahead 

  • (0430 ET/0930 GMT) Spain E4-5 bln 0.4/1.5/5.15% 2022/27/28 Bono auctions.
     
  • (0450 ET/0950 GMT) France E6-7 bln zero% 2020/22 BTan, E1.5-2.5 bln 0.1% OATi auctions.
     
  • (0615 ET/1115 GMT) Riksbank DepGov Ohlsson speaks at Linkoping University.
     
  • (0630 ET/1130 GMT) FOMC ViceChair Fischer Bloomberg TV interview.
     
  • (0730 ET/1230 GMT) ECB meeting minutes.
     
  • (0900 ET/1400 GMT) ECB Coeure speech, in a panel discussion at Maastricht conference.
     
  • (0905 ET/1405 GMT) Riksbank DepGov Skingsley interviewed at Stockholm Nordnet event.
     
  • (0925 ET/1425 GMT) Buba Thiele speaks in Frankfurt.
     
  • (1000 ET/1500 GMT) EC Moscovici, ECB/OeNB Nowotny in Vienna panel discussion.
     
  • (1300 ET/1800 GMT) Norges Bank Gov Olsen speaks in Oslo.
     
  • (1510 ET/2010 GMT) SF Fed Williams speaks in San Francisco.

FX Beat

DXY: The dollar eased across the board as the treasury yields tumbled following disappointing comments from Yellen on the U.S. economy. The greenback against a basket of currencies traded 0.1 percent lower at 101.94, having hit a high of 101.76 in the previous session, it’s strongest since Jan. 12. FxWirePro's Hourly Dollar Strength Index stood at 70.74 (Bullish) by 0500 GMT.

EUR/USD: The euro rose, retreating from a 5-week trough touched on Wednesday, as the dollar took a breather after advancing to a 1-month high on the back of upbeat U.S. economic data. The European currency edged up 0.17 percent to 1.0615, having hit a low of 1.0521 in the previous session, it’s lowest since Jan. 11. FxWirePro's Hourly Euro Strength Index stood at 12.70 (Neutral) by 0400 GMT. Investors’ will closely watch European Central Bank Monetary Policy Meeting Accounts for insights into central bank’s view of the rising inflation across the Eurozone. Markets focus will also remain on weekly U.S. initial jobless claims number, monthly housing starts and building permits data that could influence the pair. Immediate resistance is located at 1.0638 (38.2 % retracement of 1.0828 and 1.0521), a break above targets 1.0694 (21-DMA). On the downside, support is seen at 1.0578, a break below could drag it near 1.0500.

USD/JPY: The dollar declined as the 10-year treasury yield dropped two basis points following Yellen’s disappointing comments on the economy and the sharp downward revision of the U.S. Q1 GDP by the Atlanta Fed. The major rose to a 2-week top in the previous session after data showed a rise in the core inflation and core retail sales, however, it eased thereafter as Yellen offered no additional insight on the timing of the central bank's next rate hike. The pair trades 0.2 percent lower at 113.85, having hit a high of 114.95 on Wednesday, it’s highest since Jan 30. FxWirePro's Hourly Yen Strength Index stood at -91.33 (Slightly Bearish) by 0400 GMT. Investors’ attention now shifts towards the U.S. building permits, housing starts and unemployment claims data for further insights on the strength of the U.S. economy. Immediate resistance is located at 114.00 (Feb 14 High), a break above targets 114.85 (Jan 26 High). On the downside, support is seen at 113.48 (21-DMA), a break below could take it near 112.99 (10-DMA).

GBP/USD: Sterling rose as the dollar eased across the board following a drop in the U.S. Treasury yields. On Wednesday, the major touched one-week lows as a run of upbeat U.S. economic data revived expectations of an early rate hike by the Federal Reserve. Sterling trades 0.1 percent up at 1.2464, having hit a low of 1.2383 in the previous session, it’s weakest since Feb. 7. FxWirePro's Hourly Sterling Strength Index stood at -71.87(Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic data. Immediate resistance is located at 1.2484 (5-DMA), a break above could take it over 1.2497 (21-DMA). On the downside, support is seen at 1.2411, a break below targets 1.2400. Against the euro, the pound trades 0.2 percent down at 85.15 pence, having hit a low of 85.25 earlier in the session.

AUD/USD: The Australian dollar rallied to multi-week highs above the 0.7700 handle after data showed the economy's unemployment rate eased back unexpectedly in January, while employment rose 13,500, topping forecasts of an increase of 10,000. However, the major failed to extend gains as employment rose due to increase in part-time work, while full-time jobs fell 44,800 after three months of gains. The Aussie gained 0.1 percent to 0.7717, having hit a high of 0.7731 earlier in the session, its highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 110.41 (Highly Bullish) by 0400 GMT. Markets will continue to digest Australia’s mixed jobs report, ahead of series of economic data from the U.S. docket. Immediate support is seen at 0.7660 (5-DMA), a break below could drag it lower 0.7650. On the upside, resistance is located at 0.7742, a break above targets 0.7778.

NZD/USD: The New Zealand dollar struggled to extend gains since the Reserve Bank of New Zealand hinted it could keep rates at record lows for two years, slashing down expectations of a rate hike later in 2017. The Kiwi trades flat at 0.7221, having hit a low of 0.7134 on Tuesday, it’s weakest since Jan. 20. FxWirePro's Hourly Kiwi Strength Index was at 113.83 (Highly Bullish) by 0400 GMT. Markets attention will remain on U.S. macro fundamental drivers, ahead of New Zealand's retail sales and business PMI figures. Immediate resistance is located at 0.7254 (50.0 % retracement of 0.7375 and 0.7134), a break above could take it near 0.7284 (Jan 27 High). On the downside, support is seen at 0.7191 (23.6 % retracement of 0.7375 and 0.7134), a break below could drag it till 0.7150.

Equities Recap

Asian shares rose to fresh 19-month highs, following an overnight rally on the Wall Street, while the dollar eased across the board on a bout of profit-taking.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent to its highest since July 2015.

Tokyo's Nikkei advanced 0.51 percent to 19,339.44 points, Australia's S&P/ASX 200 index rose 0.10 percent to 5,815.10 points and South Korea's KOSPI was trading 0.14 percent down at 2,081.05 points.

Shanghai composite index climbed 0.40 percent to 3,225.37 points, while CSI300 index was trading 0.42 percent up at 3,436.09 points.

Hong Kong’s Hang Seng was trading 0.39 percent higher at 24,085.28 points. Taiwan shares fell 0.30 percent at 9,770.13 points.

Commodities Recap

Crude oil prices rose, reversing some of its previous losses, supported by ongoing supply cuts led by OPEC, however, increasing fuel inventories and crude production in the United States dampened market sentiment.  International benchmark Brent crude was trading 0.14 percent higher at $55.72 per barrel by 0409 GMT, having hit a high of $56.85 hit on Friday, its strongest since Feb. 6. U.S. West Texas Intermediate crude rose 0.1 percent at $53.02 a barrel, after rising as high as $54.10 last week, its highest since Feb. 6.

Gold prices edged up, retreating from a 2-week low hit in the previous session as the dollar eased from 1-month highs on profit taking. Spot gold gained 0.1 percent to $1,234.54 per ounce at 0418 GMT, having hit its lowest since Feb. 36 at $1,216.58 on Wednesday. U.S. gold futures were up 0.1 percent at $1,234.6.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.4771 percent higher by 0.007 bps, while 5-year yield was up by 0.008 bps at 1.9680 percent.

The Australian government bonds slumped after reading the better-than-expected January employment report. The detail was mixed, however, with the unemployment rate a touch lower but full-time employment showing renewed weakness. The yield on the benchmark 10-year Treasury note jumped 1 basis point to 2.81 percent, the yield on 15-year note also rose 1/2 basis point to 3.25 percent and the yield on short-term 2-year moved 1/2 basis point higher to 1.87 percent.

The New Zealand government bonds closed modestly higher as investors await to read the country’s fourth-quarter retail sales data, scheduled to be released on Friday. The yield on the benchmark 10-year bond fell 1 basis point to 3.37 percent at the time of closing, the yield on 7-year note also slid nearly 1 basis point to 2.94 percent and the yield on short-term 2-year note traded 1 basis point lower at 2.25 percent.

The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries on the firm economic data. The 2-year fell 3 Canadian cents to yield 0.815 percent and the 10-year declined 17 Canadian cents to yield 1.785 percent. The 10-year yield touched its highest intraday since Feb. 1 at 1.801 percent.

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