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Asia Roundup: Aussie rebounds from 4-month lows on upbeat employment data, dollar gains as U.S. Treasury yields rise, Asian shares nudge up - Thursday, November 16th, 2017

Market Roundup

  • Australia Oct Unemployment Rate 5.4%, last 5.5%, forecast 5.5%; lowest since 2013
     
  • Australia Oct Employment 3.7k, last 19.8k, forecast 17.5k, revised 26.6k
     
  • Australia Oct Full Time Employment 24.3k, last 6.1k, revised 9.3k
     
  • New Zealand consumer confidence falls in November - ANZ survey
     
  • China gov't official warns of bubble risks in financial sector
     
  • China Jan-Oct outbound investment falls 40.9 pct to $86.31 bln
     
  • Two U.S. Senate Republicans critical of party's tax plan
     
  • Mark Cuban says tax rates have almost no impact on investment
     
  • Japan Sept US Treasury holdings $1.096 trln, Aug $1.102 trln
     
  • S. Korea says U.S. must not strike N. Korea without Seoul's consent
     
  • Caution prudent in uncertain times, but has limits -BoC's Wilkins
     
  • Britain's May weathers new challenges on Brexit plan, more to come
  • Trade sterling like emerging market currency, say investors - Rtrs summit
     

Economic Data Ahead

  • (0430 ET/0930 GMT) Great Britain Oct Retail Sales m/m, y/y, forecast 0.1%, -0.6%, -0.8%, 1.2% last
     
  • (0500 ET/1000 GMT) EZ Oct Inflation Final m/m, y/y, forecast 0.1%, 1.4%, 0.4%, 1.4%, last

Key Events Ahead

  • (0300 ET/0800 GMT) ECB's Jazbec speaks at a conference – Ljubljana
     
  • (0345 ET/0845 GMT) ECB's Mersch speaks at a conference – Frankfurt
     
  • (0500 ET/1000 GMT) EU's Oettinger speaks at a conference – Berlin
     
  • (0650 ET/1150 GMT) Riksbank's Ohlsson speaks at a conference – Gothenburg
     
  • (0900 ET/1400 GMT) BoE's Carney and others participate in a discussion – Liverpool
     
  • (0910 ET/1410 GMT) Fed's Loretta speaks at a conference – Washington
     
  • (1200 ET/1700 GMT) SNB's Maechler speaks at a conference – Geneva
     
  • (1310 ET/1810 GMT) Fed's Kaplan participates in a Q&A – Houston
     
  • (1500 ET/2000 GMT) Fed's Williams speaks at FRBSF conference – San Francisco
     
  • (1500 ET/2000 GMT) ECB's Constancio participates in a panel – Ottawa
     
  • (1545 ET/2045 GMT) Fed's Brainard speaks at a conference – Michigan
     
  • (1630 ET/2130 GMT) Fed's Potter speaks at NASP discussion – New York

FX Beat

DXY: The dollar held gains above a 4-week low hit in the previous session, supported by renewed upside seen in the U.S. Treasury yields, while investors awaited the outcome of the US tax vote scheduled later today. The greenback against a basket of currencies traded flat at 93.87, having touched a low of 93.40 on Wednesday, its lowest since Oct. 20. FxWirePro's Hourly Dollar Strength Index stood at -13.51 (Neutral) by 0500 GMT.

EUR/USD: The euro slumped after rising to a 1-month high in the previous session as the greenback rebounded across the board in response to the comments from the White House reporters, citing that the GOP leaders are confident they have the votes to pass the tax bill today. The European currency traded 0.1 percent down at 1.1776, having touched a high of 1.1860 on Wednesday; its highest since Oct. 13. FxWirePro's Hourly Euro Strength Index stood at 85.47 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on the Eurozone consumer price index and ECB Vice President Vitor Constancio's speech, ahead of the U.S. unemployment benefit claims, import and export price index, industrial production and capacity utilization figures. Immediate resistance is located at 1.1836 (Oct. 26 High), a break above targets 1.1880. On the downside, support is seen at 1.1750, a break below could drag it lower 1.1720.

USD/JPY: The dollar steadied, rebounding from a 4-week low touched in the prior session after data released on Wednesday showed U.S. annual core inflation accelerated to 1.8 percent in October after having stayed at 1.7 percent in the preceding five months, while retail sales increased 0.2 percent. The major was trading 0.2 percent up at 113.07, having hit a low of 112.48 on Wednesday, its lowest since Oct. 19. FxWirePro's Hourly Yen Strength Index stood at -0.65 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment benefit claims, import and export price index, industrial production and capacity utilization figures for further momentum. Immediate resistance is located at 113.38 (5-DMA), a break above targets 113.65. On the downside, support is seen at 112.75 (Session Low), a break below could take it near 112.48 (Previous Session Low).

GBP/USD: Sterling consolidated within a narrow range as investors awaited the release of UK retail sales, which are seen rising 0.1 percent m/m in Oct. versus a 0.8 percent drop recorded in September. Meanwhile, the annualized figure is expected to fall 0.6 percent against a 1.2 percent gain in Sept. The major traded flat at 1.3169, having hit a low of 1.3061 on Monday, its lowest since Nov. 6. FxWirePro's Hourly Sterling Strength Index stood at -2.06 (Neutral) by 0400 GMT. Investors’ focus will remain on political developments and the UK retail sales data, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3200, a break above could take it near 1.3227. On the downside, support is seen at 1.3108 (Nov. 7 Low), a break below targets 1.3061 (Nov 13 Low). Against the euro, the pound was trading 0.1 percent down at 89.71 pence, having hit a low of 89.80 pence the day before, its lowest since Oct. 20.

AUD/USD: The Australian dollar retreated from a 4-month low touched earlier in the session, after domestic employment rose for a 13th straight month in October, the longest run of gains since the early 1990s, while the jobless rate fell to 5.4 percent, its lowest since February 2013. The Aussie trades 0.1 percent up at 0.7593, having hit a low of 0.7569 earlier; it’s lowest since Jun. 27. FxWirePro's Hourly Aussie Strength Index stood at -84.08 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7569 (Session Low), a break below targets 0.7530. On the upside, resistance is located at 0.7637(78.6% retracement of 0.7883 and 0.7569), a break above could take it near 0.7690 (61.8% retracement).

NZD/USD: The New Zealand dollar eased, extending losses for the sixth straight session, as a survey showed consumer confidence fell in November as a slowing housing market and political uncertainty dampened optimism. The Kiwi trades 0.2 percent down at 0.6863, having touched a low of 0.6844 on Tuesday, its lowest level since Nov. 1. FxWirePro's Hourly Kiwi Strength Index was at -143.60 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6895 (61.8% retracement of 0.6979 and 0.6844), a break above could take it near 0.6927 (38.2% retracement of 0.6979 and 0.6844). On the downside, support is seen at 0.6830, a break below could drag it till 0.6800.

Equities Recap

Asian shares gained amid cautious trading sentiment, while the greenback held gains above a 4-week low hit the day before, supported by renewed upside seen in the U.S. Treasury yields.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.

Tokyo's Nikkei gained 1.4 percent to 22,337.15 points, Australia's S&P/ASX 200 index advanced 0.2 percent to 5,943.50 points and South Korea's KOSPI rallied 0.5 percent to 2,531.72 points.

Shanghai composite index rose 0.1 percent to 3,404.53 points, while CSI300 index was trading 0.6 percent up at 4,098.20 points.

Hong Kong’s Hang Seng was trading 0.6 percent higher at 29,040.29 points. Taiwan shares shed 0.05 percent to 10,625.04 points.

Commodities Recap

Crude oil prices rose, extending the previous session rebound as rising U.S. crude production and inventories were offset by expectations that OPEC will extend an ongoing production cut during a meeting at the end of this month. International benchmark Brent crude was trading 0.2 percent up at $61.96 per barrel by 0452 GMT, having hit a low of $61.19 on Tuesday, its lowest since Nov. 3. U.S. West Texas Intermediate was trading 0.1 percent up at $55.33 a barrel, after falling as low as $54.87 on Wednesday, its lowest since Nov. 3.

Gold prices declined, extending previous session losses after upbeat U.S. economic data bolstered the prospects of the Federal Reserve interest rate hikes next month and beyond. Spot gold was trading 0.1 percent down at $1,276.43 per ounce at 0456 GMT, having touched a high of $1,289.34 the day before, its highest since Oct. 20. U.S. gold futures for December delivery gained 0.1 percent $1,277.80.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.345 percent higher by 0.01 bps, while 5-year yield was 0.012 bps up at 2.049 percent.

The Japanese bonds gained following firmness in the U.S. Treasuries, bolstered by rising risk aversion as equities slumped and also taking their cue from a flattening U.S. Treasury yield curve. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 0.045 percent, the yield on long-term 40-year declined nearly 1 basis point to 0.987 percent and the yield on short-term 2-year declined 1 basis point to -0.184 percent.

The Australian bonds remained volatile after October employment report portrayed a mixed picture of the economy. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1/2 basis point to 2.595 percent, the yield on the long-term 30-year note jumped 1 basis point to 3.376 percent and the yield on short-term 2-year declined 1 basis point to 1.806 percent.

The New Zealand bonds closed higher as the country’s ongoing political and policies uncertainties continue to weigh. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4 basis points to 2.865 percent, the yield on 20-year note also slid 5 basis points to 3.430 percent and the yield on short-term 2-year ended 3 basis points lower at 2.005 percent.

The Canadian government bond prices were higher across the yield curve, with the two-year rising 2.5 Canadian cents to yield 1.448 percent and the 10-year up 31 Canadian cents to yield 1.914 percent.

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