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Asia Roundup: Aussie slumps on downbeat Q3 GDP, dollar eases as U.S. government shutdown possibility looms, Asian shares tumble - Wednesday, November 6th, 2017

Market Roundup

  • Trump to recognize Jerusalem as Israel capital, upending decades of U.S. policy
     
  • Trump lawyer denies Deutsche Bank got subpoena on Trump accounts
     
  • US House tax positions begin to emerge ahead of talks with Senate
     
  • US Democrats flex muscles as Congress confronts a government shutdown
     
  • Australian citizenship threatens government with nine more MPs in doubt
     
  • Australia Q3 GDP q/q, 0.6%, 0.8% last, f' cast 0.7%, 0.9% revised
     
  • Australia Q3 GDP y/y, 2.8%, 1.8% last, f' cast 3.0%
     
  • Bitcoin surges above $12,000 to record high on relentless demand
     
  • "Deadline of deadlines" in Brexit divorce talks this week
     
  • Plot to kill British premier May foiled- Sky News
     
  • Britain needs "new paradigm" for financial services trade with EU - Hammond
     
  • EU exec to propose deeper euro zone integration to unite EU on Wed
     
  • BoJ Policy Board Masai sticks to Kuroda majority line, economy/CPI to rise
     
  • Current policy appropriate but some concerns over QQE side-effects, CPI
     
  • Foreign direct investment in Japan notched record in ’16 – Nikkei
     
  • Japan to help finance China’s Belt and Road project - Nikkei

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Oct Industrial Orders m/m, f' cast -0.3%, 1.0% last

Key Events Ahead

  • N/A ECB Governing council meeting - Frankfurt
     
  • N/A ECB's Juncker speaks on ESM fund bailout - Brussels
     
  • (0230 ET/0730 GMT) Riksbank's Ohlsson speaks at a seminar - Stockholm
     
  • (0530 ET/1030 GMT) ECB's Mersch speaks at a conference - Frankfurt
     
  • (0600 ET/1100 GMT) Riksbank's Jansson speaks at a seminar - Stockholm
     
  • (1000 ET/1500 GMT) Bank of Canada key policy rate announcement – Ottawa
     

FX Beat

DXY: The dollar index declined, reversing some of its previous session losses, as the possibility of a U.S. government shutdown loomed. The greenback against a basket of currencies traded down at 93.20, having touched a high of 93.51 on Thursday, its highest since Nov. 22. FxWirePro's Hourly Dollar Strength Index stood at 42.72 (Neutral) by 0500 GMT.

EUR/USD: The euro steadied after falling to a 2-week low in the previous session, as the dollar weakened as markets weigh in the chances of a U.S. government shutdown, in the wake of the government funding to expire this Friday. The European currency traded 0.1 percent up at 1.1836, having touched a low of 1.1800 on Tuesday, its lowest since Nov. 22. FxWirePro's Hourly Euro Strength Index stood at -91.23 (Slightly Bearish) by 0500 GMT. Investors’ attention will remain on ECB non-monetary policy meeting and ECB Mersch's speech, ahead of U.S. ADP employment change, nonfarm productivity and unit labour costs data. Immediate resistance is located at 1.1867 (10-DMA), a break above targets 1.1940. On the downside, support is seen at 1.1800 (Previous Session Low), a break below could drag it lower 1.1756.

USD/JPY: The dollar slumped to a 5-day low as concerns about a possible U.S. government shutdown offset optimism about progress on tax reform legislation. The major was trading 0.4 percent down at 112.14, having hit a high of 113.08 on Monday, its highest since Nov. 17. FxWirePro's Hourly Yen Strength Index stood at 126.50 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. ADP employment change, nonfarm productivity and unit labour costs data for further momentum. Immediate resistance is located at 112.79 (50.0% retracement of 114.73 and 110.84), a break above targets 113.25 (38.2% retracement). On the downside, support is seen at 112.00, a break below could take it near 111.80 (10-DMA).

GBP/USD: Sterling declined, extending previous session losses, as news of a plot to assassinate the UK PM Theresa May by the Islamist terrorists hit the wires, although the security services stopped the Islamist suicide bomb plot. Moreover, renewed worries surrounding the UK political climate and downbeat UK services PMI continued to weigh on the British Pound. Sterling traded 0.2 percent down at 1.3421, having hit a high of 1.3549 on Friday, it’s highest since Sept. 25. FxWirePro's Hourly Sterling Strength Index stood at -108.52 (Highly Bearish) by 0500 GMT. Investors’ focus will remain on developments surrounding Brexit deal and UK political developments, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3500, a break above could take it near 1.3549. On the downside, support is seen at 1.3370 (Previous Session Low), a break below targets 1.3333. Against the euro, the pound was trading 0.3 percent down at 88.20 pence, having hit a high of 87.55 pence on Monday, it’s highest since Nov. 1.

AUD/USD: The Australian dollar fell below the 0.7600 handle after the release of the Aussie GDP Q3 data that missed for the quarter. The economy's Q3 real GDP rose 0.6 percent quarter over quarter and 2.8 percent year over year, both below estimates of 0.7 percent and 3.0 percent, respectively. The Aussie trades 0.4 percent down at 0.7580, having hit a high of 0.7653 the day before; it’s highest since Nov. 13. FxWirePro's Hourly Aussie Strength Index stood at -122.59 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7571 (Session Low), a break below targets 0.7532 (Nov. 21 Low). On the upside, resistance is located at 0.7665 (Nov. 13 High), a break above could take it near 0.7700.

NZD/USD: The New Zealand dollar rose as the latest global auction of dairy showed a rise in prices, though that followed four straight falls. The Kiwi trades 0.5 percent up at 0.6905, having touched a low of 0.6816 on Friday, its lowest level since Nov. 21. FxWirePro's Hourly Kiwi Strength Index was at 90.55 (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 0.6925, a break above could take it near 0.6945. On the downside, support is seen at 0.6851 (Previous Session Low), a break below could drag it lower 0.6816 (Dec. 1 Low).

Equities Recap

Asian shares tumbled, weighed down by losses on Wall Street, while the greenback eased on concerns about a possible U.S. government shutdown.

MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.9 percent.

Tokyo's Nikkei eased 1.9 percent to 22,189.90 points, Australia's S&P/ASX 200 index declined 0.4 percent to 5,945.70 points and South Korea's KOSPI slumped 1.2 percent to 2,481.53 points.

Shanghai composite index fell 1.2 percent to 3,265.68 points, while CSI300 index was trading 1.4 percent down at 3,984.55 points.

Hong Kong’s Hang Seng was trading 1.8 percent lower at 28,325.78 points. Taiwan shares shed 1.6 percent to 10,393.92 points.

Commodities Recap

Crude oil prices declined, as refined product inventories in the United States increased in what the market thought as a sign of lacklustre demand. International benchmark Brent crude was trading 0.1 percent down at $62.59 per barrel by 0454 GMT, having hit a low of $62.12 on Tuesday, its lowest since Nov. 21. U.S. West Texas Intermediate was trading 0.2 percent lower at $57.34 a barrel, after rising as high as $58.86 on Friday, its highest since Nov. 27.

Gold prices steadied after sliding to a two-month low in the previous session, as the greenback eased on concerns about a possible U.S. government shutdown. Spot gold trading 0.1 percent up at $1,266.58 an ounce by 0458 GMT, having hit its lowest since Oct. 6 at $1260.88. U.S. gold futures were up 0.3 percent at $1,268.60.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.342 percent lower by 0.014 bps, while 5-year yield was 0.021 bps up at 2.129 percent.

The Australian government bond futures bounced, with the three-year bond contract up 4.5 ticks at 98.020. The 10-year contract rose 7 ticks to 97.4550, leaving cash yields a slim 18 basis points above comparable U.S. debt.

The New Zealand government bonds gained, sending yields 5.5 basis points lower at the long end of the curve.

The Canadian government bond prices were higher across the yield curve, with the two-year up 2 Canadian cents to yield 1.539 percent and the 10-year rising 22 Canadian cents to yield 1.898 percent. The gap between the 2 and 10-year yields narrowed by 1.5 basis points to a spread of 35.9 basis points, its narrowest since January 2008, tracking a flatter U.S. yield curve.

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USOverall Net Capital Flows

Actual

151.2 Bln USD

Forecast

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-51.3 Bln USD

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USNet L-T Flows,Incl.Swaps

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7.9 Bln USD

Forecast

Previous

65.1 Bln USD

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BRRetail Sales MM*

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Forecast

0.35 %

Previous

January 9 11:00 UTC 3420534205m

BRRetail Sales YY*

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Forecast

3.20 %

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January 9 11:00 UTC 3420534205m

BRRetail Sales YY*

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Forecast

3.20 %

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January 9 11:00 UTC 3420534205m

BRRetail Sales YY*

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Forecast

3.20 %

Previous

January 9 11:00 UTC 3420534205m

BRRetail Sales MM*

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Forecast

0.35 %

Previous

January 9 11:00 UTC 3420534205m

BRRetail Sales YY*

Actual

Forecast

3.20 %

Previous

December 12 09:30 UTC 62056205m

GBRPIX YY

Actual

Forecast

Previous

4.2 %

December 12 09:30 UTC 62056205m

GBPPI Input Prices MM NSA

Actual

Forecast

Previous

1 %

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