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Asia Roundup: Kiwi near 2-month peak, dollar gains against yen amid U.S. tax cut hopes, Asian shares nudge up - Monday, December 18th, 2017

Market Roundup

  • Japan Nov Exports m/m, f'cast 14.6%, 16.2%, 14.0% last
     
  • Japan Nov Imports y/y, f'cast 18.0%, 17.2%, 18.9% last
     
  • Japan Nov Trade Balance Total Yen, f'cast -54.9B , 113.4B, 285.4B last, 284.6B r'vsd
     
  • Japan eyes highest-ever budget as revenue keeps pace – Nikkei
     
  • Japan business outlook reflects global post-crisis recovery – Nikkei
     
  • Japanese pension fund to shoulder costs of BOJ's negative rate - Nikkei
     
  • U.S. Republicans confident tax bill to become law this week
     
  • Trump to say in security speech that China is competitor -officials
     
  • UK's May to pitch status quo Brexit transition to parliament
     
  • Smaller cities drive China's new home prices in Nov, defying curbs
     
  • China's campaign to cut debt enters new stage - stock exchange official
     
  • China issues guidelines for overseas investment by private firms
     
  • Australian government foresees smaller budget deficits, surplus in 2020/21
     
  • New Zealand consumer confidence eases for 3rd straight month in Dec - ANZ survey
     
  • South Africa's ANC votes to elect successor for party leader Zuma
     
  • Indian ruling party in tough election fight in Modi's home state, vote count shows
     
  • Bitcoin hits bigger stage as exchange giant CME launches futures
     
  • Speculators raise net-short dollar bets to $7.81 bln -CFTC

Economic Data Ahead

  • (0500 ET/1000 GMT) EZ Inflation Final m/m, f'cast 0.1%, 0.1% last
     
  • (0500 ET/1000 GMT) EZ Inflation, Final y/y, f'cast 1.5%, 1.5% last

Key Events Ahead

  • (0400 ET/0900 GMT) Bank of Finland Governor Erkki Liikanen to speak as the central bank updates its forecasts for the Finnish economy - Helsinki

FX Beat

DXY: The dollar slightly eased despite a minor uptick in the U.S. 10-year treasury yield. The greenback against a basket of currencies traded 0.1 percent down at 93.87, having touched a low of 93.28 on Thursday, its lowest since Dec. 6. FxWirePro's Hourly Dollar Strength Index stood at 37.33 (Neutral) by 0500 GMT.

EUR/USD: The euro rebounded after falling to a 5-day low earlier in the session, amidst broad-based dollar weakness ahead of the US tax reform votes. Investors now await the Eurozone final CPI, which is expected to confirm a 1.5 percent reading, in-line with the prelim release. The European currency traded 0.1 percent up at 1.1761, having touched a high of 1.1862 on Thursday, its highest since Dec. 5. FxWirePro's Hourly Euro Strength Index stood at -17.49 (Neutral) by 0400 GMT. Investors’ attention will remain on Eurozone CPI figures, ahead of U.S. housing market index report. Immediate resistance is located at 1.1789 (10-DMA), a break above targets 1.1816 (21-DMA). On the downside, support is seen at 1.1737 (Session Low), a break below could drag it lower 1.1717 (Dec 12. Low).

USD/JPY: The dollar rose against the Japanese yen after U.S. tax reform efforts moved another step closer to ratification over the weekend. The major was trading 0.1 percent up at 112.65, having hit a low of 112.03 on Friday, its lowest since Dec. 6. FxWirePro's Hourly Yen Strength Index stood at 102.62 (Highly Bullish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. housing market index for further momentum. Immediate resistance is located at 113.00, a break above targets 113.33 (Nov. 16). On the downside, support is seen at 112.21 (Dec.7 Low), a break below could take it near 111.73.

GBP/USD: Sterling steadied above the 1.3300 handle after slumping nearly a percent on Friday despite news that Brexit negotiations would move on to the next stage in January. The major traded 0.1 percent up at 1.3333, having hit a low of 1.3301 in the previous session; it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -117.52 (Highly Bearish) by 0400 GMT. Investors’ focus will remain the UK CBI Industrial Trends Survey, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3364 (5-DMA), a break above could take it near 1.3400. On the downside, support is seen at 1.3301 (Dec. 15 Low), a break below targets 1.3278 (Nov. 24 Low). Against the euro, the pound was trading down at 88.18 pence, having hit a low of 88.59 pence on Friday, it’s lowest since Dec. 5.

AUD/USD: The Australian dollar steadied after easing from a 1-month peak in the previous session as the country's government predicted its budget deficit would narrow faster than previously expected. The Aussie trades 0.2 percent up at 0.7656, having hit a high of 0.7694 on Friday; it’s highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 82.30 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7627 (Dec. 14 Low), a break below targets 0.7593 (Nov. 27 Low). On the upside, resistance is located at 0.7695, a break above could take it near 0.7730.

NZD/USD: The New Zealand dollar rose and just was under recent two-month highs as investors ignored mixed NZ services PMI and consumer confidence data. The Kiwi trades 0.4 percent up at 0.7012, having touched a high of 0.7033 on Friday, its highest level since Oct. 20. FxWirePro's Hourly Kiwi Strength Index was at 120.85 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7040, a break above could take it near 0.7085. On the downside, support is seen at 0.6968 (5-DMA), a break below could drag it lower 0.6931 (Dec. 13 Low).

Equities Recap

Asian shares edged up following record highs on Wall Street, while the dollar gained against the Japanese yen on expectations U.S. lawmakers will pass a long-awaited tax bill.

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

Tokyo's Nikkei rose 1.6 percent to 22,901.77 points, Australia's S&P/ASX 200 index gained 0.7 percent to 6,038.90 points and South Korea's KOSPI eased 1.04 percent to 2,480.78 points.

Shanghai composite index eased 0.3 percent to 3,257.09 points, while CSI300 index was trading 0.2 percent down at 3,972.76 points.

Hong Kong’s Hang Seng was trading 0.7 percent higher at 29,051.24 points. Taiwan shares added 0.1 percent to 10,506.52 points.

Commodities Recap

Crude oil prices continued to consolidate within narrow ranges as a lack of conclusive market indicators prevented prices from moving either way. International benchmark Brent crude was trading 0.2 percent up at $63.36 per barrel by 0432 GMT, having hit a high of $65.80 on Tuesday, its highest since Jul. 2015. U.S. West Texas Intermediate was trading 0.1 percent higher at $57.38 a barrel, after rising as high as $58.53 on Tuesday, its highest since Dec. 1.

Gold prices slightly eased, weighed down by firmer equities and a buoyant dollar after a bill to overhaul the tax system in the United States moved a step closer to ratification. Spot gold was trading down at $1,255.00 an ounce at 0438 GMT after touching its highest since Dec. 7 at $1,261.66 on Friday. U.S. gold futures were little changed at $1,257 an ounce.

Treasuries Reap

The 10-year U.S Treasury yield stood at 2.367 percent higher by 0.012 bps, while 5-year yield was 0.014 bps up at 2.170 percent.

The Japanese government bonds little changed as investors remain side-lined in any major deal ahead of the upcoming Christmas and New Year holidays. But, the market still awaited the last monetary policy meeting of 2017 from the Bank of Japan, where no change in policy-setting is expected. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.044 percent, the yield on new long-term 40-year remained steady 0.962 percent and the yield on short-term 3-year stood flat at -0.149 percent.

The Australian bonds slumped ahead of the Reserve Bank of Australia December meeting minutes, which is scheduled to be released on December 19 at 00:30 GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 3-1/2 basis points to 2.567 percent, the yield on the long-term 30-year note surged 3 basis points to 3.282 percent and the yield on short-term 2-year climbed over 3 basis points to 1.929 percent.

The New Zealand government bonds closed tad higher as investors wait to watch the country’s GlobalDairyTrade price auction and the third-quarter gross domestic product (GDP) data due through this week. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.73 percent, the yield on 20-year note slid 1/2 basis point to 3.26 percent while the yield on short-term 2-year ended 1 basis point higher at 1.94 percent.

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