Asia Roundup: Kiwi off 3-1/2 week low on upbeat Chinese data, dollar eases against yen amid political concerns, Asian shares hit 19-month high - Tuesday, February 14th, 2017

Market Roundup

• Japan PM Abe – Agrees with US President Trump to hold bilateral summit whenever both attend G7s, told Trump discussions on FX should be left for FinMin, TsySec - Reuters.
   
• FinMin Aso – Will forge ahead on framework for bilateral economic dialogue, to include fiscal-monetary-structural issues – Reuters.
   
• BoJ Gov Kuroda – Global yield rises alone won’t trigger rate hike – Reuters.
   
• Dallas Fed Kaplan – Fed should be taking steps to remove accommodation, should up rates sooner, further scope for jobs growth – Dallas Fed website.
   
• Trump NSA advisor Flynn resigns in controversy over Russia contacts - Reuters.
   
• China Jan CPI +1.0% m/m, +2.5% y/y, +0.7% and +2.4% forecast, food CPI +2.7% y/y, non-food +2.5%, CPI increase at fastest y/y pace since May ‘14.
   
• China Jan PPI +0.8% m/m, +6.9% y/y, +6.3% y/y forecast, up at fastest y/y pace since August ’11.
   
• Australia Jan NAB business conditions index +16, confidence +10, Dec 10, 6, conditions index highest in nearly decade, index of sales doubles, costs up.
   
• New Zealand Jan REINZ median house prices +0.2% m/m, +9.9% y/y, Auckland picks up.
   
• New Zealand Jan food prices +2.8% m/m, +1.4% y/y.
   
• EU and other trading partners prepare WTO challenge to US border tax – FT.
   

Economic Data Ahead

• (0200 ET/0700 GMT) Germany Q4  GDP  – flash, +0.5% q/q forecast; last +0.2%.
   
• (0200 ET/0700 GMT) Germany Jan CPI  - final, -0.6% m/m, +1.9% y/y forecast; flash -0.6%, +1.9%.
   
• (0200 ET/0700 GMT) Germany Jan HICP – final, -0.8% m/m, +1.9% y/y forecast; flash -0.8%, +1.9%.
   
• (0315 ET/0815 GMT) Switzerland Jan CPI, +0.3% y/y forecast; last -0.1% m/m, unch.
   
• (0315 ET/0815 GMT) Switzerland Jan producer/import prices, +0.2% m/m forecast; last +0.2% m/m, unch y/y.
   
• (0400 ET/0900 GMT) Italy Q4  GDP  – flash, +0.2% q/q, +1.0% y/y forecast; last +0.3%, +1.0%.
   
• (0430 ET/0930 GMT) Great Britain Jan CPI,    -0.5% m/m, +1.9% y/y forecast; last +0.5%, +1.6%.
   
• (0430 ET/0930 GMT) Great Britain Jan – core, -0.9% m/m, +1.8% y/y forecast; last +0.5%, +1.6%.
   
• (0430 ET/0930 GMT) Great Britain Jan RPI,    -0.4% m/m, +2.8% y/y forecast; last +0.6%, +2.5%, index 267.1.
   
• (0430 ET/0930 GMT) Great Britain Jan RPIX    +3.1% y/y forecast; last +0.6% m/m, +2.7% y/y.
   
• (0430 ET/0930 GMT) Great Britain Jan producer input/output prices, +1/+0.3% m/m forecast; last +6/+0.9%.
   
• (0500 ET/1000 GMT) Eurozone Q4  GDP  – flash, +0.5% q/q, +1.8% y/y forecast; last +0.5%, +1.8%.
   
• (0500 ET/1000 GMT) Eurozone Dec industrial output, -1.5% m/m, +1.7% y/y forecast; last +1.5%, +3.2%.
   
• (0500 ET/1000 GMT) Germany Feb ZEW expectations/current conditions, 15/77 forecast; last 16.6/77.3.
   
• (0600 ET/1100 GMT) United States Jan NFIB business optimism index, 104.9 forecast; last 105.8.
   
• (0830 ET/1330 GMT) United States Jan PPI - final demand, +0.3% m/m, +1.5% y/y forecast; last +0.2%, +1.6%.
   
• (0830 ET/1330 GMT) United States Jan – ex-food/energy,   +0.2% m/m, +1.1% y/y forecast; last +0.1%, +1.6%.
  ​

Key Events Ahead

• (0430 ET/0930 GMT) Spain 6 and 12-month treasury bill auctions.
   
• (0430 ET/0930 GMT) ECB zero% 7-day refi, E30 bln allotment forecast, E29.6 bln maturing.
   
• (0830 ET/1330 GMT) Richmond Fed Lacker (non-voter, hawk) speaks at U.Delaware forum.
   
• (1000 ET/1500 GMT) FOMC Chair Yellen (dove) semi-annual Senate testimony.
   
• (1300 ET/1800 GMT) Dallas Fed Kaplan (voter, centrist) at Houston luncheon.
   
• (1315 ET/1815 GMT) Atlanta Fed Lockhart (voter, centrist) speaks in Huntsville, Alabama.
   
• (1550 ET/2050 GMT) RBA Heath speaks at Sydney ABE conference.
   

FX Beat

DXY: The dollar eased across the board as the resignation of the U.S. National Security Adviser Michael Flynn triggered a bout of risk off market sentiment. The greenback against a basket of currencies traded 0.2 percent down at 100.79, having hit a high of 101.11 in the previous session, it’s strongest since Jan. 20. FxWirePro's Hourly Dollar Strength Index stood at -53.23 (Bearish) by 0500 GMT.

EUR/USD: The euro steadied after falling to a 1-month low in early trade on the back of political uncertainty in Europe and resurgence of the Greek crisis. Moreover, Trump’s tax reform talk and smooth dealing with China and Japan revived the reflation trade, which slightly weakened the bid tone around the major. The European currency edged up 0.16 percent to 1.0608, having hit a low of 1.0588, it’s lowest since Jan. 16. FxWirePro's Hourly Euro Strength Index stood at -31.43 (Neutral) by 0400 GMT. Investors’ attention will remain on the German GDP and ZEW survey, ahead of Eurozone GDP figures, which is expected to stay unchanged at 0.5 percent in the fourth quarter. Immediate resistance is located at 1.0644 (23.6% retracement of 1.0828 and 1.0588), a break above targets 1.0679 (38.2 % retrace). On the downside, support is seen at 1.0571 (Jan 12 Low), a break below could drag it near 1.0550.

USD/JPY: The dollar eased after rising to a 2-week high in the previous session as investors turned cautious ahead of the U.S. Federal Reserve Chair Janet Yellen's testimony later in the day for clues on the central bank's interest rate strategy. The major trades 0.2 percent lower at 113.49, having hit a high of 114.16 on Monday, it’s highest since Jan 30. FxWirePro's Hourly Yen Strength Index stood at -24.00 (Neutral) by 0400 GMT. Investors’ attention shifts towards the U.S. PPI data, ahead of Fed Chair Yellen’s testimony. Immediate resistance is located at 114.16 (Previous Session High), a break above targets 114.42 (Jan 23 High). On the downside, support is seen at 113.30, a break below could take it near 113.04 (Jan 26 Low).

GBP/USD: Sterling rose, extending gains from the previous session, as markets are expecting Britain's consumer prices to have accelerated further in January. Inflation is likely to rise 1.8 percent in January as compared to 1.6 percent in December, boosted by food and energy base effects and currency pass-through. Sterling trades 0.1 percent higher at 1.2538, having hit a high of 1.2582 on Thursday, it’s strongest since Feb. 2. FxWirePro's Hourly Sterling Strength Index stood at 80.99 (Slightly Bullish) by 0400 GMT. Immediate resistance is located at 1.2550, a break above could take it over 1.2582 (Previous Week High). On the downside, support is seen at 1.2475 (21-DMA), a break below targets 1.2400. Against the euro, the pound trades 0.1 percent down at 84.63 pence, having hit a high of 84.49 on Monday, it’s strongest since Dec. 22.

AUD/USD: The Australian dollar rose following better-than-expected Australia's NAB business conditions figures and upbeat Chinese inflation report. China consumer price index data rose at an annualized rate of 2.5 percent in January, versus 2.4 percent expected and previous 2.1 percent, while PPI came in at 6.9 percent y/y vs 6.3 percent estimates and 5.5 percent prior. The Aussie rallied 0.5 percent to 0.7677, reversing most of its previous session losses. FxWirePro's Hourly Aussie Strength Index stood at 41.60 (Neutral) by 0400 GMT. Markets now await the U.S. PPI data and Fed Chair Yellen’s Congressional testimony for fresh clues on the major. Immediate support is seen at 0.7633 (Session Low), a break below could drag it near 0.7605 (Feb 7 Low). On the upside, resistance is located at 0.7700, a break above targets 0.7730.

NZD/USD: The New Zealand dollar nudged up after declining to a 3-1/2 week low in the previous session, following the release of better-than-expected Chinese inflation and PPI data. The recovery in the major appears fragile as the Reserve Bank of New Zealand signaled it would hold rates at a record low for two years, reducing bets of a rate hike later in 2017. The Kiwi trades 0.1 percent up at 0.7182, having hit a low of 0.7155 on Monday, it’s weakest since Jan. 2. FxWirePro's Hourly Kiwi Strength Index was at -124.32 (Highly Bearish) by 0400 GMT. Immediate resistance is located at 0.7207 (23.6 % retracement of 0.7375 and 0.7155), a break above could take it near 0.7238 (21-DMA). On the downside, support is seen at 0.7150, a break below could drag it till 0.7100.

Equities Recap

Asian shares rose to 19-month highs as the dollar stood firm near recent highs on the potential for economic stimulus in the United States, while investors remained cautious ahead of testimony by the Federal Reserve Chair Janet Yellen.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent.

Tokyo's Nikkei slumped 0.54 percent to 19,354.51 points, Australia's S&P/ASX 200 index lost 0.08 percent to 5,756.30 points and South Korea's KOSPI was trading 0.26 percent down at 2,074.05 points.

Shanghai composite index fell 0.3 percent to 3,206.74 points, while CSI300 index was trading 0.3 percent down at 3,425.29 points.

Hong Kong’s Hang Seng was trading 0.2 percent lower at 23,688.28 points. Taiwan shares added 0.1 percent at 9,718.78 points.

Commodities Recap

Crude oil steadied, strengthened by an OPEC-led effort to cut output, however, increasing production capped upside. International benchmark Brent crude was trading 0.3 percent higher at $55.72 per barrel by 0406 GMT, pulling away from a high of $56.85 hit on Friday, its strongest since Feb. 6. U.S. West Texas Intermediate crude rose 0.3 percent at $53.01 a barrel, after rising as high as $54.10 last week, its highest since Feb. 6.

Gold prices edged up after declining to a 1-week low in the previous session, as investors turned cautious ahead of the U.S. Federal Reserve Chair Janet Yellen's testimony later in the day for clues on the central bank's interest rate strategy. Spot gold rose 0.2 percent at $1,227.44 per ounce at 0410 GMT,  having hit its lowest since Feb. 6 at $1,219.19 on Monday.  U.S. gold futures inched up 0.1 percent to $1,226.8.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.4341 percent, while 5-year yield was at 1.9114 percent.

The Australian government bond futures fell, with the 3-year bond contract down 7 ticks at 97.98 and the 10-year contract 5 ticks to 97.2150.

The New Zealand government bonds eased, sending yields 2.5 basis points higher.

The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries ahead of Yellen's testimony. The 2-year dipped 3 Canadian cents to yield 0.786 percent and the 10-year declined 28 Canadian cents to yield 1.729 percent.