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Asia Roundup: Kiwi rebounds from multi-month lows, euro at 1-week low as German coalition talks fail, Asian shares edge down - Monday, November 20th, 2017

Market Roundup

  • Merkel fourth term in doubt as German coalition talks fail
     
  • UK's Hammond seeks answer to voter unrest in new housebuilding push
     
  • Cabinet ready to back May's increased Brexit bill offer -- FT
     
  • Hammond - Hopeful main elements of EU-UK deal agreed before Brexit - ITV
     
  • Great Britain Nov IHS Market household finance index off to 43.4, Oct up to 43.8
     
  • UK households feel pinch as budget nears, Christmas sales down?
     
  • Trump open to dropping healthcare provision in Senate tax bill -aide
     
  • Goldman Sachs sees Fed raising rates four times in 2018
     
  • China's home price growth picks up in October
     
  • Japan PM Abe: Govt and BOJ to work together to beat deflation
     
  • Japan Oct trade surplus Y285.4 bln, Y330 bln eyed, exports +14%, imports +18.9%
     
  • Japan Exports to US +7.1% y/y, China +26%, largest ever in value, Asia +18.9%
     
  • Japan to offer USD-denominated loans to developing nations - Nikkei
     
  • Saudi state budget deficit shrinks nearly 10 pct in third quarter

  • Speculators cut negative dollar positions to lowest since July -CFTC

Economic Data Ahead

  • (0200 ET/0700 GMT) Germany Oct Producer Prices m/m, y/y, f' cast 0.3%, 2.7%, 0.3%, 3.1% last

Key Events Ahead

  • N/A EU General Affairs Council meeting
     
  • N/A Central and E. European cen bankers at an economic conference - Vienna
     
  • (0300 ET/0800 GMT) Riksbank executive board meeting - Stockholm
     
  • (0715 ET/1215 GMT) ECB's Lautenschlager speaks at a forum - Frankfurt
     
  • (0900 ET/1400 GMT) ECB's Draghi speaks at ECON committee - Brussels
     
  • (0915 ET/1415 GMT) ECB's Constancio chairs a panel discussion - Frankfurt
     
  • (1330 ET/1830 GMT) BoE's Ramsden speaks at King's College - London

FX Beat

DXY: The dollar index steadied after falling to a 4-week low last week on continued uncertainty over the U.S. tax bill.  The greenback against a basket of currencies traded 0.3 percent up at 93.95, having touched a high of 94.04 earlier, its highest since Nov. 14. FxWirePro's Hourly Dollar Strength Index stood at -25.23 (Neutral) by 0500 GMT.

EUR/USD: The euro slumped to a 1-week low as German Chancellor Angela Merkel's efforts to form a three-way coalition government failed, raising concerns over political uncertainty in the euro zone's largest economy. The European currency traded 0.4 percent down at 1.1734, having touched a low of 1.1722 earlier, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at -25.31 (Neutral) by 0400 GMT. Investors’ attention will remain on the ECB President Mario Draghi's speech, amid a lack of economic data from the U.S. docket. Immediate resistance is located at 1.1836 (Oct. 26 High), a break above targets 1.1880. On the downside, support is seen at 1.1722 (Session Low), a break below could drag it lower 1.1700.

USD/JPY: The dollar slumped to a 1-month low on lingering doubts about the prospects for U.S. tax reforms, including tax cuts. The major was trading 0.05 percent down at 112.02, having hit a low of 111.88 earlier, its lowest since Oct. 16. FxWirePro's Hourly Yen Strength Index stood at 127.54 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as the U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 112.50, a break above targets 113.01 (5-DMA). On the downside, support is seen at 111.65 (Oct. 16 Low), a break below could take it near 111.09 (Sept. 20 Low).

GBP/USD: Sterling eased after rising for four consecutive sessions after the European Union repeated an early December deadline for Prime Minister Theresa May to move on Britain's Brexit bill. The major traded 0.1 percent down at 1.3202, having hit a high of 1.3260 on Friday, it’s highest since Nov. 2. FxWirePro's Hourly Sterling Strength Index stood at 58.75 (Bullish) by 0500 GMT. Investors’ focus will remain on political developments, amid a lack of U.S. fundamental drivers. Immediate resistance is located at 1.3280, a break above could take it near 1.3320. On the downside, support is seen at 1.3135 (Nov. 16 Low), a break below targets 1.3061 (Nov 13 Low). Against the euro, the pound was trading 0.3 percent up at 88.85 pence, having hit a high of 88.78 pence earlier, it’s highest since Nov. 13.

AUD/USD: The Australian dollar hovered around a five-month trough as last week's surprisingly weak wage data implied inflation to remain subdued in the medium term despite the recent strength in employment. The Aussie trades 0.1 percent down at 0.7559, having hit a low of 0.7535 on Friday; it’s lowest since Jun. 22. FxWirePro's Hourly Aussie Strength Index stood at -113.15 (Highly Bearish) by 0500 GMT. Immediate support is seen at 0.7535 (Previous Session Low), a break below targets 0.7500. On the upside, resistance is located at 0.7612 (78.6% retracement of 0.7883 and 0.7535), a break above could take it near 0.7670 (61.8% retracement).

NZD/USD: The New Zealand dollar steadied after falling to multi-month lows in the prior session, amid the bearishness seen around the greenback. The Kiwi trades 0.2 percent up at 0.6826, having touched a low of 0.6780 on Friday, its lowest level since June 2016. FxWirePro's Hourly Kiwi Strength Index was at -81.91 (Slightly Bearish) by 0500 GMT. Immediate resistance is located at 0.6863 (5-DMA), a break above could take it near 0.6897 (21-DMA). On the downside, support is seen at 0.6780 (Previous Session Low), a break below could drag it lower 0.6740.

Equities Recap

Asian shares edged down, weighed down by a retreat on Wall Street amid tax reform uncertainty, while the euro tumbled to a 1-week low after German coalition talks hit a deadlock.

MSCI's broadest index of Asia-Pacific shares outside Japan eased in early trade.

Tokyo's Nikkei fell 0.5 percent to 22,273.35 points, Australia's S&P/ASX 200 index eased 0.2 percent to 5,945.70 points and South Korea's KOSPI rallied 0.05 percent to 2,534.50 points.

Shanghai composite index declined 0.2 percent to 3,377.39 points, while CSI300 index was trading 0.1 percent up at 4,125.17 points.

Hong Kong’s Hang Seng was trading 0.2 percent higher at 29,250.99 points. Taiwan shares shed 0.4 percent to 10,664.55 points.

Commodities Recap

Crude oil prices traded in a narrow range as traders were reluctant to take on big new positions ahead of an OPEC meeting at the end of the month, where the producers are expected to decide whether to continue output cuts aimed at balancing markets. International benchmark Brent crude was trading 0.2 percent down at $62.57 per barrel by 0415 GMT, having hit a low of $61.06 on Friday, its lowest since Nov. 3. U.S. West Texas Intermediate was trading 0.2 percent up at $56.74 a barrel, after falling as low as $54.87 on Tuesday, its lowest since Nov. 3.

Gold prices declined after rising to a 1-month high on Friday, weighed down by a stronger U.S. dollar. Spot gold edged down 0.1 percent to $1,291.90 per ounce by 0418 GMT, having advanced about 1.3 percent to hit a high of $1,296.76 an ounce on Friday, its highest since October 16. U.S. gold futures for December delivery fell 0.2 percent to $1,293.60.

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.327 percent lower by 0.026 bps, while 5-year yield was 0.022 bps down at 2.040 percent.

The Japanese bonds traded nearly flat as investors remain sidelined in any big deal amid lack of any major domestic events. The benchmark 10-year bond yield, which moves inversely to its price, hovered around 0.04 percent, the long-term 30-year bond yields stood flat at 0.82 percent and the yield on the 3-year note remained steady at -0.17 percent.

The Australian bonds gained on as investors remained cautious ahead of the Reserve Bank of Australia (RBA) minutes for the November monetary policy meeting. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2 basis points to 2.564 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.346 percent and the yield on short-term 2-year declined 1 basis point to 1.784 percent.

The New Zealand bonds closed higher as investors’ sentiment was dented by weaker commodity prices and a central bank disinclined to raise interest rates. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4-1/2 basis points to 3.200 percent, the yield on 20-year note also dipped 4-1/2 basis points to 3.405 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.000 percent.

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