Asia Roundup: Euro adds minor gains on Dollar weakness - October 5, 2015

Market Roundup

• Specs boost USD bets in latest week, GBP contracts turn short, EUR-CHF-CAD shorts up, JPY-AUD-NZD off.
  
  
• EPFR/BAML flow data - EM exodus continues to 12th straight week, net withdrawals from EM equity funds $1.7 bln, bond funds $1.4 bln.
  
  
• World Bank cuts '15 and '16 East Asia forecasts to +6.5%, +6.4%, previous +6.7% for both, China +6.9% and +6.7% from +7.1%, +7.0%, uncertainties high.
  
  
• Global growth shows clear signs of slowdown.
  
  
• Emerging market turmoil flashes warning lights for global economy.
  
  
• European Central Bank sued by 200 investors over Greek debt deal.
  
  
• Bank of Japan seen lowering inflation view on cheap crude calculus.
  
  
• Japan August total cash earnings +0.5% y/y, real wages +0.2%, overtime +1.5%, July real wages revised +0.5%, wage growth slowing, not good for consumption.
  
  
• Japan September services PMI 51.4, Aug 53.7, new business slows.
  
  
• Boston Fed Rosengren - Eyes '15 rate hikes despite weak jobs report.
  
  
• Australia Sept overall job ads +3.9% m/m, newspapers -2.7%, internet +4.0%.
  
  
• Australia Sept TD/MI inflation gauge +0.3% m/m, +1.9% y/y, Aug +0.1%, +1.7%.

Economic Data Ahead

• (0315 ET/0715 GMT) Spain September PMI - services, 58.5 eyed; last 59.6.
  
  
• (0330 ET/0730 GMT) Sweden August industrial production, +1.5% m/m, +0.3% y/y eyed; last -3.0%, -1.9%.
  
  
• (0330 ET/0730 GMT) Sweden August new mfg orders; last +11.2% y/y.
  
  
• (0345 ET/0745 GMT) Italy September PMI services, 54.0 eyed; last 54.6.
  
  
• (0350 ET/0750 GMT) France September PMI services, 51.2 eyed; flash 51.2.
  
  
• (0350 ET/0750 GMT) France September PMI composite; flash 51.4.
  
  
• (0350 ET/0755 GMT) Germany September PMI services, 54.3 eyed; flash 54.3.
  
  
• (0355 ET/0755 GMT) Germany September PMI composite; flash 54.3.
  
  
• (0400 ET/0800 GMT) Euro zone September PMI services, 54.0 eyed; flash 54.0.
  
  
• (0400 ET/0800 GMT) Euro zone September PMI composite, 53.9 eyed; flash 53.9.
  
  
• (0400 ET/0800 GMT) Norway September housing prices; last +7.7% y/y.
  
  
• (0430 ET/0830 GMT) UK September PMI services, 56.0 eyed; last 55.6.
  
  
• (0430 ET/0830 GMT) EZ October Sentix index, 11.6 eyed; last 13.6.
  
  
• (0500 ET/0900 GMT) EZ Aug retail sales, -0.1% m/m, +1.8% y/y eyed; last +0.4%, +2.7%.
  
  
• (0945 ET/1345 GMT) US September Markit PMI services final; flash 55.6.

• (0945 ET/1345 GMT) US September Markit PMI composite final; flash 55.3.
  
  
• (1000 ET/1400 GMT) US September ISM non-manufacturing PMI, 57.7 eyed; last 59.0.
  
  
• (1000 ET/1400 GMT) US October employment trends index; last 128.8.

Key Events Ahead

• Australia Labour Day holiday, China on holiday till Thursday.
  
  
• N/A EuroGroup meeting in Luxembourg.
  
  
• N/A France BTF t-bill, Netherlands 3/6-month treasury certificate auctions.
  
  
• N/A Norway NOK4 bln 12-month NST 32 t-bill auction.

FX Recap

EUR/USD: The greenback declined over the week, as a batch of US data came out sharply below market estimates, especially the labour market data on Friday. The US economy added only 142,000 jobs in September, up from the downwardly revised 136,000 previously reported as 173,000 in August, according to the latest non-farm payrolls report. The greenback cratered after job data and immediately lost around 150 pips against the euro, which pushed the pair above the $1.13 handle, but today it erased some of its gains and trading below 1.1300 levels. Monday sees the release of a flurry of final services PMI reports from the Euro area economics with the main highlight likely to be the UK one. It made intraday high at 1.1247 and low at 1.1206 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.

USD/JPY: Japanese labour earnings continued to grow at a smaller pace in August, casting further doubt on the government's plan to revive the economy by spurring inflation and wage growth. Average cash earnings rose 0.5% year-on-year in August after rising 0.9% in July and dropping 2.5% in June, according to the Ministry of Health, Labour and Welfare. Pair made intraday high at 120.11 and low at 119.86 levels. Later today market will focus on US ISM Non manufacturing data for the further directions. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

GBP/USD: Sterling edged higher against the US dollar after the negative US NFP job reports on last Friday. Today in data front, UK will release Service PMI data for the further directions. Pair made intraday high at 1.5218 and low at 1.5167 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.

NZD/USD: The New Zealand dollar continues to outperform its American counterpart into a fifth straight session on Monday, with pair reaching fresh five-week highs in the upper band of 0.64 handle. The Kiwi bulls remain in the drivers' seat as the greenback continues to suffer from poor non-farm payrolls result due out on Friday, which now diminishes chances of the Fed rate hike this year. It made intraday high at 0.6476 and low at 0.6436 levels. Initial support is seen at 0.6195 and resistance at 0.6511 levels.

AUD/USD: A set of disappointing US data from last week, including non-farm payrolls, added to speculation that Fed will start hiking rates no earlier than in Q1 2016, which dragged the dollar lower across the board. A softer greenback played in favour of commodities and Australian mining companies. Mainland China and Australia markets were closed on Monday for public holidays. Markets now focus on RBA's interest rate decision due tomorrow for the further momentum. Pair made intraday low at 0.7080 levels and high around 0.7042 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels.

Equity Recap

Japan's benchmark Nikkei 225 index rallied 1.38% to 17,970.05 points within the first hour of trade, while Tokyo's broader Topix gauge jumped 1.12% to 1,461.14 points.

Korea's benchmark Kospi index jumped 1.26% to 1,994.56 points on Monday morning in Seoul, while New Zealand's benchmark S&P/NZX 50 index rose 0.57% to 5,625.18 points this afternoon in Wellington.

Mainland China and Australia markets were closed on Monday for public holidays.

Tokyo's Nikkei average unofficially closes up 1.58 pct at 18,005.49.

Treasury Recap

South Korea sells 3-year treasury bonds, dated June 10, 2015, at average yield of 1.580 pct.

BOJ offers to lend Y800 bln of JGBs on spot basis through 10/6 as a secondary source of JGBs.

Thailand 10 bln baht, 28-day Treasury bill average accepted yield 1.48894 pct. Thailand 15 bln baht, 183-day Treasury bill average accepted yield 1.50179 pct.

Philippine Treasury accepts bids of 6 billion pesos for 364-day t-bills.

Commodity Recap

The precious metal continued on a downward trajectory over the past week, but a string of losses was halted on Friday when expectations of a Federal Reserve rate hike this year were undermined by a weak US non-farm payroll report. Spot Gold is currently trading at $1135 per troy ounce.

Oil started the new week trading higher after the number of US oil rigs fell the most since April, while the ongoing conflict in Syria is helping to boost the sentiment. Futures for WTI added 0.64% to trade at $45.83 per barrel, while Brent futures were traded 0.55% higher at $49.06 per barrel.