Asia Roundup: Kiwi rallies after RBNZ's financial stability report, dollar firms as U.S. Treasury yields stabilize, investors await OPEC meeting outcome - Wednesday, November 30th, 2016

Market Roundup

• US Pres-elect Trump picks loyalists for economic posts, Steven Mnuchin for Treasury, Wilbur Ross for Commerce, Obamacare critic Tom Price for Health- Reuters, other media.
   
• Japan fund managers up stocks, reduce bonds in November – Reuters poll.
   
• Japan Oct industrial production +0.1% m/m, -0.1% forecast, Nov forecast at +4.5%, previous estimate +2.1%, Dec at -0.6%.
   
• Japan Oct housing starts +13.7% y/y, construction orders -4.1% but large contractors +15.2%.
   
• China state-owned banks sell USD for third straight day, PBOC fix 6.8865.
   
• UK Nov GfK consumer confidence index -8, -4 forecast, October -3.
   
• ECB Coeure – Greece can maintain 3.5% primary surplus post-’18 – Reuters.
   
• Australia home building boom fast turning to rubble – Reuters.
   
• Australia Oct private-sector credit +0.5% m/m, housing credit +0.6%.
   
• Australia Oct building approvals -12.6% m/m, +1.5% forecast, priv houses -3.4%.
   
• RBNZ Financial Stability Report – System sound but risks still, especially in housing, new rules to rein in risky home loans forecast, GDP outlook as is.
   
• RBNZ Gov Wheeler – NZ in for tough ride on growing global protectionism, sees December CPI back in target band, just above 1%b – Reuters.
   
• NZ Nov ANZ biz confidence index 20.5%, own activity 37.6%, Oct 24.5%, 38.4%.
  ​

Economic Data Ahead

• (0200 ET/0700 GMT) Switzerland Oct UBS consumption indicator; last 1.59.
   
• (0200 ET/0700 GMT) Norway Oct credit indicator; last +5.1% y/y.
   
• (0245 ET/0745 GMT) France Nov HICP – flash, +0.6% y/y forecast; last +0.5%.
   
• (0245 ET/0745 GMT) France Oct PPI; last +0.1%.
   
• (0300 ET/0800 GMT) Spain Sep current account balance; last E2.9 bln surplus.
   
• (0300 ET/0800 GMT) Switzerland Nov KOF indicator, 104.0 forecast; last 104.7.
   
• (0355 ET/0855 GMT) Germany Nov unemployment, 6.0%, -5k forecast; last 6.0%, -13k.


• (0355 ET/0855 GMT) Germany Nov unemployment, 2.53 mln nsa forecast; last 2.54 mln nsa, 2.66 mln sa.
   
• (0500 ET/1000 GMT) Eurozone Nov inflation – flash, +0.6% y/y forecast; last +0.5%.
   
• (0500 ET/1000 GMT) Eurozone Nov – ex-food/energy – flash, +0.8% y/y forecast; last +0.7%.
   
• (0500 ET/1000 GMT) Italy Nov CPI  – flash, -0.3% m/m, -0.1% y/y forecast; last -0.1%, -0.2%.
   
• (0500 ET/1000 GMT) Italy Nov HICP – flash, -0.2% m/m, +0.1% y/y forecast; last +0.2%, -0.1%.
   
• (0600 ET/1100 GMT) Italy Oct PPI; last unch m/m, -0.7% y/y.
   
• (0815 ET/1315 GMT) United States Nov ADP national employment, +165k forecast; last +147k.
   
• (0830 ET/1330 GMT) United States Oct personal income, +0.4% m/m forecast; last +0.3%.
   
• (0830 ET/1330 GMT) United States Oct personal consumption, +0.5% m/m sa forecast; last +0.5% sa, +0.3% nsa.
   
• (0830 ET/1330 GMT) United States Oct PCE price index; last +0.2% m/m, +1.2% y/y.
   
• (0830 ET/1330 GMT) United States Oct - core PCE, +0.1% m/m forecast; last +0.1% m/m, +1.7% y/y.
   
• (0900 ET/1400 GMT) Belgium Q3  GDP – revised; flash +0.2% q/q.
   
• (0945 ET/1445 GMT) United States Nov Chicago PMI, 52.0 forecast; last 50.6.
   
• (1000 ET/1500 GMT) United States Oct pending home sales, +0.2% m/m forecast; last +1.5%, index 110.0.
   
• (1400 ET/1800 GMT) United States Oct Dallas Fed PCE; last +1.9%.
   

Key Events Ahead

• N/A   OPEC Vienna meeting, press conference to follow.
   
• N/A   German Chanc Merkel, World Bank Kim others at Berlin G20 event.
   
• (0235 ET/0735 GMT) Riksbank DepGov Floden speaks in Stockholm.
   
• (0300 ET/0800 GMT) Dallas Fed Kaplan speaks before Economic Club of New York.
   
• (0400 ET/0900 GMT) Norway December CB currency operations, November NOK900 mln net sales.
   
• (0530 ET/1030 GMT) Germany E3 bln zero% 2021 Bobl auction.
   
• (0730 ET/1230 GMT) ECB Pres Draghi speaks at Madrid business school event.
   
• N/A   Cleveland Fed Mester speaks at Pittsburgh luncheon.
   
• (1245 ET/1745 GMT) Fed Gov Powell speaks at Washington, DC Brookings Institution event.
   

FX Beat

DXY: The dollar stood firm versus its major peers, as the U.S. treasury yields stabilized, while traders braced for a meeting by OPEC later in the day. The greenback against a basket of currencies trades 0.1 percent up at 101.12, snapping a 4-day losing streak. FxWirePro's Hourly Dollar Strength Index stood at -110.98 (Highly Bearish) by 0500 GMT.

EUR/USD: The euro edged down, after rising in the previous three sessions, as the greenback recovered some ground across the board following the release of robust revised U.S. GDP data. Moreover, Italian referendum on Sunday and weak Italian banking shares also softened the bid tone around the major. Investors will closely watch the Eurozone's preliminary CPI reading for November, which is expected to show the cost of living nudged higher 0.6 percent y/y. The European currency trades 0.15 percent down at 1.0630, pulling away from a high of 1.0685 hit on Monday, it’s highest since Nov. 17. FxWirePro's Hourly Euro Strength Index stood at 63.05 (Bullish) by 0400 GMT. Focus will also remain on German labor market data and ECB President Draghi’s comment, ahead of U.S. personal spending and ADP private sector employment report for further momentum. Immediate resistance is located at 1.0700, a break above targets 1.0774 (21-DMA). On the downside, support is seen at 1.0564 (Previous Session Low), a break below could drag it lower 1.0500.

USD/JPY: The dollar advanced, extending previous session gains, as investors cheered on a minor recovery staged by the treasury yields across the curve. Data released on Tuesday showed that the U.S. preliminary gross domestic product rose at an annualized rate of 3.2 percent in the third quarter, which confirmed a December Federal Reserve rate hike.  Moreover, the gains remained capped amid prevalent risk off market sentiment ahead of an OPEC meeting outcome. The major trades 0.4 percent up at 112.76, hovering away from a low of 111.35 hit on Monday. FxWirePro's Hourly Yen Strength Index stood at -107.62 (Highly Bearish) by 0400 GMT. Investors now await U.S. ADP employment report, personal consumption expenditures and pending home sales figures for fresh impetus. Immediate resistance is located at 113.53, a break above targets 114.00. On the downside, support is seen at 111.73 (9-EMA), a break below could take it near 111.00.

GBP/USD: Sterling inched lower, after rising above the 1.2500 handle in the previous session, as the greenback rebounded across the board. The weakness comes in as stabilizing of the U.S. treasury yields boosted bid tone around the dollar. Sterling trades 0.1 percent down at 1.2470, drifting away from a high of 1.2525 hit in the previous session. FxWirePro's Hourly Sterling Strength Index stood at 77.61 (Slightly Bullish) by 0400 GMT. Markets attention now remain on the UK’s banks stress results and BoE Financial Stability Report (FSR) due later in the day for fresh cues on the major. Immediate resistance is located at 1.2531 (Nov-28 High), a break above could take it near 1.2590. On the downside, support is seen at 1.2441 (10-DMA), a break below targets 1.2400. Against the euro, the pound trades 0.1 percent up at 85.14 pence, having hit a high of 84.66 pence the day before.

AUD/USD: The Australian dollar declined, weighed down by worse-than-expected building permits figures. Australia home building approvals for new projects declined 12.6 percent in October, against forecasts of a 1.5 percent rise, recording its biggest drop since mid-2012. While on an annual basis it slumped 24.9 percent, which undermined RBA policymakers' expectations for solid economic growth next year.  The Aussie trades 0.1 percent lower at 0.7476, having touched an intra-day high of 0.7497, it’s strongest since Nov. 17. FxWirePro's Hourly Aussie Strength Index stood at 100.29 (Highly Bullish) by 0500 GMT. Investors now await the U.S. economic data including inflation gauge and ADP jobs report, ahead of FOMC member Jerome Powell's speech. Immediate support is seen at 0.7430 (Previous Session Low), a break below could drag it lower 0.7400. On the upside, resistance is located at 0.7526 (21-DMA), a break above targets 0.7570/ 0.7600.

NZD/USD: The New Zealand dollar rallied, extending gains for the fourth consecutive session after Reserve Bank of New Zealand warned of significant risks from rising house prices. The central bank stated that more restrictions on mortgage lending might be required if property prices continued to accelerate. The Kiwi trades 0.2 percent up at 0.7143, having touched a high of 0.7124 earlier in the session, its highest since Nov. 11. FxWirePro's Hourly Kiwi Strength Index was at 81.41 (Slightly Bullish) by 0500 GMT. Markets focus will remain on U.S. macro fundamental drivers for further momentum on the major. Immediate resistance is located at 0.7190 (Nov 1 High), a break above could take it over 0.7200. On the downside, support is seen at 0.7088 (7-EMA), a break below could drag it near 0.7032.

Equities Recap

Asian shares climbed to 3-week highs, following overnight gains on Wall Street, while oil rebounded as investors looked ahead to the Organization of the Petroleum Exporting Countries (OPEC) meeting outcome in Vienna later in the day.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, its highest since Nov. 11.

Tokyo's Nikkei rose 0.08 percent at 18,321.53 points, Australia's S&P/ASX 200 index lost 0.36 percent at 5,437.70 points and South Korea's KOSPI was trading 0.21 percent up at 1,982.23 points.

Shanghai composite index declined 0.94 percent to 3,251.68 points, while CSI300 index was trading 0.72 percent lower at 3,538.34 points.

Hong Kong’s Hang Seng was trading 0.29 percent up at 22,806.17 points. Taiwan shares added 0.53 percent at 9,240.71 points.

Commodities Recap

Crude oil prices edged up, after declining to near 2-week low on Tuesday, as markets cautiously awaited an OPEC meeting outcome, where members of the producer cartel are trying to agree on an output cut to curb oversupply. International benchmark Brent crude was 0.76 percent up at $47.67 per barrel by 0400 GMT, having hit a near 2-week low of $45.91 in the previous session. U.S. West Texas Intermediate crude rose 0.73 at $45.54 a barrel, after falling as low as $44.81 the prior day, its lowest since Nov. 18.

Gold traded in narrow ranges, as investors remained on the sidelines ahead of the outcome of an OPEC meeting later in the day and Italian constitutional referendum on Sunday. Spot gold rose 0.23 percent at $1,190.40 an ounce by 0411 GMT, while U.S. gold futures were up 0.3 percent at $1,191.40 per ounce.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.3018 percent, while 5-year yield was up by 0.004 bps at 1.7861 percent.

The Australian government bonds slumped following firmness in the energy prices ahead of OPEC ministerial gathering, in which oil-producing countries are expected to strike an agreement on output cut. The yield on the benchmark 10-year Treasury note rose 3-1/2 basis points to 2.74 percent, the yield on the 15-year note climbed 3 basis points to 3.15 percent and the yield on short-term 2-year inched 1/2 basis point to 1.85 percent.

Canadian government bond prices were mixed across a flatter yield curve, with the 2-year bond falling 3 Canadian cents to yield 0.676 percent and the benchmark 10-year rising 13 Canadian cents to yield 1.510 percent. The 10-year yield touched an 11-month high at 1.614 percent last week on expectations that the policies of U.S. President-elect Donald Trump will lead to higher inflation.