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Asia Roundup: Kiwi rises following better-than-expected Chinese PPI figures, euro eases on political worries, Asian shares rally - Monday, October 16th, 2017

Market Roundup

  • Deadline nears for Catalan leader to clarify independence stance
     
  • China Sep PPI, 6.9% vs 6.3%, forecast 6.3%, at six-month high
     
  • China  Sep CPI, 0.5% m/m, 1.6% y/y vs 0.4%, 1.8%; forecast 0.4% m/m, 1.6% y/y
     
  • China cbank gov sees 7 pct growth in H2, stronger than expected
     
  • May heads for Brussels after Brexit talks deadlock
     
  • Germany's Merkel suffers state vote setback as coalition talks loom
     
  • Austria shifts to the right as conservative star steals election win
     
  • Japan ruling bloc heads for big election win despite voter distaste for PM Abe-poll
     
  • BoJ Gov Kuroda – No excesses in markets, will continue easy policy
     
  • MoF off’ls – G20 didn’t discuss trade, FX, Japan not fx manipulator
     
  • IMF Brekk – Sales tax hike obvious choice for Japan debt woes
     
  • New Zealand likely to announce new government by end of week
     
  • Fed's Yellen says watching inflation closely but economy is strong
     
  • Fed's Rosengren sees three to four rate hikes next year
     
  • U.S., South Korea conduct joint Navy drills to counter N. Korea threat
     
  • Specs trim bearish USD bets, JPY shorts largest since early Aug - CFTC

Economic Data Ahead

  • (0500 ET/0900 GMT) Euro Zone Eurostat Trade NSA, Eur

Key Events Ahead

  • (0300 ET/0700 GMT) Riksbank Deputy Gov Ohlsson speaks in Stockholm
     
  • (0300 ET/0730 GMT) EU Foreign Affairs Council meeting in Luxumbourg
     
  • (0900 ET/1300 GMT) ECB's Angeloni speaks in Cambridge
     
  • (1400 ET/1800 GMT) ECB's Lautenschlager speaks in Washinton DC

FX Beat

DXY: The dollar index rose on expectations of a Fed rate hike in December and hopes of tax cuts by U.S. President Donald Trump.  The greenback against a basket of currencies traded 0.2 percent up at 93.22, having touched a low of 92.75 the session before, its lowest since Sept. 26. FxWirePro's Hourly Dollar Strength Index stood at -37.37 (Neutral) by 0500 GMT.

EUR/USD: The euro edged down, extending losses for the third straight session on political uncertainty surrounding Catalonia’s independence vote. The European currency traded 0.1 percent down at 1.1804, having touched a high of 1.1880 on Thursday, its highest since Sept. 25. FxWirePro's Hourly Euro Strength Index stood at -126.01 (Highly Bearish) by 0400 GMT. Investors’ attention will remain on Eurozone Trade Balance, ahead of New York empire state manufacturing index. Immediate resistance is located at 1.1850, a break above targets 1.1940. On the downside, support is seen at 1.1805 (21-DMA), a break below could drag it near 1.1750.

USD/JPY: The dollar rebounded after falling to an over 2-week high, as U.S. consumer prices rose the most in eight months in September as gasoline prices soared in the wake of hurricane-related refinery disruptions. The major was trading 0.1 percent up at 111.92, having hit a low of 111.68 on Friday, its lowest since Sept. 26. FxWirePro's Hourly Yen Strength Index stood at 113.04 (Highly Bullish) by 0400 GMT.  Investors’ will continue to track broad-based market sentiment, ahead of New York empire state manufacturing index for further momentum. Immediate resistance is located at 112.26 (21-DMA), a break above targets 112.54 (10-DMA). On the downside, support is seen at 111.68 (Previous Session Low), a break below could take it near 111.47.

GBP/USD: Sterling declined, halting its 5-day winning streak, as British Prime Minister Theresa May and her party struggled to break the impasse over Brexit. The major traded 0.1 percent down at 1.3291, having hit a high of 1.3337 on Friday, its highest since Oct. 2. FxWirePro's Hourly Sterling Strength Index stood at 56.64 (Bullish) by 0400 GMT. Investors’ focus will remain on U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.3349 (21-DMA), a break above could take it near 1.3400. On the downside, support is seen at 1.3221 (5-DMA), a break below targets 1.3204 (10-DMA). Against the euro, the pound was trading 0.1 higher at 88.83 pence, having hit a high of 88.73 pence, its highest since Oct. 4.

AUD/USD: The Australian dollar declined after rising for four consecutive sessions, despite better-than-expected China PPI release. Chinese producer price index advanced 6.9 percent year-on-year in September, beating the estimated figure of 6.3 percent. The Aussie trades 0.2 percent down at 0.7874, having hit a high of 0.7897 in the previous session, it’s highest since Sept. 25. FxWirePro's Hourly Aussie Strength Index stood at 57.11 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7850, a break below targets 0.7804 (5-DMA). On the upside, resistance is located at 0.7900, a break above could take it near 0.7948.

NZD/USD: The New Zealand dollar advanced, extending gains for the seventh consecutive session, following the releases of the Chinese CPI and PPI reports for September. The Kiwi trades 0.1 percent up at 0.7177, having touched a high of 0.7196 on Friday, its highest level since Oct. 4. FxWirePro's Hourly Kiwi Strength Index was at 86.80 (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 0.7196 (21-DMA), a break above could take it near 0.7230. On the downside, support is seen at 0.7124 (10-DMA), a break below could drag it till 0.7055 (Oct. 10 Low).

Equities Recap

Asian shares advanced to a decade high, while the greenback steadied as U.S. consumer prices rose the most in eight months in September.

MSCI's broadest index of Asia-Pacific shares outside Japan rose for a fifth consecutive day, to its highest level since late 2007.

Tokyo's Nikkei rose 0.6 percent to 21,289.33 points, Australia's S&P/ASX 200 index gained 0.6 percent to 5,846.80 points and South Korea's KOSPI climbed 0.2 percent to 2,478.48 points.

Shanghai composite index declined 0.4 percent to 3,378.99 points, while CSI300 index was trading 0.1 percent up at 3,917.56 points.

Hong Kong’s Hang Seng was trading 0.9 percent higher at 28,727.73 points. Taiwan shares added 0.5 percent to 10,774.21 points.

Commodities Recap

Crude oil prices rallied to an over 2-week high on concerns over potential renewed U.S. sanctions against Iran as well as an explosion at a U.S. oil rig. International benchmark Brent crude was trading 1.1 percent up at $57.80 per barrel by 0426 GMT, having hit a high of $57.87 earlier, its weakest since Sept. 27. U.S. West Texas Intermediate was trading 1.0 percent lower at $51.86 a barrel, after rising as high as $51.91 earlier, its highest since Sept. 28.

Gold prices eased after rising to a 2-1/2-week high earlier after U.S. President Donald Trump warned he might ultimately end a 2015 nuclear agreement with Iran. Spot gold  eased 0.1 percent at $1,302.14 an ounce by 0436 GMT), after hitting a high of $1,301.42, the highest since Sept. U.S. gold futures for December delivery settled up $8.10, or 0.6 percent, at $1,304.60 per ounce, also touching the highest level in more than two weeks

Treasuries Recap

The 10-year U.S Treasury yield stood at 2.389 percent higher by 0.009 bps, while 5-year yield was 0.01 bps up at 1.916 percent.

The Japanese government bonds remained flat after the country’s industrial production for the month of August disappointed market participants coming in at 2.0 percent m/m, down from expectations of and from prior 2.1 percent m/m. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.06 percent, the yield on long-term 30-year tad up at 0.87 percent and the yield on short-term 2-year traded flat at -0.14 percent.

The Australian bonds rallied following firmness in U.S. Treasuries owing to lower-than-expected September inflation data. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2-1/2 basis points to 2.777 percent, the yield on the 15-year note also slid 2-1/2 basis points to 3.065 percent and the yield on short-term 2-year traded 2 basis points lower at 1.918 percent.

The New Zealand bonds ended the session higher after investors poured into safe-haven assets, following acting Prime Minister Bill English’s comments that it could take until the end of the week to confirm the country’s next government following an inconclusive election last month. 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 2.94 percent, the yield on 7-year note also slipped 1 basis point to 2.94 percent and the yield on short-term 2-year too ended a basis point lower at 2.06 percent.

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