Asia Roundup: Kiwi tumbles as RBNZ signals further depreciation, rate Cuts- September 10, 2015

Market Roundup

• Fed wavers on September rate rise.
  
  
• BOJ Gov Kuroda - Economy continues to recover, inflation trend to rise, not thinking of abandoning or cutting 0.1% interest on excess reserves.
  
  
• Fin Min Aso - Clear downside risks in global economy, monitoring US monetary policy normalization, China slow-down.
  
  
• Japan July core mach orders -3.6% m/m, +2.8% y/y, +3.7% and +10.5% y/y eyed, CabOffice cuts assessment of sector, core orders value lowest since Nov '14.
  
  
• Japan August domestic corporate goods prices -0.6% m/m, -3.6% y/y, -0.4%, -3.3% eyed.
  
  
• MoF flow data week-ended Sept 5 - Japanese buy net Y868.5 bln foreign stocks, trln bonds, Y57.7 bln bills; foreign investors sell net Y986.0 bln Japanese stocks, Y338.6 bln bonds, trln bills.
  
  
• China August CPI +0.5% m/m, +2.0% y/y, +0.4% and +1.8% eyed, food +3.7% y/y.
  
  
• China August PPI -0.8% m/m, -5.9% y/y, largest fall in 6 years, -5.5% y/y eyed.
  
  
• Australia August employment +17.4k, unemployment 6.2%, participation 65.0%, +5k, 6.2% and 65.0% eyed, full-time employment +11.5k.
  
  
• Australia September MI inflation expectations +2.3% weighted mean, +3.2% trimmed mean, down from August +2.7% and +3.7%.
  
  
• RBNZ Gov Wheeler - China slowdown, El Nino to impact NZ economy, concerned Over CNY depreciation, dairy auctions-CPI-Fed helped in rate outlook.
  
  
• RBNZ cuts OCR 25 bps to 2.75% as eyed, signals likely further easing, further NZD fall appropriate, CPI +0.5% end-'15, GDP +2.1% in year to March '16.
  
  
• NZ August electronic card retail sales +0.5% m/m, +4.2% y/y, July +0.4%, +5.6%.
  
  
• NZ Aug REINZ house prices -0.9% m/m but +10.6% y/y, sales volume up too.
  
  
• NZ Fonterra maintains milk volume forecast for '15-16, lower than last year.

Economic Data Ahead

• (0245 ET/0645 GMT) France July industrial output, +0.2% m/m eyed; last -0.1%.
  
  
• (0300 ET/0700 GMT) Spain July industrial output, +4.3% y/y eyed; last +4.5%.
  
  
• (0330 ET/0730 GMT) Sweden August CPI, -0.1% m/m, -0.1% y/y eyed; last unchanged, -0.1%.

• (0330 ET/0730 GMT) Sweden August CPIF, -0.1% m/m, +0.9% y/y eyed; last +0.1%, +0.9%.
  
  
• (0400 ET/0800 GMT) Norway August CPI, -0.3% m/m, +1.8% y/y eyed; last -0.1%, +1.8%.

• (0400 ET/0800 GMT) Norway August core, -0.4% m/m, +2.8% y/y eyed; last unchanged, +2.6%.
  
  
• (0400 ET/0800 GMT) Norway August PPI; last -6.6% y/y.
  
  
• (0800 ET/1200 GMT) New Zealand August PMI manufacturing; last 53.5.
  
  
• (0830 ET/1230 GMT) US weekly initial jobless claims, 275k eyed; last 282k.
  
  
• (0830ET/1230 GMT) US August import/export prices, -1.6%, -0.2% m/m eyed; last -0.9%, -0.2%.
  
  
• (1000ET/1400 GMT) US July wholesale inv/sales, +0.3%, +0.1% m/m eyed; last +0.9%, +0.1%.

Key Events Ahead

• N/A World Economic Forum in Dalian, China (till September 11).
  
  
• N/A Eurofi Financial Forum at Luxexpo, Luxembourg (till September 11).
  
  
• N/A Italy E7.5 bln 12-month BOT auction.
  
  
• (0500 ET/0900 GMT) ECB/Austria CB Nowotny speech in Vienna.
  
  
• (0500 ET/0900 GMT) Ireland E1.0 bln 2.4% 2030 bond auction.
  
  
• (0700 ET/1100 GMT) BoE MPC policy announcement/minutes, no change in 0.5% bank rate, QE eyed.
  
  
• (0700 ET/1100 GMT) ECB Praet speech at Bussum, Netherlands conference.
  
  
• (0900 ET/1300 GMT) US Tsy Raskin speech at Washington, DC CSIS conference.

FX Recap

EUR/USD is trading flat in quiet trading session holding around the 1.12 level. Pair has made intraday high at 1.1244 and low at 1.1194 levels. The next risk event for the pair will be Friday's release of the final figures of German inflation during last month, with headline prices expected to have risen at an annual pace of 0.2%. Today there is no major macroeconomic data is expecting from the Euro zone.  Initial support is seen around at 1.1015 and resistance at 1.1363 levels.

The USD/JPY rose sharply to its weekly high, as the yen suffered amid strongly improved market sentiment provoked by the Chinese reforms announcement. Meanwhile in the US, JOLTS spiked the most since December 2000. Today Japan released core machinery orders and PPI data with negative numbers. Core machinery orders released at -3.6% mm vs previous -7.9%, while PPI data released at -3.6% vs previous -3.1%. Pair is currently trading at 120.76 levels. It has made intraday high at 120.30 and low at 119.97 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

The UK currency is trading downside after the UK posted manufacturing and production data for July. Manufacturing production declined 0.8% in July, after a stronger performance during the previous month, when output rose 0.2% on a monthly basis. Meanwhile, the trade balance data pointed to a bigger deficit of -£3,371 million, which declined from -£818 million in June, according to the ONS. Now focus turns for the UK rate decisions as well as monetary policy meeting minutes for the further directions. It made an intraday high at 1.5367 and low at 1.5349 levels. Pair is currently trading at 1.5355 levels. Initial support is seen at 1.5185 and resistance is seen around 1.5436 levels.

The New Zealand dollar fell sharply against the greenback on Thursday after the RBNZ signalled that the currency remained overvalued and as the bank indicated that further rate cuts were on the cards, following today's cut to 2.75%. Thursday's cut marks the third consecutive 25-basis point rate cut since June. "At this stage, further easing seems likely," Wheeler said. The central bank predicts that the economy will expand some 2% this year, down from more than 3% last year. Pair made intraday low at 0.6255 and high at 0.6382 levels. Initial support is seen at 0.6195 and resistance at 0.6511 levels.

The Australian dollar was driven primarily by market sentiment which seems to be risk-off again, causing downside pressure on the Aussie. However, upbeat jobs data helped the currency to bounce back from intraday lows. The Australian jobs market saw 17,400 people added to the workforce in August, much more than the initially expected 5,000. The unemployment rate declined to 6.2% from last month's 6.3%, providing some relief for the Aussie. Pair is supported above 0.7000 levels and trading at 0.7016 levels. It has made intraday high at 0.7018 levels and low at 0.6946 levels. Initial support is seen at 0.6908 and resistance at 0.7122 levels.

Equity Recap

Japan's benchmark Nikkei 225 index tumbled 3.25% to 18,159.99 points in morning trade, with only a handful of shares on the index trading with gains, while Tokyo's broader Topix gauge fell 2.39% to 1,471.29 points.

Hong Kong's benchmark Hang Seng index plummeted 2.20% to 21,643.64 points within the first hour of trade, and mainland China's benchmark Shanghai Composite fell 1.04% to 3,209.34 points at the same time.

Korea's benchmark Kospi index fell 0.53% to 1,923.94 points this morning in Seoul.

The benchmark Australian S&P/ASX 200 index plunged 2.49% to 5,090.90 points in Sydney, with almost all 200 stocks on the index trading in red.

New Zealand's benchmark S&P/NZX 50 index was largely spared losses, trading down just 0.06% at 5,668.02 points this afternoon in Wellington.

Australia's S&P/ASX 200 index closes down 2.18 pct at 5,107.30 points.

Tokyo's Nikkei average closes down 2.51 pct at 18,299.62.

Treasury Recap

BOJ offers to lend Y115.6 bln of JGBs on spot basis through 9/11 as a secondary source of JGBs. Japan 03-month treasury discount bill auction lowest price 100.0000, average price 100.0008, bids accepted at lowest price 8.8270 pct. Japan 5-year JGB auction lowest price 100.1500, average price 100.1600, bids accepted at lowest price 63.1297 pct.

German bund futures open 37 ticks higher at 154.86.

Malaysia will sell 4.0 bln RGT Government bond.

Commodity Recap

Gold languished near a four-week low on Thursday, retaining sharp overnight losses, as strong U.S. economic data and outflows from bullion-backed exchange traded funds sapped investor interest. Spot gold was little changed at $1,106.65 an ounce by 0339 GMT, after losing 1.4 percent in the previous session - its biggest daily drop since July 20. The metal slid to $1,101.11 on Wednesday, it's lowest since Aug. 11.

Oil posted losses on Thursday, adding to the negative performance booked last session, dragged lower by weak price forecasts and a rise in US crude supplies. Futures for WTI dropped 0.68% to trade at $43.85 per barrel, while Brent futures were traded 0.80% lower at $47.20 per barrel, after both benchmarks fell about 4% at Wednesday's market close.