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THE ASIA FX/RATES DAYBOOK: FX/RATES DAYBOOK ASIA: Manufacturing Print Extends USD Streak

(Bloomberg) — The dollar built on last week’s gains, aided by strong manufacturing data that knocked Treasuries from session highs. Action was muted as traders already start to look ahead to Friday’s jobs numbers. Market attention now turns to the RBA policy decision, where analysts expect the central bank will keep its cash rate target unchanged at 1.5 percent. Speculative accounts stayed mostly sidelined ahead of the RBA decision. WHAT TO WATCH

  • Beyond the RBA, there’s also a smattering of Aussie economic data, with the monthly change in job advertisements for September as well as new home sales and building approvals for August slated for release.
  • Elsewhere, the September reading of the Nikkei India manufacturing purchasing managers’ index, Japanese consumer consumer confidence for September, and Hong Kong retail sales for August are on the docket.

OVERNIGHT TRADING SESSIONS

  • The dollar sustained overnight gains, climbing as much as 0.5% and gaining against all of its G-10 peers after American manufacturing expanded last month at the fastest pace in 13 years. EUR/USD slid as much as 0.7% to 1.1730 as euro-area bond yields rose in the aftermath of cession referendum in Catalonia. AUD/USD fell as much as 0.5% ahead of RBA decision, rebounding late in U.S. session to trade trading near 0.7825
  • Treasuries ended the day largely unchanged. 10Y yields traded within 1bp range while the belly of the curve outperformed, pushing 5s30s to steepen by 1bp
  • Commodities tumbled, with crude sliding as much as 3.1% and gold down as much as 0.8%

TOP OVERNIGHT NEWS

  • The White House ruled out talks with North Korea over its nuclear arsenal, just days after Secretary of State Rex Tillerson said the U.S. was talking to North Korea “directly, through our own channels.”
  • Trump’s tax proposals would probably weigh on the U.S. government’s credit outlook, on concerns that it would raise the deficit, said Moody’s
  • Spain said it would use all tools available to enforce the rule of law after Catalonia’s attempt to hold an illegal referendum on independence, returning political risk to the Eurozone and weighing down the euro
  • Goldman Sachs is said to explore starting a cryptocurrency trading venture, potentially bringing digital currencies further into mainstream

KEY VIEWS

  • Risks to the euro stemming from Catalonia’s independence bid should remain contained, analysts say
  • Markets looks like they are shifting toward pricing in tighter monetary policy settings, rather than a reflationary narrative, Bloomberg’s Cameron Crise writes

DATA RELEASED OVERNIGHT

  • ISM Manufacturing climbed to 60.8 vs est. 58.1 in September, the highest since May 2004; the strength partly reflects impacts from hurricanes Harvey and Irma

ECONOMIC DATA (All times HK):

  • 6:30am: (Australia) Oct. ANZ Roy Morgan Weekly Consumer Confidence Index, prior 114.1
  • 7:50am: (Japan) Sept. Monetary Base End of period, prior ¥469.2t
    • Sept. Monetary Base YoY, est. 16.7%, prior 16.3%
  • 8am: (Australia) Aug. HIA New Home Sales MoM, prior -3.7%
  • 8:30am: (Australia) Aug. Building Approvals MoM, est. 1.0%, prior -1.7%
    • Aug. Building Approvals YoY, est. -17.2%, prior -13.9%
  • 11:30am: (Australia) Oct. RBA Cash Rate Target, est. 1.5%, prior 1.5%
  • 1pm: (India) Sept. Nikkei India PMI Mfg, prior 51.2
  • 1pm: (Japan) Sept. Consumer Confidence Index, est. 43.5, prior 43.3
  • 1:30pm: (Australia) Sept. Commodity Index AUD, prior 120.2
    • Sept. Commodity Index SDR YoY, prior 20.1%
  • 4:30pm: (Hong Kong) Aug. Retail Sales Value YoY, est. 3.4%, prior 4.0%
    • Aug. Retail Sales Volume YoY, est. 3.95%, prior 4.6%
  • 8pm: (India) Aug. Eight Infrastructure Industries, prior 2.4%

GOVERNMENT:

  • 9am: (New Zealand) Treasury Publishes Monthly Economic Indicators

CENTRAL BANKS (All times HK):

  • 7:50am: Japan Tankan price forecasts data
  • 11:30am: (Australia) RBA Cash Rate Target, est. 1.5%, prior 1.5%
  • 1:30pm: (Australia) Commodity Index SDR YoY, prior 20.1%

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 11:45am: Japan to Sell 10-Year Bonds
  • 1pm: Philippines To Sell PHP15.0b 4-Year Bond
  • 5pm: Indonesia to Sell 5-Year Bonds
    • Indonesia to Sell 15-Year Bonds
    • Indonesia to Sell 20-Year Bonds

MARKETS as of 4:30 AM IN HONG KONG

  • USD/JPY +0.2% to 112.72 (range 112.40-113.06)
  • EUR/USD -0.7% to 1.1736 (range 1.1730-1.1820)
  • AUD/USD -0.1% to 0.7828 (range 0.7796-0.7848)
  • NZD/USD -0.2% to 0.7197 (range 0.7168-0.7234)
  • USD/CAD +0.3% to 1.2510 (range 1.2468-1.2525)
  • GBP/USD -0.9% to 1.3283 (range 1.3257-1.3402)
  • USD/CHF +0.7% to 0.9749 (range 0.9675-0.9755)
  • 1-mo. USD/TWD NDF +0.4% to 30.46
  • Bloomberg Dollar Spot Index +0.5% to 1165.87
  • JPM Emerging Mkt FX Index -0.2% to 69.39
  • JPM FX Volatility Index -1.3% to 8.15
  • U.S. stocks higher
    • S&P 500 +0.4% to 2529.12
    • DJIA +0.7% to 22558
  • Commodities:
    • WTI Crude -2.2% to $50.55/bbl
    • Gold -0.6% to $1,272/oz (range $1,271-$1,280)
    • Copper +0.2% to $6,493/mt

TECHNICAL OUTLOOK by Bloomberg strategist Vincent Cignarella

  • USD/JPY — Heading toward upper span at 114.33 where USD rally should stall
  • Resistance: 113.21/26 Sept. 28/27 highs; 113.53/58 July 13/14 highs
  • Support: 112.22/26 Sept. 29/28 lows; 112.01 200-DMA
  • EUR/USD — Consolidates, downward momentum intact
  • Resistance: 1.1795 Sept. 27 high; 1.1833 Sept. 29 high
  • Support: 1.1717/21 Sept. 27/28 lows; 1.1682 Aug. 16 low
  • EUR/JPY — Consolidating within downtrend
  • Resistance: 133.12 Sept. 29 high; 133.26 Sept. 20 low
  • Support: 132.32 Sept. 29 low; 131.75 Sept. 26 low
  • AUD/USD — Testing 0.7809 1st upper band
  • Resistance: 0.7858/60 Sept. 29/28 highs; 0.7889 Sept. 27 high
  • Support: 0.7769 100-DMA; 0.7740 July 13 high
  • NZD/USD — Consolidating between 200/100 DMAs
  • Resistance: 0.7239/44 Sept. 27/28/29 highs; 0.7251 100- DMA
  • Support: 0.7168 Sept. 26 low; 0.7152 200-DMA
  • USD/KRW 1M Fwd — Higher through 200-DMA
  • Resistance: 1147.95 Oct. 2 high; 1151.32 July 12 high
  • Support: 1136.65 Sept. 27 low; 1132.32 Sept. 26 low
  • USD/THB — Higher, below 100-DMA
  • Resistance: 33.495 Sept. 28 high; 33.618 100- DMA
  • Support: 33.088 Sept. 26 low; 33.035 Sept. 7 low
  • USD/SGD — Consolidating above 50-DMA
  • Resistance: 1.3637 Aug. 23 high; 1.3689 100-DMA
  • Support: 1.3543 Sept. 27 low; 1.3502 Sept. 26 low
  • USD/TWD — Rising above 50/100- DMAs
  • Resistance: 30.472 Sept. 28 high; 30.501 July 12 high
  • Support: 30.225 Sept. 27 low; 30.137 Sept. 25 low
  • USD/MYR — Consolidating within short term uptrend
  • Resistance: 4.2377 Sept. 28 high; 4.2695 Sept. 5 high
  • Support: 4.1825 Sept. 8 low; 4.1775 Nov. 9 low
  • USD/PHP — Higher above 50- DMA
  • Resistance: 51.162 Sept. 21 high; 51.289 Sept. 15 high
  • Support: 50.528 100-DMA; 49.930 June 20 low
  • USD/INR — Lower, breaching 200-DMA
  • Resistance: 65.7850 March 15 high; 66.2450 March 14 high
  • Support: 65.150 Sept. 26 low; 64.7275 Sept. 25 low
  • USD/IDR — Consolidating above multiple DMAs
  • Resistance: 13577 Dec. 5 high; 13609 Dec. 1 high
  • Support: 13334 200-DMA; 13227 Sept. 15 low

–With assistance from Robert Fullem, Luke Kawa, Edward Bolingbroke and Dennis Pettit. To contact the reporter on this story: Katherine Greifeld in New York at kgreifeld@bloomberg.net

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