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THE ASIA FX/RATES DAYBOOK: FX/RATES DAYBOOK ASIA: Treasuries Rally on Fed Chair Speculation

(Bloomberg) — Treasuries gain amid early Fed chair chatter. The dollar traded within a narrow range as investors await ADP employment data, which will be parsed for clues as to what Friday’s U.S. non-farm payrolls report holds. The kiwi slumped after an unexpectedly soft whole milk prices at Fonterra’s GlobalDairyTrade auction. WHAT TO WATCH

  • Reserve Bank of India holds a policy review meeting Wednesday; economists surveyed by Bloomberg see the repo rate holding steady at 6.00%
  • Elsewhere, Aussie economic data includes the CBA Australia PMI index for September, while Kiwi data features the ANZ job advertisement and commodity price indices; Japan PMI services index data is also on the docket

OVERNIGHT TRADING SESSIONS

  • Treasuries held on to gains in early U.S. session. Bid coincided with Politico report that Treasury Secretary Mnuchin favors Jerome Powell as next Fed chair. Rally came even as JPM Treasury client survey showed surge in short positioning. Yields lower by ~2bp across 2Y-10Y; long-end of the curve lagged amid pricing of $10b Abu Dhabi deal, which included $3b 30Y tranche
  • The dollar was little changed on the day amid moderate flows. EUR/USD rose as high as 1.1773 despite simmering tensions in Catalonia, after briefly trading below 1.1700 overnight. AUD/USD recovered from post-RBA losses to rise as much as 0.2%, to 0.7839. NZD/USD fell as much as 0.7% to 0.7149 in the U.S. session, spurred in part by an unexpected 2.7% drop in whole milk prices

TOP OVERNIGHT NEWS

  • U.S. Defense Secretary Jim Mattis supported Secretary of State Rex Tillerson’s diplomatic efforts in dealing with North Korea, days after Trump said Tillerson is “wasting his time”
  • Trump’s tax plan hit an early speed bump after a Republican senator said he wouldn’t vote for a bill that raised the deficit, denting the legislation’s passage prospects
  • Catalonia will declare independence in a matter of days, Catalan President Carles Puigdemont Tells the BBC

KEY VIEWS

  • Warren Buffet said he may buy or sell stocks in his portfolio based on the outcome of Trump’s tax proposals
  • RBI Likely to Keep Rates Steady, Neutral Stance at Oct.4 Review, writes BI Economist Abhishek Gupta

ECONOMIC DATA (All times HK):

  • 6am: (Australia) Sept. CBA Australia PMI Composite, prior 54.1
    • Sept. CBA Australia PMI Services, prior 54.2
  • 6:30am: (Australia) Sept. AiG Perf of Services Index, prior 53
  • 8am: (New Zealand) Sept. ANZ Commodity Price, prior -0.8%
  • 8:30am: (Singapore) Sept. Nikkei Singapore PMI, prior 53.2
  • 8:30am: (Japan) Sept. Nikkei Japan PMI Services, prior 51.6
    • Sept. Nikkei Japan PMI Composite, prior 51.9
  • 4pm: (Singapore) Oct. Automobile COE Open Bid Cat A, prior 42,902
    • Oct. Automobile COE Open Bid Cat B, prior 49,189
    • Oct. Automobile COE Open Bid Cat E, prior 49,012
  • 5pm: (India) Oct. RBI Repurchase Rate, est. 6.0%, prior 6.0%
    • Oct. RBI Reverse Repo Rate, est. 5.75%, prior 5.75%
    • Oct. RBI Cash Reserve Ratio, est. 4.0%, prior 4.0%

CENTRAL BANKS (All times HK):

  • 9:10am: BOJ Outright Bond Purchase 1~3 Years
    • BOJ Outright Bond Purchase 3~5 Years
    • BOJ Outright Bond Purchase 5~10 Years
  • 5pm: RBI Repurchase Rate, est. 6.0%, prior 6.0%
    • RBI Reverse Repo Rate, est. 5.75%, prior 5.75%
    • RBI Cash Reserve Ratio, est. 4.0%, prior 4.0%

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 8am: Australia Plans to Sell A$700.0m 4.75% 2027 Bonds

MARKETS as of 5 AM IN HONG KONG

  • USD/JPY +0.1% to 112.84 (range 112.66-113.20)
  • EUR/USD +0.1% to 1.1747 (range 1.1696-1.1773)
  • AUD/USD +0.1% to 0.7835 (range 0.7786-0.7839)
  • NZD/USD -0.5% to 0.7160 (range 0.7148-0.7198)
  • USD/CAD -0.2% to 1.2486 (range 1.2481-1.2539)
  • GBP/USD -0.3% to 1.3240 (range 1.3222-1.3288)
  • USD/CHF -0.1% to 0.9735 (range 0.9729-0.9787)
  • 1-mo. USD/TWD NDF -0.1% to 30.415
  • Bloomberg Dollar Spot Index little changed at 1165.39
  • JPM Emerging Mkt FX Index +0.3% to 69.49
  • JPM FX Volatility Index -2.3% to 7.95
  • U.S. stocks higher
    • S&P 500 +0.2% to 2534.58
    • DJIA +0.4% to 22642
  • Commodities:
    • WTI Crude -0.8% to $50.17/bbl
    • Gold little changed at $1,272/oz (range $1,268- $1,275)
    • Copper +0.4% to $6,520/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: 112.40 Oct.2 low; 112.22/26 Sept. 29/28 lows
  • 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: 132.19 Oct. 19 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: 0.7772 100-DMA; 0.7740 July 13 high
  • NZD/USD — Consolidating between 200/100 DMAs
  • Resistance: 0.7239/44 Sept. 27/28/29 highs; 0.7254 100- DMA
  • Support: 0.7148 Sept. 1 low; 0.7127 June 6 low
  • USD/KRW 1M Fwd — Consolidating above 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: 33.545 Oct. 3 high; 33.618 100- DMA
  • Support: 33.194 Sept. 27 low; 33.088 Sept. 26 low
  • USD/SGD — Higher toward 100-DMA
  • Resistance: 1.3662 Oct. 3 high; 1.3686 100-DMA
  • Support: 1.3543 Sept. 27 low; 1.3502 Sept. 26 low
  • USD/TWD — Consolidating above 50/100-DMAs
  • Resistance: 30.501 July 12 high; 30.525 July 11 low
  • Support: 30.330 Oct. 2 low; 30.225 Sept. 27 low
  • USD/MYR — Consolidating within short term uptrend
  • Resistance: 4.2440 Oct. 3 high; 4.2695 Sept. 5 high
  • Support: 4.1825 Sept. 8 low; 4.1775 Nov. 9 low
  • USD/PHP — Higher above 50- DMA
  • Resistance: 51.292 Oct. 3 high; 51.305 Aug. 23 high
  • Support: 50.870 Oct. 2 low; 50.542 100-DMA
  • USD/INR — Orbiting 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: 13593 Oct. 3 high; 13609 Dec. 1 high
  • Support: 13334 50/200-DMAs; 13227 Sept. 15 low

To contact the reporter on this story: Katherine Greifeld in New York at kgreifeld@bloomberg.net

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