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THE ASIA FX/RATES DAYBOOK: FX/RATES DAYBOOK ASIA: Treasuries Stuck in Range as Dollar Gains

(Bloomberg) — Dollar bulls caught a break after the greenback rallied on the heels of robust economic data, gaining ground against almost all of its G-10 peers. U.S. 10-year Treasury yields stayed within their narrowest trading range in three months as traders awaited tier-one inflation and payrolls data due Thursday and Friday. WHAT TO WATCH

  • China August PMI data; see more below
  • Bank of Korea 7-Day Repo Rate decision; est. 1.25%, prior 1.25%

OVERNIGHT TRADING SESSIONS

  • Bloomberg dollar index climbed 0.4% to rise for a second day, the longest streak in two weeks; the euro fell through 1.1900; UST 10Y yields traded within 2.43bps to end at 2.143%
  • In European trading, the euro slid 0.2% lower to 1.1953; UST 10Y yields ended little changed at 2.13% after climbing as high as 2.15% as risk-off tone evaporated

TOP OVERNIGHT NEWS

  • Trump dismissed the idea of negotiating with North Korea while his defense chief said the U.S. hasn’t exhausted its diplomatic options
  • Trump warned Congress not to miss a “once-in-a-generation opportunity” to boost the economy with a massive overhaul of the U.S. tax code
  • Warren Buffett said the rally in markets over the last several years has made it harder to find bargains, but that stocks remain his choice over bonds
  • Hurricane Harvey may help Congress delay a possible U.S. government shutdown and avoid a costly fight over raising the debt ceiling
  • Agriculture Secretary Sonny Perdue said Wednesday he’s been trying to convince the Trump administration that Nafta is “good for U.S. agriculture”

KEY VIEWS

  • Passive rebalancing model points to “moderate” USD buying vs EUR and JPY and “a more modest dollar buying signal” vs GBP, CAD and AUD, Barclays says
  • Analysts suggest ECB’s Draghi is likely to try and talk down euro strength at the ECB’s Sept. 7 meeting

DATA RELEASED OVERNIGHT

  • GDP rose 3% in 2Q vs est. 2.7%; consumer spending, the biggest part of the economy, grew 3.3% vs est. 3%; both prints were revised up from prior quarter
    • Revisions indicate greater momentum going into the second half of 2017, as well as showing that GDP growth may be broadening beyond household spending
  • ADP employment showed private payrolls rose by 237k (est. 185k), the biggest gain in five months, after an upwardly revised 201k gain in July

ECONOMIC DATA (All times HK):

  • TBA: (Philippines) July Money Supply M3 SRF YoY, prior 13.2%
    • July Bank Lending Net of RRPs YoY, prior 19.0%
    • July Bank Lending YoY, prior 18.3%
  • TBA: (Indonesia) July Money Supply M1 YoY, prior 17.81%
    • July Money Supply M2 YoY, prior 11.43%
  • TBA: (Macau) July Exports YoY, prior 14.3%
    • July Trade Balance, prior -5.24b
    • July Imports YoY, prior 10.4%
  • TBA: (Hong Kong) July Budget Balance HKD, prior 40.1b
    • July Money Supply M1 HKD YoY, prior 13.0%
    • July Money Supply M2 HKD YoY, prior 15.9%
    • July Money Supply M3 HKD YoY, prior 15.9%
  • 7am: (South Korea) July Industrial Production SA MoM, est. 0.5%, prior -0.2%
    • July Industrial Production YoY, est. -0.2%, prior -0.3%
    • July Cyclical Leading Index Change, prior 0.3
  • 7:50am: (Japan) Aug. Foreign Buying Japan Bonds, prior ¥185.1b deficit
    • Aug. Japan Buying Foreign Bonds, prior ¥453.2b deficit
    • Aug. Japan Buying Foreign Stocks, prior ¥320.7b
    • Aug. Foreign Buying Japan Stocks, prior ¥300.1b deficit
    • July Industrial Production MoM, est. -0.3%, prior 2.2%
    • July Industrial Production YoY, est. 5.2%, prior 5.5%
    • July Loans & Discounts Corp YoY, prior 4.1%
  • 9am: (China) Aug. Manufacturing PMI, est. 51.3, prior 51.4
    • Aug. Non-manufacturing PMI, prior 54.5
    • July Swift Global Payments CNY, prior 1.98%
  • 9am: (New Zealand) Aug. ANZ Business Confidence, prior 19.4
    • Aug. ANZ Activity Outlook, prior 40.3
  • 9:30am: (Australia) July Private Sector Credit MoM, est. 0.5%, prior 0.6%
    • July Private Sector Credit YoY, est. 5.4%, prior 5.4%
    • 2Q Private Capital Expenditure, est. 0.15%, prior 0.3%
  • 10am: (Singapore) July Money Supply M1 YoY, prior 10.78%
    • July Money Supply M2 YoY, prior 7.3%
    • July Credit Card Bad Debts SGD, prior 24.1m
    • July Credit Card Billings SGD, prior 4.48b
    • July Bank Loans and Advances YoY, prior 7.64%
  • 11:30am: (Thailand) July Capacity Utilization ISIC, prior 61.1
    • July Mfg Production Index ISIC NSA YoY, est. 3.0%, prior -0.16%
  • 12pm: (Japan) July Vehicle Production YoY, prior 6.9%
  • 1pm: (Japan) July Housing Starts YoY, est. -0.2%, prior 1.75%
    • July Annualized Housing Starts, est. 995,000, prior 1m
    • July Construction Orders YoY, prior 2.3%
  • 3:30pm: (Thailand) July Exports YoY, prior 7.6%
    • July Exports, prior $19.8b
    • July Imports YoY, prior 12.8%
    • July Imports, prior $16.9b
    • July Trade Balance, prior $2.94b
    • July BoP Current Account Balance, est. $2.24b, prior $4.28b
    • July BoP Overall Balance, prior $1.97b
  • 5:30pm: (Sri Lanka) Aug. CPI YoY, est. 6.0%, prior 4.8%
    • Aug. CPI Moving Average YoY, est. 5.5%, prior 5.4%
  • 7pm: (India) July Fiscal Deficit INR Crore, prior 68,324
  • 8pm: (India) 2Q GVA YoY, est. 6.2%, prior 5.6%
    • 2Q GDP YoY, est. 6.5%, prior 6.12%
    • July Eight Infrastructure Industries, prior 0.4%

GOVERNMENT:

  • 6am: (Australia) Bloomberg Address with Treasurer Scott Morrison

CENTRAL BANKS (All times HK):

  • Aug. BoK 7-Day Repo Rate, est. 1.25%, prior 1.25%
  • 9:30am: (Japan) BOJ Masai speaks in Matsuyama
  • 11am: RBA’s Harris Participates in Panel at Conference

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 11:35am: Japan to Sell 3-Month Bills
  • 11:45am: Japan to Sell 2-Year Bonds

MARKETS as of ~4:30am IN HONG KONG

  • EUR/USD -0.7% to 1.1883 (range 1.1882-1.1984)
  • AUD/USD -0.7% to 0.7898 (range 0.7890-0.7996)
  • NZD/USD -0.8% to 0.7196 (range 0.7189-0.7278)
  • GBP/USD little changed at 1.2919 (range 1.2879-1.2938)
  • USD/CNH -0.1% to 6.5989 (range 6.5837-6.6133)
  • Bloomberg Dollar Spot Index +0.4% to 1155.49
  • JPM Emerging Mkt FX Index -0.2% to 70.55
  • JPM FX Volatility Index +0.1% to 8.03
  • U.S. stocks higher
    • S&P 500 +0.5% to 2457.59
    • DJIA +0.1% to 21892
  • Commodities:
    • WTI Crude -1% to $45.97/bbl
    • Gold -0.1% to $1,308/oz (range $1,305-$1,314)
    • Copper -0.3% to $6,769/mt

TECHNICAL OUTLOOK by Bloomberg strategist Vincent Cignarella

  • USD/JPY — Gapping higher toward cloud base at 111.66
  • Resistance: 110.85/95 Aug.15/16 highs; 111.16 100-DMA
  • Support: 109.35 Ichimoku conversion line; 109.12 Aug. 25 low
  • EUR/USD — Testing 1.1910 intermediate wave
  • Resistance: 1.1984 Aug. 28/30 high; 1.2046 pivot R2
  • Support: 1.1889/93 Aug. 4/3 highs; 1.1844/46 Aug. 1/July 31 highs
  • EUR/JPY — Uptrend may be nearing exhaustion
  • Resistance: 131.78 Dec. 31 2025 high; 131.92 Dec. 30, 2015 high
  • Support: 130.97 Aug. 28 high; 130.44 Aug. 25 high
  • AUD/USD — Lower, below 0.7928 2nd upper band standard deviation
  • Resistance: 0.7993 Aug. 2 high; 0.8004 July 31 high
  • Support: 0.7885 Aug. 25 low; 0.7867 Aug. 24 low
  • NZD/USD –Forming classic head and shoulders bear pattern around 0.7200
  • Resistance: 0.7299 Aug. 29 high; 0.7310 1st upper band
  • Support: 0.7180 100-DMA; 0.7130 200-DMA
  • USD/KRW 1M Fwd — Consolidating below 100-DMA
  • Resistance: 1128.45 Aug. 29 high; 1131.65 Aug. 24 high
  • Support: 1118.15 Aug. 29 low; 1115.85 Aug. 1 low
  • USD/THB — Consolidating losses below 33.551 50-DMA
  • Resistance: 33.292 Aug. 28 high; 33.367 Aug. 24/25 highs
  • Support: 33.147 May 4 2015 low; 32.969 May 1 2015 low
  • USD/SGD — Consolidating within downtrend
  • Resistance: 1.3599 Aug. 23/24 lows; 1.3622 Aug. 25 high
  • Support: 1.3501 Sept. 9 low; 1.3482 Sept. 7 high
  • USD/TWD — Holding within downtrend
  • Resistance: 30.269 Aug. 25 high; 30.317 Aug. 22 high
  • Support: 30.085 Aug. 28 low; 30.074 June 8/9 lows
  • USD/MYR — Grinding sideways below 4.2875 50-DMA
  • Resistance: 4.2797 Aug. 25 high; 4.2817 Aug. 24 high
  • Support: 4.2640 Aug. 28 low; 4.2580 June 14 low
  • USD/PHP — Consolidating short-term downtrend
  • Resistance: 51.222 Aug. 29 high; 51.305 Aug. 23 high
  • Support: 50.993 Aug. 29 low; 50.576 Aug. 10 low
  • USD/INR — Consolidating below 64.2836 50-DMA
  • Resistance: 64.0887 Aug. 24 high; 64.1425 Aug. 22/23 highs
  • Support: 63.8563 Aug. 28 low; 63.7150 Aug. 9 low
  • USD/IDR — Sideways, no clear direction
  • Resistance: 13353 Aug. 25 high; 13383 Aug. 16 high
  • Support: 13327 Aug. 22 low; 13220 Aug. 9 low

To contact the reporter on this story: Katherine Greifeld in New York at kgreifeld@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Greg Chang

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