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THE ASIA FX/RATES DAYBOOK: FX/RATES DAYBOOK ASIA: USD Breaks Losing Streak as Risks Fade

(Bloomberg) — The dollar posted its first gain in eight sessions as risk appetite reappeared. Traders were relieved after North Korea refrained from a weekend missile test and Hurricane Irma’s damage estimates were downgraded. Stocks gained while the Japanese yen and U.S. Treasuries sold off. WHAT TO WATCH

  • Australia Aug. NAB business confidence
  • India Aug. CPI, July industrial production

OVERNIGHT TRADING SESSIONS

  • Bloomberg dollar index rose as much as 0.6%; USD/JPY rose 1.5% to 109.51, the biggest gain since January; USTs sold off, with yields gaining 5bp-8bp across the curve
  • S&P 500 Index added 1.1% to close at a new record
  • The euro fell 0.2% to $1.2015; 10Y sector led selloff, with 10Y yield rising to around 2.09%

TOP OVERNIGHT NEWS

  • The U.S. watered down a proposal to punish North Korea, omitting an oil embargo and a freeze of Kim Jong Un’s assets that may have hindered passage by the UN Security Council
  • Irma was downgraded to a tropical storm as one estimate of total damage dropped to $49 billion from $200 billion earlier

KEY VIEWS

  • Treasury may exhaust borrowing authority by late March, based on “highly uncertain tax flows” in early 2018 and the fact that Congress “likely will not want to play with fire,” Deutsche Bank said
  • Analysts suggest that near-term positioning views on USTs are broadly bearish, based on factors including Fed rate-hike odds higher than what market is pricing in, potential for inflation to stabilize, and prospect of increased auction sizes

ECONOMIC DATA (All times HK):

  • 12:01am: (Taiwan) 4Q Manpower Survey, actual 22.0%, prior 26.0%
  • 12:01am: (Hong Kong) 4Q Manpower Survey, actual 17.0%, prior 15.0%
  • 12:01am: (Singapore) 4Q Manpower Survey, actual 11.0%, prior 4.0%
  • 6am: (New Zealand) Aug. ANZ Truckometer Heavy MoM, prior -5.5%
  • 7:30am: (Australia) Sept. ANZ Roy Morgan Weekly Consumer Confidence Index, prior 114.1
  • 8:01am: (Japan) 4Q Manpower Survey, prior 24
  • 8:01am: (Australia) 4Q Manpower Survey, prior 7.0%
  • 8:01am: (New Zealand) 4Q Manpower Survey, prior 12.0%
  • 8:01am: (China) 4Q Manpower Survey, prior 5.0%
  • 8:01am: (India) 4Q Manpower Survey, prior 15.0%
  • 9am: (Philippines) July Unemployment Rate, prior 5.7%
    • July Exports YoY, est. 8.5%, prior 0.8%
    • July Exports, prior $4.91b
    • July Imports YoY, est. 7.0%, prior -2.5%
    • July Imports, prior $7.06b
    • July Trade Balance, est. $2.4b deficit, prior $2.15b deficit
  • 9:30am: (Australia) Aug. NAB Business Conditions, prior 15
    • Aug. NAB Business Confidence, prior 12
    • July Credit Card Purchases, prior A$26.7b
    • July Credit Card Balances, prior A$52.4b
  • 11am: (South Korea) July Money Supply L SA MoM, prior 0.3%
    • Aug. Bank Lending to Household Total, prior KRW737.7t
    • July Money Supply M2 SA MoM, prior 0.4%
  • 1pm: (Singapore) July Retail Sales SA MoM, est. 0.65%, prior -0.5%
    • July Retail Sales YoY, est. 1.7%, prior 1.9%
    • July Retail Sales Ex Auto YoY, est. 2.0%, prior 4.0%
  • 8pm: (India) Aug. CPI YoY, est. 3.26%, prior 2.36%
    • July Industrial Production YoY, est. 1.7%, prior -0.1%

GOVERNMENT:

  • China Premier Li Hosts Economic Roundtable

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 9am: Australia Plans to Sell A$150.0m 1.25% 2022 I/L Bonds
  • 10:05am: New Zealand Plans To Sell NZD100.0m 112-Day Bills
    • New Zealand Plans To Sell NZD100.0m 182-Day Bills
    • New Zealand Plans To Sell NZD100.0m 364- Day Bills
  • 11am: Bk of Thailand to Sell THB30b 91-Day Bills
    • Bk of Thailand to Sell THB30b 182-Day Bills
  • 11:30am: Hong Kong to Sell HKD44.2b 91-Day Bills
    • Hong Kong to Sell HKD14.0b 182-Day Bills
  • 11:45am: Japan to Sell 5-Year Bonds
  • 1pm: MAS plans to Sell SGD1.8Bb 28-Day Bills
    • MAS plans to Sell SGD5.4b 84-Day Bills
  • 5pm: Indonesia to Sell 6-Month Islamic Bills
    • Indonesia to Sell PBS Due 2019
    • Indonesia to Sell PBS Due 2021
    • Indonesia to Sell PBS Due 2023
    • Indonesia to Sell PBS due 2031

MARKETS as of ~5:00am in HONG KONG

  • USD/JPY +1.5% to 109.41 (range 108.09-109.51)
  • EUR/USD -0.7% to 1.1953 (range 1.1948-1.2036)
  • AUD/USD -0.4% to 0.8029 (range 0.8019-0.8073)
  • NZD/USD -0.2% to 0.7254 (range 0.7225-0.7294)
  • USD/CAD -0.4% to 1.2114 (range 1.2098-1.2170)
  • GBP/USD -0.3% to 1.3167 (range 1.3161-1.3222)
  • USD/CHF +1.3% to 0.9564 (range 0.9447-0.9569)
  • USD/CNH +0.7% to 6.5388 (range 6.4960-6.5398)
  • 1-mo. USD/TWD NDF +0.1% to 29.943
  • Bloomberg Dollar Spot Index +0.5% to 1142.15
  • JPM Emerging Mkt FX Index -0.3% to 71.21
  • JPM FX Volatility Index -4.5% to 8.23
  • U.S. stocks higher
    • S&P 500 +1.1% to 2488.11
    • DJIA +1.2% to 22057
  • Commodities:
    • WTI Crude +1.3% to $48.12/bbl
    • Gold -1.4% to $1,327/oz (range $1,326-$1,340)
    • Copper +0.8% to $6,748/mt

TECHNICAL OUTLOOK by Bloomberg strategist Vincent Cignarella

  • USD/JPY — Establishing a new range between intermediate spans 106.52/111.16.
  • Resistance: 109.27 Sept. 7 high; 109.40 Sept. 6 high
  • Support: 108.05 Sept. 7 low; 107.32 major wave, Sept. 8 low
  • EUR/USD — Rally stalling at 1.2092 5th major wave
  • Resistance: 1.2059 Sept. 7 high; 1.2092 5th major wave
  • Support: 1.1950 Sept. 6 high; 1.1922 Sept. 4 high
  • EUR/JPY — Upward momentum stalling around 50-DMA
  • Resistance: 130.66 Sept. 8 high; 131.09 Sept. 7 high
  • Support: 129.65 55-DMA; 129.37/38 Sept. 6/5 lows
  • AUD/USD — Held upper band, potential to trade toward 0.7960
  • Resistance: 0.8135 upper band; 0.8164 May, 14 2015 high
  • Support: 0.8021 Sept. 6 high; 0.7994 Sept. 1 high
  • NZD/USD — Consolidating, holding below 0.7316 50-DMA
  • Resistance: 0.7299 Aug. 29 high; 0.7335/37 multiple tops
  • Support: 0.7192/98/96 Aug. 24/23 lows/100-DMA; 0.7158 Sept. 5 low
  • USD/KRW 1M Fwd — Consolidating around 50/100-DMAs
  • Resistance: 1136.90 Sept. 7 high; 1138.15 Sept. 6 high
  • Support: 1126.29 Sept. 11 low; 1119.65 Sept. 4 low
  • USD/THB — Consolidating losses below 50-DMA
  • Resistance: 33.175 Sept. 6 high; 33.229 Aug. 31 high
  • Support: 33.035 Sept. 7 low; 32.969 May 1 2015 low
  • USD/SGD — Lower, extending downtrend
  • Resistance: 1.3483 Sept. 6 low; 1.3539 Sept. 6 high
  • Support: 1.3346 Sept. 8 low; 1.3313 June 23 2016 low
  • USD/TWD — Consolidating within downtrend
  • Resistance: 30.065 Sept. 7 high; 30.177 Sept. 4 high
  • Support: 29.897 Sept. 7 low; 28.860 July 4 2014 low
  • USD/MYR — Attempting to fill gap lower
  • Resistance: 4.2262 Sept. 7 high; 4.2695 Sept. 5 high
  • Support: 4.1825 Sept. 8 low; 4.1775 Nov. 9 low
  • USD/PHP — Lower, testing 50-DMA
  • Resistance: 51.194 Sept. 6 high; 51.222 Aug. 29 high
  • Support: 50.666 Sept. 8 low; 50.576 Aug. 10 low
  • USD/INR — Consolidating below multiple DMAs
  • Resistance: 64.0550 Sept. 7 high; 64.2600 Sept. 6 high
  • Support: 63.7150 Aug. 9 low; 63.6200 Aug. 8 low
  • USD/IDR — Gapping lower, establishing downtrend
  • Resistance: 13305 Sept. 7 low; 13335 Sept. 7 high
  • Support: 13098 Nov. 10 low; 13052 Nov. 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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