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THE ASIA FX/RATES DAYBOOK: FX/RATES DAYBOOK ASIA: USD, USTs Fell Friday Amid Risk Aversion

(Bloomberg) — The dollar closed on a sour note Friday as Hurricane Irma bore down on Florida and the possibility of a North Korean missile launch weighed on markets. U.S. Treasuries failed to catch a haven bid, paring weekly gains. WHAT TO WATCH

  • North Korea Foundation Day developments
  • Hurricane Irma
  • Malaysia industrial production; see more below

FRIDAY TRADING SESSIONS

  • Bloomberg dollar index fell 0.2% to push its weekly decline to ~1.5%, steepest in four months; USD/JPY ended Friday near 107.80; USTs pared weekly gain, with yields higher by 1.5bp-2.5bp across 5Y-30Y tenors despite weekend risks
  • In the European session, the euro pared gains from Asian hours to trade 0.4% stronger at 1.2066; UST yields were lower by ~1bp across the curve, 10Y by 0.7bp at 2.032%

TOP OVERNIGHT NEWS

  • Fed’s Dudley said back-to-back hurricanes in the third quarter could temporarily influence the timing of the next interest-rate increase; not expecting storms to delay balance-sheet decision
  • North Korean leader Kim Jong Un said this month’s test of a hydrogen bomb is a “great victory” won by the country’s people at the cost of their blood while tightening their belts, the official Korean Central News Agency reported on Sunday
  • The U.S. said it would seek a vote Monday on a draft United Nations Security Council resolution on North Korea, as it pushes for fresh sanctions
  • Trump signed legislation Friday to stave off a potential U.S. default on its debt and provide $15.25 billion for hurricane relief

KEY VIEWS

  • Fed faces a difficult path with lower-than-expected inflation and vacant seats after Fischer’s departure, said Mohamed El- Erian, Allianz’s chief economic advisor

DATA RELEASED FRIDAY

  • Wholesale inventories rose 0.6% in July, vs est. 0.4%

ECONOMIC DATA (All times HK):

  • 6:45am: (New Zealand) Aug. Card Spending Total MoM, prior -0.7%
    • Aug. Card Spending Retail MoM, est. 0.5%, prior -0.5%
  • 7:50am: (Japan) July Machine Orders MoM, est. 4.1%, prior -1.9%
    • July Machine Orders YoY, est. -7.8%, prior -5.2%
    • Aug. Money Stock M2 YoY, est. 4.1%, prior 4.0%
    • Aug. Money Stock M3 YoY, est. 3.4%, prior 3.4%
  • 12pm: (Malaysia) July Industrial Production YoY, est. 5.0%, prior 4.0%
    • July Manufacturing Sales Value YoY, prior 11.5%
  • 12:30pm: (Japan) July Tertiary Industry Index MoM, est. 0.1%, prior 0.0%
  • 2pm: (Japan) Aug. Machine Tool Orders YoY, prior 28.03%

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 9am: Australia Plans to Sell A$500.0m 4.5% 2033 Bonds
  • 9:30am: Korea Central Bank to Sell KRW900b 1-Year Bonds
  • 10:30am: Korea to Sell KRW1.4t 10-Year Bonds
  • 11am: Bk of Thailand to Sell THB5b 91-Day Bills
    • Bk of Thailand to Sell THB9.6b 182-Day Bills
  • 1pm: Philippines To Sell PHP4.0b 91-Day Bills
    • Philippines To Sell PHP5.0b 182-Day Bills
    • Philippines To Sell PHP4.0b 364-Day Bills
  • 1pm: Korea Central Bank To Sell KRW900b 91-Days Bills

MARKETS as of LATE FRIDAY

  • USD/JPY -0.6% to 107.80 (range 107.32-108.49)
  • EUR/USD +0.1% to 1.2037 (range 1.2015-1.2092)
  • AUD/USD +0.1% to 0.8056 (range 0.8043-0.8125)
  • NZD/USD +0.5% to 0.7268 (range 0.7228-0.7338)
  • USD/CAD +0.3% to 1.2147 (range 1.2062-1.2165)
  • GBP/USD +0.8% to 1.3204 (range 1.3094-1.3224)
  • USD/CHF -0.7% to 0.9441 (range 0.9421-0.9509)
  • USD/CNH +0.3% to 6.5042 (range 6.4436-6.5192)
  • 1-mo. USD/TWD NDF +0.5% to 29.915
  • Bloomberg Dollar Spot Index -0.2% to 1135.93
  • JPM Emerging Mkt FX Index -0.4% to 71.42
  • JPM FX Volatility Index +3.2% to 8.62
  • U.S. stocks mixed
    • S&P 500 -0.1% to 2461.43
    • DJIA +0.1% to 21798
  • Commodities:
    • WTI Crude -3.1% to $47.58/bbl
    • Gold -0.2% to $1,347/oz (range $1,343-$1,358)
    • Copper -3% to $6,693/mt

TECHNICAL OUTLOOK by Bloomberg strategist Vincent Cignarella

  • USD/JPY — Near wave exhaustion, potential to extend to long-term span around 106.52, establishing a new range between intermediate spans 106.52/111.16.
  • Resistance: 108.45 Sept. 6 low; 108.60/64 Aug. 18/21 lows
  • Support: 107.36 potential major wave; 106.93/95 Nov. 11/10 highs
  • EUR/USD — Trending toward January 2015 highs
  • Resistance: 1.2092 Sept. 8 high; 1.2108/09 Jan. 2/1 2015 highs
  • Support: 1.1980 Sept. 1 high; 1.1950 Sept. 6 high
  • EUR/JPY — Upward momentum stalling around 50-DMA
  • Resistance: 130.66 Sept. 8 high; 131.09 Sept. 7 high
  • Support: 129.37/38 Sept. 6/5 lows; 129.12 Aug. 25 low
  • AUD/USD — Trending toward 3rd upper band 0.8135
  • Resistance: 0.8135 upper band; 0.8164 May, 14 2015 high
  • Support: 0.8066 July 27 high; 0.8043 Aug. 1 high
  • NZD/USD — Higher, testing 0.7318 50-DMA
  • Resistance: 0.7335/37 multiple tops; 0.7370/71 Aug. 8/10 highs
  • Support: 0.7192/98/94 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: 1119.65 Sept. 4 low; 1115.85 Aug. 1 low
  • USD/THB — Extending 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 — Lower within downtrend
  • Resistance: 30.104 Sept. 6 high; 30.177 Sept. 4 high
  • Support: 29.897 Sept. 7 low; 28.860 July 4 2014 low
  • USD/MYR — Gapping 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 — Gapping lower 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

–With assistance from Joshua Fineman. 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, Bruce Rule

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