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THE ASIA FX/RATES DAYBOOK: FX/RATES DAYBOOK ASIA: Yellen Has Something for Everyone, USD Up

(Bloomberg) — The greenback rallied to its highest in more than a month, then quickly gave a good chunk of its gains back, after Fed Chair Janet Yellen delivered something for everyone Tuesday in Cleveland. She cautioned against the Fed hiking rates too gradually, while warning that downward inflation pressures could prove less than fleeting. WHAT TO WATCH

  • The economic calendar is sparsely populated Wednesday, with the annual change in Chinese industrial profits for August headlining the data. Also on deck, the Bank of Thailand is expected to keep its benchmark rate unchanged at 1.5 percent.

OVERNIGHT TRADING SESSIONS

  • Bloomberg dollar index ended U.S. trading up ~0.3 percent after Yellen reinforces December rate hike odds. Greenback gained against 9 of 10 G-10 peers. EUR/USD extended overnight losses to slide 0.5%, falling below 1.1800 for first time this month. CAD was U.S. session’s top performer among after the nation’s finance minister said the country can do well at these dollar levels.
  • USTs maintained early sell-off to end the day with yields higher by 1.5bp-2bp across the curve, even as they pared some Yellen-led losses into the close
  • Odds of a December rate hike steady at ~65% Tuesday, based on OIS

TOP OVERNIGHT NEWS

  • Yellen maintained that gradually raising interest rates is the most appropriate policy approach and that it would be “imprudent” to stay on hold until inflation returns to 2%
  • Republicans ended their third attempt to repeal Obamacare, citing the lack of votes, further clouding the possibility of passing significant tax reform in the near term
  • Trump said the U.S. is prepared to use “devastating” force against North Korea, but encouraged unity in working to end the country’s nuclear program
  • Canada Finance Minister Bill Morneau said that the rising loonie reflects the country’s positive economy, and that a strong currency won’t deter further growth

KEY VIEWS

  • The yen and the euro have surpassed the dollar as the world’s favorite havens as investors increasingly use them as funding currencies: BofA

DATA RELEASED OVERNIGHT

  • New home sales fell 3.4% m/m to 560k annualized pace (est. 585k), showing the market for new homes remains subdued, as elevated prices crimp affordability
  • Consumer confidence cooled to 119.8 (est. 120) from downwardly revised 120.4 in August, mirroring other economic data showing tempered confidence in the aftermath of Hurricanes Harvey and Irma

ECONOMIC DATA (All times HK):

  • TBA: (Macau) Aug. Unemployment Rate, prior 2.0%
    • Aug. Exports YoY, prior 34.0%
    • Aug. Imports YoY, prior 8.7%
    • Aug. Trade Balance, prior -5.03b
  • 9:30am: (China) Aug. Industrial Profits YoY, prior 16.5%
  • 1pm: (Japan) Sept. Small Business Confidence, est. 49.5, prior 49
  • 2pm: (Japan) Aug. Machine Tool Orders YoY, prior 36.29%
  • 4pm: (Taiwan) Aug. Monitoring Indicator, prior 22
  • 4:20pm: (Taiwan) Aug. Bounced Check Ratio, prior 0.18%

GOVERNMENT:

  • TBA: (Hong Kong) U.S. Commerce Secretary Ross Speaks in Hong Kong, Bangkok

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 10-25 Years
    • BOJ Outright Bond Purchase 25 Years
  • 3:05pm: (Thailand) BoT Benchmark Interest Rate, est. 1.5%, prior 1.5%

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 9am: Australia Plans to Sell A$700.0m 2.75% 2027 Bonds
  • 1pm: Singapore Plans To Sell SGD2.4b 2-Year Bonds
  • 5:30pm: Vietnam To Sell VND500.0b 5-Year Bond
    • Vietnam To Sell VND500.0b 7-Year Bond
    • Vietnam To Sell VND500.0b 30-Year Bond
    • Vietnam To Sell VND500.0b 10-Year Bond

MARKETS as of ~4:50am HONG KONG TIME

  • USD/JPY +0.4% to 112.23 (range 111.50-112.48)
  • EUR/USD -0.5% to 1.1789 (range 1.1758-1.1862)
  • AUD/USD -0.6% to 0.7887 (range 0.7859-0.7949)
  • NZD/USD -0.8% to 0.7207 (range 0.7168-0.7278)
  • USD/CAD -0.2% to 1.2347 (range 1.2331-1.2413)
  • GBP/USD -0.1% to 1.3458 (range 1.3410-1.3514)
  • USD/CHF +0.2% to 0.9690 (range 0.9653-0.9727)
  • 1-mo. USD/TWD NDF +0.1% to 30.2
  • USD/CNH +0.3% to 6.6305 (range 6.6000-6.6453)
  • Bloomberg Dollar Spot Index +0.3% to 1156.75
  • JPM Emerging Mkt FX Index -0.4% to 69.82
  • JPM FX Volatility Index +0.5% to 8.54
  • U.S. stocks mixed
    • S&P 500 little changed at 2496.84
    • DJIA -0.1% to 22284
  • Commodities:
    • WTI Crude -0.2% to $52.14/bbl
    • Gold -1.3% to $1,294/oz (range $1,292-$1,314)
    • Copper -0.6% to $6,413/mt

TECHNICAL OUTLOOK by Bloomberg strategist Vincent Cignarella

  • USD/JPY — Consolidating within corrective wave 2; maintains a downward bias
  • Resistance: 112.53/56 Sept. 25/22 highs; 112.72 major wave
  • Support: 111.65 Elliott wave span; 111.20/09 Sept. 20/19 lows/100-DMA
  • EUR/USD — Within downtrend, momentum could extend to July lows
  • Resistance: 1.1866 Sept. 21 low; 1.1937 Sept. 25 high
  • Support: 1.1740/45 Aug. 23/22 lows; 1.1709 Aug. 18 low
  • EUR/JPY — Establishing fresh downtrend
  • Resistance: 133.09 Sept. 15 high; 133.26 Sept. 20 low
  • Support: 131.76 Sept. 14 high; 131.26 Sept. 13 low
  • AUD/USD — Extending losses toward 0.7800 trend support
  • Resistance: 0.7935 55-DMA; 0.7974 Sept. 25 high
  • Support: 0.7845 Aug. 14 low; 0.7800 trend line
  • NZD/USD — Extending losses below 100-DMA
  • Resistance: 0.7344 Sept. 22 high; 0.7364 Sept. 21 high
  • Support: 0.7184 Sept. 14 low; 0.7146 200-DMA
  • USD/KRW 1M Fwd — Higher toward 200-DMA
  • Resistance: 1139.55 Sept. 27 high; 1141.69 200-DMA
  • Support: 1132.32 Sept. 26 low; 1127.04 Sept. 21 low
  • USD/THB — Higher, testing 50-DMA
  • Resistance: 33.238 50-DMA; 33.292 Aug. 28 high
  • Support: 33.035 Sept. 7 low; 32.969 May 1 2015 low
  • USD/SGD — Higher, testing 50-DMA
  • Resistance: 1.3566 50-DMA; 1.3575 Sept. 5 high
  • Support: 1.3447 Sept. 25 low; 1.3411 Sept. 11 low
  • USD/TWD — Filling gap testing DMAs higher
  • Resistance: 30.269 Aug. 25 high; 30.294 Aug. 23 high
  • Support: 30.093 Sept. 19 low; 30.019 Sept. 18 low
  • USD/MYR — Consolidating within downtrend
  • Resistance: 4.2262 Sept. 7 high; 4.2695 Sept. 5 high
  • Support: 4.1825 Sept. 8 low; 4.1775 Nov. 9 low
  • USD/PHP — Higher toward 50-DMA
  • Resistance: 51.162 Sept. 21 high; 51.289 Sept. 15 high
  • Support: 50.482 100-DMA; 49.930 June 20 low
  • USD/INR — Higher toward 200- DMA
  • Resistance: 65.5146 200-DMA; 65.5250 March 24 high
  • Support: 64.7275 Sept. 25 low; 64.4462 Sept. 21 low
  • USD/IDR — Higher, breached multiple DMAs
  • Resistance: 13343 Sept. 6 high; 13354 Aug. 31 high
  • Support: 13333 200-DMA; 13227 Sept. 15 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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