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FX/RATES DAYBOOK ASIA: USD Slips; Yellen, Catalonia Don’t Excite

 (Bloomberg) — The dollar pared early losses to trade modestly lower, aided by a solid ADP jobs print and better than expected ISM non-manufacturing data. Treasuries recovered from data-driven drop with support from large futures block trade. Speeches from Fed Chair Janet Yellen and Catalonian leader Carles Puigdemont late in U.S. session left market participants uninspired. WHAT TO WATCH

  • Australian economic data includes international trade figures and retail sales for August, while Japan reports weekly international security flows; New Zealand’s government releases financial statements for the year-ended June 2017

OVERNIGHT TRADING SESSIONS

  • USD fell against all of its G-10 peers except CHF, despite paring losses to about 0.1% after falling as much as 0.4%. EUR/USD traded in 1.1747/1.1788 range as Puigdemont stopped short of declaring independence from Spain in speech. USD/JPY tracked UST yields, rising as high as 112.94 before falling 0.1%.
  • USTs erased early gains to end the U.S. session little changed. 10Y yields rose as much as 2.3bp after strong ISM data, but losses were paired after $400k/DV01 block trade in 10Y futures that appeared buyer-initiated

TOP OVERNIGHT NEWS

    • President Trump’s short list of candidates to replace Yellen remained a topic of discussion among traders, with Kevin Warsh, seen by some traders as having a more hawkish tilt, and current Governor Jerome Powell holding the highest odds as of Wednesday.
  • Catalan President Puigdemont said that Catalonia will apply result of illegal independence referendum and seeks meditation process with Spain
  • Trump’s budget chief said not to take literally the president’s suggestion that Puerto Rico’s debt would be “wiped out” as territory’s bonds plunged to a record low
  • U.S. Secretary of State Rex Tillerson said he’s “never considered” leaving his job, rejecting news reports that he had denigrated President Donald Trump and weighed resigning.

KEY VIEWS

  • Marathon Asset Management boss Bruce Richards is gearing up for the next global recession, which he reckons could be less than two years away.
  • Fed chair decision and potential nomination of Kevin Warsh poses risk to bearish USD outlook: Credit Suisse
  • Swiss Franc Likely to See Continued Weakness, BofAML Says

DATA RELEASED OVERNIGHT

  • ISM non-manufacturing index jumped to 59.8 vs est. 55.5 in Sept., highest since Aug. 2005, though strength is probably exaggerated by hurricane recovery; private payrolls rose by 135k in Sept, matching estimates, for the smallest gain since Oct. 2016

MARKETS as of 4:30 AM IN HONG KONG

  • USD/JPY -0.1% to 112.72 (range 112.32-112.94)
  • EUR/USD +0.2% to 1.1764 (range 1.1736-1.1788)
  • AUD/USD +0.3% to 0.7862 (range 0.7830-0.7875)
  • NZD/USD +0.1% to 0.7169 (range 0.7147-0.7206)
  • USD/CAD -0.1% to 1.2474 (range 1.2449-1.2498)
  • GBP/USD +0.1% to 1.3254 (range 1.3235-1.3292)
  • USD/CHF +0.1% to 0.9748 (range 0.9710-0.9762)
  • 1-mo. USD/TWD NDF -0.1% to 30.38
  • Bloomberg Dollar Spot Index -0.1% to 1164.16
  • JPM Emerging Mkt FX Index +0.1% to 69.65
  • JPM FX Volatility Index -0.5% to 7.92
  • U.S. stocks higher
    • S&P 500 +0.1% to 2537.74
    • DJIA +0.1% to 22662
  • Commodities:
    • WTI Crude -1.1% to $49.89/bbl
    • Gold +0.3% to $1,275/oz (range $1,269-$1,282)
    • Copper little changed at $6,521/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

–With assistance from Robert Fullem, Dennis Pettit and Edward Bolingbroke. To contact the reporter on this story: Katherine Greifeld in New York at kgreifeld@bloomberg.net

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