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THE ASIA FX/RATES DAYBOOK: FX/RATES DAYBOOK ASIA: Soft Data Sinks Dollar, Lifts Treasuries

(Bloomberg) — The Canadian dollar stole the show after a strong GDP print sent the loonie flying. The greenback lost ground against all but one of its G-10 peers on weak inflation and housing data and after Treasury Secretary Mnuchin said a weaker dollar can help the U.S. on trade. 10Y Treasury yields ended the day at their lowest closing level of 2017. WHAT TO WATCH

  • South Korea GDP and CPI; see more below

OVERNIGHT TRADING SESSIONS

  • Bloomberg dollar index fell 0.2% to close August in the red, its 6th consecutive monthly decline, the longest losing streak since 2007; USD/CAD fell through 1.2500 level to trade in 1.2450 range after Canadian GDP beat estimates; UST 10Y yields ended at 2.12% after futures volume surged around 3pm ET amid month-end rebalancing; the Mexican peso saw a steep decline amid Nafta uncertainty
  • In European trading, the euro dropped as much as 0.3% to 1.1844 after Reuters reported that recent gains had ECB policy makers worried; UST 10Y yields traded within a 1.22 bps range at 2.145%

TOP OVERNIGHT NEWS

  • The additional spending needed to help Texas recover from Hurricane Harvey may reduce the amount of time Congress has to increase the federal debt limit, Mnuchin said
  • Wells Fargo raised its estimate for how many bogus accounts employees may have created by 67% to 3.5m
  • Even though Fed officials have made it clear they intend to begin reducing the bank’s $4.5t balance sheet shortly, 10Y Treasury yields saw the steepest monthly decline since June 2016

KEY VIEWS

  • Canada’s strong GDP print supports the Bank of Canada’s case for further interest rate hikes and could reinforce loonie strength after a period of recent softness, Wells Fargo says

DATA RELEASED OVERNIGHT

  • In the U.S., rising incomes and low inflation boosted Americans’ spending in July, with purchases rising 0.3% (vs est. 0.4%) and incomes rising 0.4% (vs est. 0.3%); however, pending home sales fell 0.8% in July (vs est. 0.3% gain), indicating that a limited number of listings and elevated property prices are leaving homebuyers empty-handed
  • In Canada, GDP expanded 4.5% in 2Q (vs est. 3.7%), the strongest pace in nearly six years

ECONOMIC DATA (All times HK):

  • TBA: (Macau) Aug. Macau Casino Revenue YoY, prior 29.2%
    • July Hotel Occupancy Rate, prior 85.1
  • 1am: (New Zealand) Aug. QV House Prices YoY, actual 4.8%, prior 6.4%
  • 6:45am: (New Zealand) 2Q Terms of Trade Index QoQ, est. 3.0%, prior 5.1%
  • 7am: (South Korea) 2Q F GDP SA QoQ, est. 0.6%, prior 0.6%
    • 2Q F GDP YoY, est. 2.7%, prior 2.7%
    • Aug. CPI MoM, est. 0.2%, prior 0.2%
    • Aug. CPI YoY, est. 2.2%, prior 2.2%
    • Aug. CPI Core YoY, est. 1.75%, prior 1.8%
  • 7am: (Australia) Aug. CBA Australia PMI Mfg, prior 54.4
  • 7:30am: (Australia) Aug. AiG Perf of Mfg Index, prior 56
  • 7:50am: (Japan) 2Q Capital Spending YoY, est. 7.9%, prior 4.5%
    • 2Q Capital Spending Ex Software, est. 8.2%, prior 5.2%
    • 2Q Company Profits, prior 26.6%
    • 2Q Company Sales, prior 5.6%
  • 8am: (Australia) Aug. CoreLogic House Px MoM, prior 1.5%
  • 8am: (South Korea) Aug. Exports YoY, est. 15.75%, prior 19.5%
    • Aug. Imports YoY, est. 16.0%, prior 14.5%
    • Aug. Trade Balance, est. $6.24b, prior $10.6b
  • 8:30am: Aug. Nikkei Japan PMI Mfg, prior 52.8
  • 8:30am: Aug. Nikkei Vietnam PMI Mfg, prior 51.7
  • 8:30am: Aug. Nikkei Thailand PMI Mfg, prior 49.6
  • 8:30am: Aug. Nikkei South Korea PMI Mfg, prior 49.1
  • 8:30am: Aug. Nikkei Taiwan PMI Mfg, prior 53.6
  • 9:45am: Aug. Caixin China PMI Mfg, est. 51, prior 51.1
  • 11:30am: (Thailand) Aug. CPI YoY, est. 0.38%, prior 0.17%
    • Aug. CPI NSA MoM, est. 0.2%, prior -0.13%
    • Aug. CPI Core YoY, est. 0.5%, prior 0.48%
  • 1pm: (Japan) Aug. Consumer Confidence Index, est. 43.5, prior 43.8
    • Aug. Vehicle Sales YoY, prior -1.15%
  • 1pm: Aug. Nikkei India PMI Mfg, prior 47.9
  • 2:30pm: (Australia) Aug. Commodity Index SDR YoY, prior 17.1%
    • Aug. Commodity Index AUD, prior 114.4
  • 3:30pm: (Thailand) Aug. Business Sentiment Index, prior 50.3
    • Aug. Foreign Reserves, prior $192.9b
    • Aug. Forward Contracts, prior $31.5b

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 5-10 Years

BOND SALES/PURCHASES (All times HK):

  • For corporate bonds, see New Issue Monitor
  • 9am: Australia to Sell A$500.0m 0% 2021 Bonds
  • 10:35am: China to Sell CNY10.0b 91-Day Bills
  • 11am: Bk of Thailand to Sell THB20b 14-Day Bills
  • 5:30pm: India to Sell INR30.0b 6.84% 2022 Bonds
    • India to Sell INR90.0b 2031 Bonds
    • India to Sell INR30.0b 6.57% 2033 Bonds
    • India to Sell INR30.0b 7.72% 2055 Bonds

TECHNICAL OUTLOOK by Bloomberg strategist Vincent Cignarella

  • USD/JPY — Lower, testing 110.00
  • Resistance: 110.85/95 Aug.15/16 highs; 111.18/20, 100/55- DMAs
  • Support: 109.90 Aug. 29 high; 109.55 Aug. 30 low
  • EUR/USD — Testing 1.1910 intermediate wave
  • Resistance: 1.1917 Aug. 28 low; 1.1947 Aug. 29 low
  • Support: 1.1823/24 Aug. 23/22 highs; 1.1798 2nd upper band
  • EUR/JPY — Uptrend rolling over, showing signs of exhaustion
  • Resistance: 131.78 Dec. 31 2025 high; 131.92 Dec. 30, 2015 high
  • Support: 130.76 pivot S1; 130.44 Aug. 25 high
  • AUD/USD — Testing 0.7930 2nd upper band support/resistance
  • Resistance: 0.7954 Aug. 25 high; 0.7973/83 Aug. 28/29 highs
  • Support: 0.7867 Aug. 24 low; 0.7845 Aug. 14 low
  • NZD/USD — Lower, testing 200-DMA
  • Resistance: 0.7218 Aug. 29 low; 0.7231 Aug. 28 low
  • Support: 0.7131 200-DMA; 0.7114 June 5 low
  • 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 50-DMA
  • Resistance: 33.292 Aug. 28 high; 33.367 Aug. 24/25 highs
  • Support: 33.144 Aug. 29 low; 32.969 May 1 2015 low
  • USD/SGD — Consolidating within downtrend
  • Resistance: 1.3622 Aug. 25 high; 1.3641 Aug. 21 high
  • Support: 1.3529 Aug. 28 low; 1.3501 Sept. 9 low
  • 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 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 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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