Asia roundup: Aussie rallies on better-than-expected business conditions, Dollar index eases following a decline in U.S. treasury yields, investors eye UK CPI – Tuesday, February 13th, 2018
- Merkel, SPD under renewed fire over German coalition deal
- Japan PM Abe – Undecided on next BoJ governor, expects BoJ to maintain course
- Japan FinMin Aso –BoJ gov needs English, communication skills (ref to Mr. Kuroda?)
- Japan eyes tighter leverage cap on forex trading – Nikkei
- US Pres Trump – To push for reciprocal tax on trade partners
- Australia Jan NAB Business Conditions, 19 vs 13
- Australia Jan NAB Business Confidence, 12 vs 11
- Australia central bank sees only gradual recovery in wages
- N.Korea warms to S.Korea after visit, pressure to be kept in place for now
- South Africa’s ANC decides to remove Zuma as head of state -source
Economic Data Ahead
- (0530 ET/0930 GMT) Great Britain Jan Core CPI, -0.9% m/m, 2.6% y/y forecast, 0.3%, 2.5% last
- (0530 ET/0930 GMT) Great Britain Jan CPI, -0.6% m/m, 2.9% y/y forecast, 0.4%, 3.0% last
- (0530 ET/0930 GMT) Great Britain Jan RPI, -0.7% m/m, 4.1% y/y forecast, 0.8%, 4.1% last
Key Events Ahead
- (0515 ET/1015 GMT) Italy E2.0-2.5/E2.5-3.0/E1.75-2.25 bln for 2/6/30 year auction
- (0545 ET/1045 GMT) Portugal E1.0-1.25/E1.0-1.25 bln for 4/10 year auction
- (0800 ET/1300 GMT) Cleveland Fed President Loretta Mester speaks in Dayton, Ohio
DXY: The dollar index declined, extending previous session losses, as global equity markets showed some sign of stability after the recent rout. The greenback against a basket of currencies traded 0.2 percent down at 89.94, having touched a high of 90.57 on Thursday, its highest since Jan. 23. FxWirePro’s Hourly Dollar Strength Index stood at -105.13 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rose, extending gains for a third straight session on the view that the European Central Bank will scale back its stimulus later this year amid a strong recovery seen in the eurozone economy. The European currency traded 0.1 percent up at 1.2302, having touched a low of 1.2205 on Friday, its lowest since Jan. 18. FxWirePro’s Hourly Euro Strength Index stood at 54.91 (Bullish) by 0500 GMT. Investors’ attention will remain on U.S. business optimism index and FOMC member Mester’s speech, amid a lack of significant economic data from Eurozone docket. Immediate resistance is located at 1.2328 (61.8% retracement of 1.2522 and 1.2205), a break above targets 1.2357 (10-DMA). On the downside, support is seen at 1.2245 (Feb 7 Low), a break below could drag it lower 1.2205 (Feb. 9 Low).
USD/JPY: The dollar declined against the Japanese yen as markets remained volatile ahead of US CPI later on in the week. The major was trading 0.3 percent down at 108.29, having hit a low of 108.04 on Friday, its lowest since Sept. 8. FxWirePro’s Hourly Yen Strength Index stood at 149.54 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. FOMC member Mester’s speech for further momentum. Immediate resistance is located at 109.37 (61.8% retracement of 111.48 and 108.04), a break above targets 110.28. On the downside, support is seen at 108.00, a break below could take it lower 107.30.
GBP/USD: Sterling gained as investors awaited UK CPI print, which is expected to show the cost of living dropped 0.6 percent month-on-month in January, while the core CPI, which strips out volatile items, is seen rising at an annualized rate of 2.6 percent against 2.5 percent in December. The major traded 0.1 percent up at 1.3852, having hit a low of 1.3764 on Friday, it’s lowest since Jan 17. FxWirePro’s Hourly Sterling Strength Index stood at -71.49 (Bearish) by 0500 GMT. Investors’ focus will remain on the UK producer price index and consumer price index, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3991 (21-DMA), a break above could take it near 1.4063. On the downside, support is seen at 1.3764 (Feb 9 Low), a break below targets 1.3700. Against the euro, the pound was trading 0.1 percent down at 88.86 pence, having hit a low of 89.10 pence on Tuesday, it’s lowest since Jan. 17.
AUD/USD: The Australian dollar rose to a 6-day high after data showed domestic business conditions reached near-boom levels in January as sales and profits increased sharply. National Australia Bank’s index of business conditions climbed 6 points to +19 in January, while business confidence bounced 2 points to +12, the highest reading since April last year. The Aussie trades 0.1 percent up at 0.7867, having hit a low of 0.7758 on Friday; it’s lowest since Dec. 27. FxWirePro’s Hourly Aussie Strength Index stood at 87.98 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7835 (5-DMA), a break below targets 0.7758 (Feb 9 Low). On the upside, resistance is located at 0.7915 (10-DMA), a break above could take it near 0.7967 (21-DMA).
NZD/USD: The New Zealand dollar advanced amid a rebound in broader risk sentiment which saw global equities rally strongly. The Kiwi trades 0.05 percent up at 0.7264, having touched a low of 0.7176 on Thursday, its lowest level since Jan. 10. FxWirePro’s Hourly Kiwi Strength Index was at 51.59 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7297 (10-DMA), a break above could take it near 0.7350. On the downside, support is seen at 0.7176 (Feb. 8 Low), a break below could drag it near 0.7100.
Asian shares retreated from two-month lows, boosted by Wall Street’s extended rebound from last week’s steep fall, while the greenback eased as investors remained cautious ahead of U.S. inflation data later in the week.
MSCI’s broadest index of Asia-Pacific shares outside Japan surged 0.1 percent.
Tokyo’s Nikkei declined 0.7 percent to 21,227.08 points, Australia’s S&P/ASX 200 index gained 0.6 percent to 5,855.90 points and South Korea’s KOSPI advanced 0.7 percent to 2,400.79 points.
Shanghai composite index rose 0.9 percent to 3,184.70 points, while CSI300 index was trading 1.2 percent up at 3,936.38 points.
Hong Kong’s Hang Seng was trading 1.8 percent higher at 29,887.10 points.
Crude oil prices rose, boosted by a rebound in global stock markets that followed sharp falls last week. International benchmark Brent crude was trading 0.5 percent up at $62.96 per barrel by 0436 GMT, having hit a low of $61.75 on Friday, its lowest since Dec. 7. U.S. West Texas Intermediate was trading 0.4 percent up at $59.59 a barrel, after falling as low as $58.06 on Friday, its weakest since Dec. 22.
Gold prices held gains, supported by a weaker dollar, while investors awaited U.S. inflation data for clues on the pace of interest rate hikes. Spot gold was trading 0.2 percent up at $1,325.69 an ounce by 0445 GMT, having hit a low of 1,306.96 on Thursday, lowest since Jan 14. U.S. gold futures were down 0.1 percent at $1,324.6 per ounce.
The 10-year U.S Treasury yield stood at 2.849 percent lower by 0.006 bps, while 5-year yield was 0.004 bps down at 2.550 percent.
The Japanese government bonds remained tad higher Tuesday, following expectations of a decline in the country’s fourth-quarter gross domestic product (GDP), scheduled to be released today. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped 1/2 basis point to 0.06 percent, the yield on the long-term 30-year note fell nearly 1 basis point to 0.80 percent and the yield on short-term 2-year remained tad lower at -0.14 percent.
The Australian bonds sharply rallied during early Asian session as investors covered previous short positions ahead of the employment report for the month of January, scheduled to be released on February 15. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.86 percent, the yield on the long-term 30-year note fell nearly 1-1/2 basis points to 3.51 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at 2.00 percent.
The New Zealand government bonds closed Tuesday’s session on a higher note as demand for safe-haven instruments continued amid a mild recovery in equities in a muted trading week that is scheduled to witness data of least economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.99 percent, the yield on 20-year also plunged 2-1/2 basis points to 3.51 percent and the yield on short-term 2-year closed 2 basis points lower at 1.88 percent.
The Canadian government bond prices were higher across the yield curve, with the two-year up 1 Canadian cent to yield 1.783 percent and the benchmark 10-year rising 11 Canadian cents to yield 2.338 percent. The gap between Canada’s 10-year yield and its U.S. equivalent widened by 3.7 basis points to a spread of -51.6 basis points, its widest since Dec. 19.
Source: FXWire Media Round Ups