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FX/RATES DAYBOOK ASIA: Havens Reverse as N. Korea Anxiety Eases

(Bloomberg) — Risk-off momentum reversed as markets looked
past news that North Korea launched a missile over Japan,
prompting equities and the dollar to rebound and Treasuries to
pare gains. The dollar reversed a steep drop and ended Tuesday
up against most of its G-10 peers.
WHAT TO WATCH
* BOJ bond purchases; see more below

OVERNIGHT TRADING SESSIONS
* Bloomberg dollar index recovered from a 0.5% decline to gain
~0.2%; EUR/USD fell from overnight high to settle below 1.2000,
while USD/JPY rebounded to gain 0.4% to ~109.67; UST 10Y fell
~3bps to 2.1275%, after earlier plunging to lowest since
November
* In European trading, the euro gained as much as 0.8% to
1.2070, while USD/JPY dove to lowest since April at 108.34; UST
10Y yields touched 2.0841%, with 5Y yields also sinking to
1.6675% for a fresh 2017 low

TOP OVERNIGHT NEWS
* The U.S. and Japan will call for an international embargo on
oil exports to North Korea after Tuesday’s launch of a ballistic
missile, Nikkei reported, without saying where it obtained the
information
* U.S. President Trump said that “all options” are under
consideration in response to North Korea firing a missile over
Japan
* North Korea’s latest missile launch may have ratcheted up
geopolitical tensions to a new level, but for bond and currency
traders, the primary focus is still on U.S. monetary policy
* Just as refiners in South Texas are starting to recover from
Harvey, forecasters have the storm gearing up for a second
landfall in an area further east that includes the nation’s
largest refinery

KEY VIEWS
* Mike Swell, co-head of global fixed income portfolio
management at Goldman Sachs Asset Management, says the dollar
looks “very, very attractive” from an economic perspective
* UST 10Y yields breaking through the symbolic 2% mark may be a
stretch based solely on a missile launch, but 2.02% is
achievable in the near future, according to Ian Lyngen and Aaron
Kohli at BMO Capital Markets.

DATA RELEASED OVERNIGHT
* U.S. consumer confidence rose to the second-highest level
since 2000, which bodes well for household spending growth, the
biggest part of the economy

ECONOMIC DATA (All times HK):
* TBA: (Macau) July Hotel Occupancy Rate, prior 85.1
* 6:45am: (New Zealand) July Building Permits MoM, prior -1.0%
* 7:50am: (Japan) July Retail Trade YoY, est. 1.0%, prior 2.1%
** July Dept. Store, Supermarket Sales, est. -0.2%, prior 0.2%
** July Retail Sales MoM, est. 0.3%, prior 0.2%
* 9:30am: (Australia) July Building Approvals MoM, est. -5.0%,
prior 10.9%
** July Building Approvals YoY, est. -16.6%, prior -2.3%
** 2Q Construction Work Done, est. 1.0%, prior -0.7%
* 10am: (South Korea) July Department Store Sales YoY
** July Discount Store Sales YoY
* 1pm: (Japan) Aug. Small Business Confidence, prior 50

CENTRAL BANKS (All times HK):
* 9:10am: 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$900.0m 2.25% 2028 Bonds
* 11am: Thailand to Sell THB7b Bonds Due 2066
* 5:30pm: India to Sell INR100.0b 91-Day Bills
** India to Sell INR60.0b 364-Day Bills
* 5:30pm: Sri Lanka to Sell 10.6% 2019 Bonds
** Sri Lanka to Sell 11% 2025 Bonds
* 5:30pm: Vietnam to Sell VND500.0b 5-Year Bond
** Vietnam to Sell VND500.0b 7-Year Bond
** Vietnam to Sell VND500.0b 10-Year Bond
** Vietnam to Sell VND500.0b 15-Year Bond

MARKETS as of ~4am IN HONG KONG
* USD/JPY +0.4% to 109.73 (range 108.27-109.90)
* EUR/USD -0.2% to 1.1956 (range 1.1947-1.2070)
* AUD/USD -0.2% to 0.7945 (range 0.7906-0.7983)
* NZD/USD -0.1% to 0.7251 (range 0.7218-0.7299)
* USD/CAD +0.1% to 1.2526 (range 1.2442-1.2550)
* GBP/USD -0.1% to 1.2918 (range 1.2915-1.2979)
* USD/CHF +0.1% to 0.9559 (range 0.9429-0.9561)
* USD/CNH -0.2% to 6.6074 (range 6.5973-6.6277)
* 1-mo. USD/TWD NDF +0.1% to 30.05
* Bloomberg Dollar Spot Index +0.2% to 1151.13
* JPM Emerging Mkt FX Index +0.1% to 70.60
* JPM FX Volatility Index +3.5% to 8.02
* U.S. stocks higher
** S&P 500 +0.1% to 2446.30
** DJIA +0.3% to 21865
* Commodities:
** WTI Crude -0.4% to $46.39/bbl
** Gold -0.1% to $1,309/oz (range $1,305-$1,326)

TECHNICAL OUTLOOK by Bloomberg strategist Vincent
Cignarella USD/JPY — Trading short-term between 108.13
intermediate wave, Ichimoku conversion line

* Resistance: 109.32 Ichimoku conversion line; 109.41/41 Aug.
28/21 highs
* Support: 108.13 intermediate wave; 107.77 Nov. 15 low
EUR/USD — Extending gains toward 1.2167 50% Fibo retracement

* Resistance: 1.2070 Aug. 29 high; 1.2097 Dec. 31, 2014 low
* Support: 1.1984 Aug. 28 high; 1.1941 Aug. 25 high
EUR/JPY — Consolidating within short-term uptrend

* Resistance: 131.40 Aug. 2 high; 131.78 Dec. 31 2025 high
* Support: 129.71 Aug. 17 high; 129.12 Aug. 25 low/Aug. 23 high
AUD/USD — Higher, holding above 0.7925 2nd upper band standard
deviation

* Resistance: 0.7993 Aug. 2 high; 0.8004 July 31 high
* Support: 0.7914 Aug. 28 low; 0.7885 Aug. 25 low
NZD/USD — Spiking higher through top end of diamond pattern

* Resistance: 0.7310 1st upper band; 0.7335/37 Aug. 22/21 highs
* Support: 0.7231 Aug. 28 low; 0.7198 Aug. 25 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 33.567 50-DMA
* Resistance: 33.292 Aug. 28 high; 33.367 Aug. 24/25 highs
* Support: 33.147 May 4 2015 low; 32.969 May 1 2015 low
USD/SGD — Resuming downtrend

* Resistance: 1.3572 Aug. 28 high; 1.3622 Aug. 25 high
* Support: 1.3501 Sept. 9 low; 1.3482 Sept. 7 high
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 lower below 4.2877 50-DMA

* Resistance: 2.2797 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: 51.220 Aug. 24 high; 51.305 Aug. 23 high
* Support: 50.917 Aug. 14 low; 50.576 Aug. 10 low
USD/INR — Consolidating below 64.2943 50-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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