Asia Roundup: Euro hovers near $1.1300 after German CPI data - September 11, 2015

Market Roundup

• Germany August HICP final mm stays flat at 0.0 % (forecast 0.0 %) vs previous 0.0 %.
  
  
• Germany August CPI final mm stays flat at 0.0 % (forecast 0.0 %) vs previous 0.0 %.
  
  
• Germany August wholesale price index mm decrease to -0.8 % vs previous 0.1 %.
  
  
• Japan Q3 big manufacturing sentiment index +11.0, first rise in 2 qtrs, Q2 -6.0, +10.5 eyed for Q4, previous estimate +13.2, FY '15/16 CAPEX +6.1% y/y, previous estimate +5.9%.
  
  
• Japan convertible bond issuance rises to nine-year high.
  
  
• China deflation risks grow, foreign central banks on alert.
  
  
• Foreign CB US debt holdings $3.335 trln September 9 week, -$11.564 bln, Treasury holdings $3.005 trln, -$11.863 bln, agencies $285.327 bln, +$288 mln.
  
  
• NY Fed - Swaps with foreign CBs $136 mln September 9 week, all with ECB.
  
  
• US-based stock funds post $16.2 bln outflows over week.
  
  
• NZ August PMI 55.0, July revised up to 53.7, 3 of 5 sub-indices up.
  
  
• NZ August food price index -0.5% m/m, +0.4% y/y.

Economic Data Ahead

• (0245 ET/0645 GMT) France July current account balance; last E1.0 bln surplus.
  
  
• (0300 ET/0700 GMT) Spain August CPI, -0.3% m/m, -0.4% y/y eyed; last -0.9%, +0.1%.
  
  
• (0300 ET/0700 GMT) Spain August HICP, -0.4% m/m, -0.5% y/y eyed; last -1.5%, flash -0.5%.
  
  
• (0330 ET/0730 GMT) Sweden Q2 GDP - revised, +1.0% q/q, +3.0% y/y eyed; prelim +1.0%, +3.0%.
  
  
• (0330 ET/0730 GMT) Sweden August unemployment, 6.8% nsa eyed; last 6.5% nsa, 7.3% sa.
  
  
• (0400 ET/0800 GMT) Italy July industrial output, +0.5% m/m, +0.9% y/y eyed; last -1.1%, -0.3%.
  
  
• (0430 ET/0830 GMT) UK July construction output, +0.5% m/m, +0.6% y/y eyed; last +0.9%, +2.6%.
  
  
• (0830 ET/1230 GMT) US August PPI, -0.1% m/m, -0.9% y/y eyed; last +0.2%, -0.8%.
  
  
• (0830 ET/1230 GMT) US August ex-food/energy, +0.1% m/m, +0.7% y/y eyed; last +0.3%, +0.6%.
  
  
• (1000 ET/1400 GMT) US September UOM sentiment index prelim, 91.2 eyed; last 91.9.

Key Events Ahead

• N/A World Economic Forum in Dalian, China (till September 11).
  
  
• N/A EU FinMin informal meeting in Luxembourg (till Saturday).
  
  
• N/A Euro Financial Forum at Luxexpo, Luxembourg (till September 11).
  
  
• N/A UK DMO GBP2.0/1.0/2.0 bln 1/3/6-month treasury bill auctions.
  
  
• (0400 ET/0800 GMT) Norway regional network survey.
  
  
• (0430 ET/0830 GMT) BoE inflation survey.
  
  
• (0500 ET/0900 GMT) Italy -2.25/3.25-4/1-1.5 bln 0.25/1.45/3.25% 2018/22/46 BTP auctions.
  
  
• (0700 ET/1100 GMT) Text of Riksbank DepGov Skingsley presentation in Skaraborg, Sweden.
  
  
• (0715 ET/1115 GMT) BoE MPC Forbes speech at Cardiff Business School.
  
  
• (0745 ET/1145 GMT) ECB Nouy speaks at New York roundtable discussion.
  
  
• (1600 ET/2000 GMT) US Tsy Toloui in joint APEC FinMin meeting press conference in Cebu, PI.

FX Recap

The EUR/USD pair trades 0.14% higher at fresh session highs of 1.1304, flirting with 1.1300 on data release. Pair made intraday high at 1.1304 and low at 1.1271 levels. A closely watched measure of German inflation stagnated on a monthly basis in August, the final CPI reading from the German Federal Statistical Office revealed on Friday. Consumer prices remained flat month-on-month in the eighth month of the year. Back in July, the gauge added 0.2% on the same basis. A calmer Asian session, with broad based USD weakness emerging the underlying theme across the FX space. With nothing significant on the macro calendar reported today, the Asian traders shifted their attention towards a slew of Chinese economic releases over the weekend and next week's Fed rate decision appear to have turned a bit cautious on Friday. Besides, the Euro group meeting will take place, with Greece expected to be the main topic. Moving on, we have an eventful New York session later tonight, as the US calendar brings a set of key economic releases - PPI and prelim consumer sentiment. Initial support is seen around at 1.1015 and resistance at 1.1363 levels.

The Japanese yen extended weakness versus the US dollar on the back of diminishing bids for safe-haven assets as Asian stock markets were seen stabilizing. USD/JPY keeps range below 121 handle, consolidating the gains seen in the previous session. Pair is currently trading at 120.77 levels. It made intraday high at 120.96 and low at 120.58 levels. Today Japan released BSI manufacturing index data with positive numbers at 11.0 mm vs previous -6.0 release. Market will focus on US macroeconomic data for the further directions. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

Sterling rose to week's high of $1.5476 after BoE rate decision and meeting minutes. Global markets' volatility, significant 'low inflationary' forces, and mixed macro data continue to ease the pressure on the Bank of England to slowly begin returning monetary policy toward more normal levels. Regarding the outlook for economic growth, the BoE lowered its estimate for the third-quarter growth to 0.6%, down from 0.7% it expected in August. It made an intraday high at 1.5461 and low at 1.5435 levels. Pair is currently trading at 1.5454 levels. Initial support is seen at 1.5185 and resistance is seen around 1.5507 levels.

New Zealand's dollar managed to register some gains on Friday after taking a thumping on Thursday due to a dovish RBNZ. As expected the RBNZ cut rates to 2.75% but it was the dovish commentary from the bank which hit the kiwi yesterday. The bank still sees the New Zealand dollar as overvalued and signalled further monetary easing to come in the near future. A manufacturing release overnight helped to provide some much need relief to the kiwi. The Business NZ Performance of Manufacturing Index (PMI) rose to 55 in August from 53.7 previously. Today's calendar is likely to provide some incentives, with the US Producer Price Index due before the US open, while the University of Michigan will release its consumer sentiment gauge later in the afternoon. Important data is also due out of China this weekend, which could affect the pair, especially as China is a major trading partner for New Zealand, particularly its dairy sector. It made an intraday high at 0.6319 and low at 0.6286 levels. Pair is currently trading at 0.6308 levels Initial support is seen at 0.6195 and resistance at 0.6511 levels.

The Australian dollar was driven primarily by market sentiment which seems to be risk-off again, causing downside pressure on the Aussie. However, upbeat jobs data helped the currency to bounce back from intraday lows. Pair is supported above 0.7000 levels and trading at 0.7062 levels. It has made intraday high at 0.7085 levels and low at 0.7060 levels. Initial support is seen at 0.6908 and resistance at 0.7122 levels.

Equity Recap

Asian markets steadied on Friday after a volatile week, with the Japan's benchmark index, the Nikkei, muted around 18,308.

While the Hong Kong's benchmark Hang Seng index advances 0.70% to 21,711 and the Shanghai Composite trading modestly flat at 3,195. The benchmark Australian S&P/ASX 200 was almost unchanged at 5,094.

Australia's S&P/Asx 200 index closes down 0.38 pct at 5,075.80 points.

Tokyo's Nikkei average closes down 0.19 pct at 18,264.22.

Treasury Recap

10-year US treasury yield at 2.211 percent vs US close of 2.222 percent on Thursday.

German bund futures open 8 ticks higher at 154.81.

Kenya is going to sell a one-year treasury bond worth a total 30 bln shillings in September.

Short-dated New Zealand government bonds rose, pushing the yield on 2017 notes 2 basis points lower, while longer dated bonds eased.

Australian bond futures were softer with the three-year contract 2 ticks lower at 98.105. The 10-year contract was also down around 2 ticks at 97.2375.

Commodity Recap

Gold clung to small overnight gains near $1,110 an ounce on Friday, but the metal was headed for a third consecutive weekly fall as investors continued to fret over the timing of a looming U.S. interest rate hike. Spot gold was little changed at $1,111.55 an ounce by 0317 GMT, after gaining 0.5 percent in the previous session.

Prices of oil were trading in the negative zone on Friday, digesting the latest inventory report that offered a mixed view for investors. Futures for WTI dropped 0.52% to trade at $45.68 per barrel, while Brent futures were traded 0.18% lower at $48.80 per barrel.