Asia Roundup: Antipodean's extend gains, dollar erases losses against yen following presidential debate, Asian shares volatile - Tuesday, September 27th, 2016

Market Roundup

• Hillary maintains poise at presidential debate, Trump not as much, seen ill-prepared, began to rant at times, risk less off post-debate, CNN poll has 62% thinking Clinton won debate.
   
• BoJ July 28-29 Policy Board minutes – Debate on uncertainties in hitting inflation target, need for comprehensive review of policy, agreed risks skewed to downside, external shocks big, mostly agreed on ETF expansion, rejected notion of limits to monetary policy – Reuters.
   
• Japan Aug corporate goods prices -0.3% m/m, +0.2% y/y, July +0.4%, +0.3%.
   
• Japan looks abroad, cautiously, for labor shortage solution – Nikkei.
   
• Japan to push exports of energy-saving tech- Nikkei.
   
• Japan Inc. hoping interim dividends can satisfy shareholders – Nikkei.
   
• China Aug industrial profits +19.5% y/y, Jan-Aug +8.4%, liabilities +4.6%.
   
• Minny Fed Kashkari – Fed right in not hiking rates in September – Reuters.
   
• BoC Gov Poloz – Increased trade-economic global integration challenge for CBs, growth and inflation targets affected, lessens impact of domestic interest rate/FX fluctuations, increase market volatility, global demand-supply rather than domestic factors more key, to take 3-5 yrs for Canadian economy to recover from lower crude prices – Reuters.
   
• Canada’s lagging growth pressures policymakers to add stimulus – Reuters.
   
• ECB Lane – Current interest rate policies working but still long way to go to achieve inflation target, eyeing Japanese efforts closely – Reuters.
   
• ADB stocks to Asia growth forecasts on China, India strength, cautions on Fed, developing Asia +5.7% 2016/17 - Reuters.
   
• IIF - Emerging markets corporate debt issuance hits $26 trln in H1.
   

Economic Data Ahead

• (0330 ET/0730 GMT) Sweden Aug trade balance; last SEK500 mln surplus.
   
• (0330 ET/0730 GMT) Sweden Aug retail sales, +0.5% m/m, +3.7% y/y eyed; last -0.9%, +1.1%.
   
• (0330 ET/0730 GMT) Sweden Aug household lending growth; +7.6% y/y.
   
• (0330 ET/0730 GMT) Sweden Aug PPI; last -0.3% m/m, -1.1% y/y.
   
• (0400 ET/0800 GMT) Eurozone Aug money supply M3, +4.9% y/y; last +4.8%.
   
• (0400 ET/0800 GMT) Eurozone Aug loans to non-fin’ls, +1.9% eyed; last +1.9%, to households +1.8%.
   
• (0400 ET/0800 GMT) Italy Jul ind orders/sales; last -2.8% m/m, -4.2% y/y and -1.1%, -2.7%.
   
• (0730 ET/1130 GMT) United States Aug building permits; prelim 1.14 mln AR, -0.4% m/m.
   
• (0900 ET/1300 GMT) United States Jul CaseShiller 20, unch m/m sa, +5.1% y/y; last -0.1%, +5.1%.
   
• (0945 ET/1345 GMT) United States Sep Markit PMI services – flash, 51.1 eyed; last 51.5.
   
• (0945 ET/1345 GMT) United States Sep Markit PMI composite – flash.
• (1000 ET/1400 GMT) United States Sep consumer confidence index, 99.0 eyed; last 101.1.
   
• (1000 ET/1400 GMT) United States Sep Richmond Fed mfg shipments/services/comp indices; last -14/0/-11.
   
• (1030 ET/1430 GMT) United States Sep Dallas Fed services revenues/outlook; last 6.5, -5.
   

Key Events Ahead
​

• N/A   OPEC meeting in Algeria (till Wednesday).
   
• (0500 ET/0900 GMT) Netherlands E0.75-1.25 bln 4% 2037 DSL auction.
   
• (0500 ET/0900 GMT) Italy E2-2.5 bln 2018 CTZ, E0.5-1 bln 1.25% 2032 BTPei auctions.
   
• (0530 ET/0930 GMT) UK GBP400 mln 0.025% 2052 index-linked Gilt auction.
   
• (0530 ET/0930 GMT) ECB zero% 7-day refi, E43 bln allotment eyed; E43.2 bln maturing.
   
• (0600 ET/1000 GMT) EC Moscovici speaks at Brussels event.
   
• (0700 ET/1100 GMT) ECB/Slovakia CB Makuch quarterly macroeconomic forecast.
   
• N/A   US TsySec Lew meetings with Brazil Pres Temer, others in Brasilia.
   
• (1100 ET/1500 GMT) Buba Dombret speaks at Vienna event.
   
• (1115 ET/1515 GMT) FOMC ViceChair Fischer speaks at Howard University convocation.
   

FX Beat

DXY: The dollar strengthened against the yen and euro as investors appeared to judge Democrat Hillary Clinton as the winner of the first U.S. presidential debate against Republican Donald Trump. The dollar index against a basket of currencies trades 0.1 percent up at 95.38, after declining to 95.13 in the previous session.

EUR/USD: The euro stalled its four-day winning streak as markets feared that Deutsche Bank would require a government bailout. The major rose as high as 1.1279 hitting a more than 1-week high in the previous session, however, it reversed gains as broader markets focused on the first U.S. presidential debate between Democrat Hillary Clinton and Republican Donald Trump. The European currency trades 0.1 percent down at 1.1242, hovering towards a low of 1.1221 touched on Monday. Investors now await Eurozone private loan and M3 money supply figures, ahead of series of U.S. macro fundamentals and Fed's Stanley Fischer speech. Immediate resistance is located at 1.1280 (Previous Session High), break above could take it till over 1.1300. On the downside, support is seen at 1.1222 (5-DMA), break below could drag it till 1.1200/1.1184.

USD/JPY: The dollar rose, retreating from a 1-month low set against the yen with markets speculating a Clinton win, as the U.S presidential election debate progressed. According to BoJ minutes, some policymakers stated that Japan's inflation expectations were vulnerable to external uncertainties such as oil price falls, slow down in overseas economies, which supported the recovery in the greenback. The major trades 0.4 percent higher at 100.74 yen, recovering from a low of 100.08 touched earlier in the session, its lowest level since late August. Markets will continue to closely watch the developments surrounding the U.S. presidential election, ahead of U.S. economic data including consumer confidence, home price indices, preliminary services and composite PMI. Immediate resistance is located at 101.00, break above targets 101.30/ 101.62 (5-DMA). On the downside, support is seen at 100.08 (Session Low), break below could take it lower 100.00.

GBP/USD: Sterling steadied after declining to near 6-week low in the previous session, as lingering worries over the economic impact of Brexit weakened the currency. Investors wary that an exit from EU will take the UK into a recession and increase Britain's growing current account deficit, which is already around 5 percent of GDP, the highest in the developed nations. Sterling trades flat at 1.2971, attempting to regain the 1.3000 handle. Investor’s attention will remain on UK's CBI distributive trades survey for further cues on major. Immediate resistance is located at 1.3001 (5-DMA), break above could take it near 1.3050. On the downside, support is seen at 1.2949, break below targets 1.2910. Against the euro, the pound trades flat at 86.67 pence, having declined to 87.16 pence on Tuesday, it’s lowest since August 16 and close to the 3-year low of 87.24 pence.

AUD/USD: The Australian dollar advanced, extending gains from the previous session largely on the back of risk-on market sentiment amid rallying oil prices. The Aussie trades 0.3 percent higher at 0.7661, retreating from an early low of 0.7611. The major declined about 0.2 percent before the U.S. presidential debate but turned around as the debate got underway. Focus will remain on the U.S. political dynamics, while investors await the U.S. consumer confidence data and Fed Stanley's speech for further impetus. Immediate support is seen at 0.7600, break below could drag it till 0.7575 (20-DMA). On the upside, resistance is located at 0.7674 (2-week High), break above targets 0.7700.

NZD/USD: The New Zealand dollar gained, rebounding from a fresh 1-month low hit on Monday. The major has weakened over the last 2-weeks largely on the likelihood of further easing by RBNZ at its next policy meeting and on global risk-aversion. However, it is up nearly 7 percent, making it one of the best performing major currencies this year. The Kiwi trades 0.2 percent higher at 0.7286, attempting to take out the 0.7300 handle. Markets will continue to track broad based market sentiment, ahead of U.S. macro fundamentals. Immediate resistance is located at 0.7311 (20-DMA), break above targets 0.7370 (2-weeks High). On the downside, support is seen at 0.7254 (Sept 19 Low), break below could drag it near 0.7200.

Equities Recap

Asian shares bounced back as investors seemed to see Democrat Hillary Clinton as the candidate of the status quo, than her rival Republican Donald Trump.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.

Tokyo's Nikkei rose 0.84 percent at 16,683.93 points, Australia's S&P/ASX 200 index fell 0.4 percent at 5,409.90 points and South Korea's KOSPI added 0.80 percent at 2,063.37 points.

Shanghai composite index declined 0.17 percent at 2,975.25 points, while CSI300 index was trading 0.1 percent higher at 3,222.73 points.

Hong Kong’s Hang Seng was trading 1.02 percent up at 23,558.05 points.

Commodities Recap

Crude oil prices extended gains, after trimming gains on profit-taking in the previous session as world oil producers meet in Algeria to discuss alternatives to cut or freeze oil output in order to tackle a crude glut.  International benchmark Brent crude was trading 0.6 percent higher at $47.20 per barrel at 0354 GMT, hovering towards a 10-day high of $48.23, hit last week. U.S. West Texas Intermediate crude rose 0.59 percent at $45.86 a barrel, having gained 3.3 percent in the previous session.

Gold prices edged down, erasing early session gains, with the equity markets volatile at the start of the first U.S. presidential debate. Spot gold declined 0.2 percent at $1,334.72 an ounce by 0401 GMT, having traded near more than 1-week high of $1343.56 for the last two days. U.S. gold futures eased 0.2 percent to $1,341.60 an ounce.

Treasuries Recap

The 10-year U.S treasury yield stood at 1.6012 percent higher by 0.012 bps, while 5-year was 0.011 bps up at 1.1380 percent.

The Australian government bonds traded narrowly mixed, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.012 percent, the yield on long-term 15-year note remained steady at 2.377 percent and the yield on short-term 2-year rise 1/2 basis point to 1.614 percent.

The New Zealand government bonds closed mixed as investors remained anxious about the result of the first US Presidential debate between Democrat Hillary Clinton and Republican Donald Trump. The yield on the benchmark 10-year bond fell 1 basis point to 2.365 percent, the yield on 7-year note ended flat at 2.110 percent and the yield on short-term 2-year note rose 2 basis points to 1.910 percent.