Asia Roundup: Aussie Halts Promising Rally against USD on Weak Job Growth - October 15, 2015

Market Roundup

• As FX markets turn choppy, demand for M&A-related hedging revives.
  
  
• Japan calls upon BlackRock in bid to encourage corporate investment.
  
  
• Japan October Reuters Tankan manufacturing index +7, matches May '13 low, recession fears, Sept +9, non-manufacturing index +27 vs Sept +23, Jan mfg index eyed at +7, non-mfg +24.
  
  
• National Australia Bank explores tie-up with Japan Nippon Life, reports yesterday Nippon to pay Y200-300 bln to buy-in.
  
  
• Australia September employment -5.1k, unemployment 6.2% participation 64.9%, +5k, 6.3% and 65.0% eyed, full-time employment -13.9k.
  
  
• Australia October MI expected inflation weighted mean +2.4%, trimmed mean +3.5%.
  
  
• Australia September new motor vehicle sales +5.5% y/y to 100k+, record, +7.7% y/y.
  
  
• Broad-based demand for new Aussie sov bond, A$8 bln orders vs A$4 bln sold.
  
  
• NZ October ANZ/RM consumer confidence index 114.9, highest in 4-mos, September 110.8.
  
  
• NZ September PMI 55.4, slightly faster growth, best since February, Aug 55.1.
  
  
• ECB Constancio - Diverging US-EZ monetary policies could have greater global repercussions than in past, huge USD debt globally.

Economic Data Ahead

• (0330 ET/0730 GMT) Sweden September unemployment, 6.6% nsa eyed; last 6.4% nsa, 7.0% sa.
  
  
• (0830 ET/1230 GMT) US September CPI,  -0.2% m/m, -0.1% y/y eyed; last -0.1%, +0.2%.

• (0830 ET/1230 GMT) US September core, +0.1% m/m, +1.8% y/y eyed; last +0.1%, +1.8%.
  
  
• (0830 ET/1230 GMT) US weekly initial jobless claims, 270k eyed; last 263k.
  
  
• (0830 ET/1230 GMT) US October NY Fed Empire State mfg index, -8.00 eyed; last -14.67.
  
  
• (1000 ET/1400 GMT) US October Philly Fed business sentiment index, -1.0 eyed; last -6.0.
  
  
• (1130 ET/1530 GMT) US September Cleveland Fed CPI; last +0.2%.

Key Events Ahead

• N/A Brussels European Council meeting (to 10/16), Warsaw EEI/NBP conference.
  
  
• (0430 ET/0830 GMT) UK ONS quarterly Economic Forum in London.
  
  
• (0530 ET/0930 GMT) Spain E3.5-4.5 bln 0.25/2.15/1.95% 2018/25/30 Bono auctions.
  
  
• (0550 ET/0950 GMT) France E7-8 bln 4.0/0.25/3.0% 2018/20/22 OAT auctions.
  
  
• (0630 ET/1030 GMT) UK DMO GBP1.5 bln 0.125% 2026 index-linked Gilt auction.
  
  
• (0650 ET/1050 GMT) France E1-1.5 bln 1.3/2.1/0.25% 2019/23/24 index-linked BTan/OAT auctions.
  
  
• (0815 ET/1215 GMT) Buba Thiele speech in Wiesbaden, Germany.
  
  
• (0930 ET/1330 GMT) Buba VP Buch speech at Warsaw School of Economics.
  
  
• (1030 ET/1430 GMT) St Louis Fed speech at conference hosted by St Louis Fed.
  
  
• (1030 ET/1430 GMT) NY Fed Dudley speaks at Brookings Institution Washington, DC event.
  
  
• (1630 ET/2030 GMT) Cleveland Fed Mester speech at NYU Stern School of Business.

FX Recap

EUR/USD: Pair trades 0.10% higher at 1.1486, and within a shouting distance of the 1.15 barrier. The major extends its recovery from a drop to hourly 20-SMA located near 1.1460 in early Asia and now looks to attack 1.1500 levels, the strongest since Aug 26. Looking ahead, markets await the European opening bells ahead of the US data releases for further cues on pair amid a data-deficient EUR calendar. It made intraday high at 1.1489 and low at 1.1460 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.

USD/JPY: Japan's industrial output declined for the second month in a row in August, final official data showed on Thursday, suggesting the economy remains on a sluggish recovery path. Industrial output fell 1.2% over the month in August, the final data from the Ministry of Economy, Trade and Industry (METI) showed on Thursday, confirming the preliminary results. Pair made intraday high at 119.15 and low at 118.69 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

GBP/USD: The pound was up around 100 pips on the dollar Wednesday, after muted US retail sales and strong UK unemployment figures that showed the highest employment levels in 7 years. Highs of $1.5493 were posted, reversing yesterday's losses led by poor CPI data from the UK. Pair made intraday high at 1.5482 and low at 1.5460 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.

NZD/USD: A recent strong run in the New Zealand dollar continued on Thursday, as fundamentals looked increasingly brighter for the New Zealand economy. Pair traded up 0.66% at $0.6829 on Thursday afternoon in Wellington, rising from $0.6784 where the pair closed in New York on Wednesday, while touching a four-month high of $0.6846 earlier on Thursday. Earlier today a measure of consumer sentiment pointed to a strong jump in confidence levels among New Zealanders this month. The ANZ Consumer Confidence Index rose 3.7% in October to 114.9 points from 110.8 in September. Pair made intraday high at 0.6845 and low at 0.6781 levels. Initial support is seen at 0.6235 and resistance at 0.6721 levels.

AUD/USD: The Australian dollar retraced some of its earlier gains on the release of Australian labour market data which came in below expectations. Australia's jobless rate held at 6.2% last month, according to the Australian Bureau of Statistics, despite job growth declining by 5,100. Analysts anticipated that the unemployment rate would be stable in September, but thought the economy would add around 7,000 jobs. Pair made intraday high at 0.7350 levels and low around 0.7296 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels.

Equity Recap

Japan's benchmark Nikkei 225 index rose 0.56% to 17,991.91 points within the first hour of trade, while Tokyo's broader Topix gauge jumped 0.59% to 1,479.58 points.

Hong Kong's benchmark Hang Seng index advanced 0.75% to 22,608.04 points at the opening bell, but mainland China's benchmark Shanghai Composite eased 0.23% to 3,255.03 points at the same time.

Korea's benchmark Kospi index jumped 0.88% to 2,027.23 points this morning in Seoul. The Bank of Korea kept its benchmark rate on hold at a record-low 1.50% on Thursday.

The benchmark Australian S&P/ASX 200 index traded 0.52% higher at 5,224.10 points in Sydney, with oil and gold miners off to a solid start.

New Zealand's benchmark S&P/NZX 50 index rose 0.18% to 5,737.26 points this afternoon in Wellington.

Australia's S&P/ASX 200 index closes up 0.62 pct at 5,229.30 points.

Tokyo's Nikkei average closes up 1.15 pct at 18,096.90.

Treasury Recap

BOJ offers to lend Y235.1 bln of JGBs on spot basis through 10/16 as a secondary source of JGBs.

New Zealand government bonds rose, sending yields 12.5 ticks lower at the long end of the curve.

Australian government bond futures were split, with the three-year bond contract off 3 ticks at 98.200. The 10-year contract added 3 ticks to 97.4100, while the 20-year contract was up 4 ticks to 96.8900.

Commodity Recap

Gold held near a 3-1/2-month high on Thursday as sluggish economic data from China and the United States stoked speculation the Federal Reserve will not raise rates this year. Spot gold was little changed at $1,185 an ounce by 0022 GMT following a four-day rally. The metal climbed to $1,190 on Tuesday, it's highest since June 22.

Oil was trading mixed on Thursday as concerns about slowing demand and the supply surplus continue to cap any upside price move. Futures for WTI dropped 0.21% to trade at $46.54 per barrel, while Brent futures were traded 0.16% up to $49.77 per barrel.