Asia Roundup: Aussie maintains mild gains after RBA keeps policy intact -September 1, 2015

Market Roundup

• Japan Fin Min Aso - China to be topic at G20 meeting this week, structural issues may be behind stock market moves.
• China PBOC to require banks trading currency forwards for clients to hold USD FX reserves beginning Oct 15, ratio to be 20%, no interest to be paid, review on monthly basis, funds in reserves to be frozen for one year.
• China August Caixin/Markit manufacturing PMI - final 47.3, lowest since '09, flash 47.1; services PMI 51.5, lowest in over a year, July 53.8.
• China Aug official manufacturing PMI 49.7, as eyed, contraction, 3-year low, July 50.0; official services PMI 53.4, July 53.9.
• Japan August manufacturing PMI - final 51.7, best in 7-mos, flash 51.9, July final 51.2.
• MoF survey - Q2 corporate CAPEX +5.6% y/y, -2.7% q/q excluding software, largest decline since Q2 '12, recurring profits +23.8% y/y, Y20.3 trln highest on record, sales +1.1%.
• RBA OCR unchanged at 2% as eyed, AUD adjusting to lower commodity prices, policy needs to remain accommodative, economy still growing, inflation on target.
• Australia Q2 current account deficit A$19.0 bln, A$15.8 bln eyed, net exports GDP impact -0.6% in Q2, -0.3% eyed; Q2 government spending +2.2% to A$72.1 bln.
• Australia August PMI +1.3 pt to 51.7.
• Australia July building approvals +4.2% m/m, +2.5% eyed, private-sector houses -3%.
• Australia August RP Data home prices +0.3% m/m, +10.2% y/y, July +2.8%, +11.1%.
• NZ Q2 terms of trade index +1.3% q/q, -1.9% eyed, export volumes -0.2%, prices +2.1%, import prices +0.7%, +0.3/unch/+1.3% eyed.
• NZ August QV residential property price index +11.3% y/y, July +10.1%.
• Citi - WTI/Brent to fall to new '15 lows, rallies to be short-lived.

 Economic Data Ahead

• (0300 ET/0700 GMT) Norway August PMI manufacturing, 46.0 eyed; last 45.8.
• (0315 ET/0715 GMT) Spain August PMI manufacturing, 53.2 eyed; last 53.6.
• (0330 ET/0730 GMT) Switzerland August PMI manufacturing, 49.7 eyed.
• (0345 ET/0745 GMT) Italy August PMI manufacturing, 54.8 eyed; last 55.3.
• (0350 ET/0750 GMT) France August PMI manufacturing, 48.6 eyed; flash 48.6.
• (0355 ET/0755 GMT) Germany August PMI manufacturing, 53.2 eyed; flash 53.2.
• (0355 ET/0755 GMT) Germany August unemployment, 6.4%, -3k sa eyed; last 6.4%, +9k.
   
• (0355 ET/0755 GMT) Germany August unemployment, 2.8 mln nsa eyed; last 2.77 mln nsa, 2.8 mln sa.
• (0400 ET/0800 GMT) Euro Zone August PMI manufacturing, 52.4 eyed; flash 52.4.
• (0400 ET/0800 GMT) Italy July unemployment, 12.6% eyed; last 12.7%.
• (0430 ET/0830 GMT) UK August PMI manufacturing, 52.0 eyed; last 51.9.
• (0430 ET/0830 GMT) UK July mortgage approvals, 68.0k eyed; last 66.58k.
• (0430 ET/0830 GMT) UK July mortgage lending; last bln.
• (0430 ET/0830 GMT) UK consumer credit, GBP1.2 bln eyed; last bln.
• (0430 ET/0830 GMT) UK money supply M4; last -0.5%.
• (0500 ET/0900 GMT) Euro Zone July unemployment, 11.1% eyed; last 11.1%.
• (0500 ET/0900 GMT) Italy Q2 GDP final, +0.2% q/q, +0.5% y/y eyed; prelim +0.2%, +0.5%.
• (0945 ET/1345 GMT) US August Markit PMI manufacturing - final; flash 52.9.
• (1000 ET/1400 GMT) US August ISM PMI manufacturing, 52.6 eyed; last 52.7.
• (1000 ET/1400 GMT) US July construction spending, +0.6% m/m eyed; last +0.1%.
• (1030 ET/1430 GMT) US August Dallas Fed services sector outlook/revenues; last 7.9/19.1.
• (1330 ET/1730 GMT) US August total vehicle sales, 17.3 mln AR eyed; last 17.55 mln.

Key Events Ahead

• (0500 ET/0900 GMT) Austria total bln 3.9% and 1.2% 2020 and 2025 RAGB auctions.
• (0530 ET/0930 GMT) ECB 7-day refi at fixed 0.05%, E70 bln allotment eyed, last bln.
• (0800 ET/1200 GMT) ECB Supervisory Board Dickson London speech on financial regulation.
• (1200 ET/1600 GMT) SNB Chair Jordan speech in Zurich.
• (1310 ET/1710 GMT) Boston Fed Rosengren speech in New York.

FX Recap

EURUSD: Pair is currently supported above 1.1200 levels and trading at 1.1271 levels. It made intraday high at 1.1277 and low at 1.1208 levels. Retail sales for Germany posted better-than-expected results in the seventh month of 2015, according to the latest report from the German statistical office released on Monday. Retail turnover rose 1.4% in real terms month-on-month in July, up from a 2.3% decline recorded in the previous month, coming in above market expectations of a 1.1% increase. Euro zone inflation rose 0.2% year-on-year, the same reading as in the previous month, according to preliminary data. Market will focus on manufacturing PMI data due to release on European hours. Initial support is seen around 1.1210 levels and resistance at 1.1425 levels.

USDJPY: Pair is supported below 121.00 levels. It made intraday high at 121.24 and low at 120.59 levels. It is currently trading around 120.65 levels. The Japanese yen rallied against the greenback on Tuesday as investors sought the yen's safe-haven status after Chinese equity markets went into free-fall again and manufacturing data from the world's second-biggest economy disappointed.  The US dollar fell 0.36% against the yen to ¥120.77 on Tuesday afternoon in Tokyo as safe-haven demand bid up the yen, sliding from ¥121.21 where the cross closed in New York overnight. Initial support is seen at 118.23 and resistance at 122.01 levels.

GBPUSD: Pair is supported around 1.5400 levels. It made intraday high at 1.5405 and low at 1.5344 levels. It is currently trading at 1.5391 levels. pair ran into offers at 1.5405 in the Asian session, after having recovered from the low of 1.5340 on the back of broad based USD selling. The final UK manufacturing PMI for August is seen rising to 52.00 from the earlier figure of 51.9. The traders would also keep an eye on the new export orders index, which is sensitive to the GBP exchange rate. Meanwhile, net consumer credit, mortgage approvals, and money supply figures could be overshadowed by PMI figures. Ahead in the day, the US ISM figures could affect the pair. The sentiment in the major European equities and on Wall Street could influence the Fed rate hike bets and the market's appetite for the US dollars. Initial support is seen at 1.5321 and resistance at 1.5592 levels.

NZDUSD: Pair is supported below 0.6400 levels and trading at 0.6380 levels. It made intraday high at 0.6389 and low at 0.6343 levels. Pair is trading range bound as Oil prices fell on Tuesday after surging in the previous session, as worries over demand from China returned following the fresh PMI figures. Initial support is seen at 1.3187 and resistance at 1.3322 levels.

AUDUSD: Pair is supported above 0.7100 levels and trading around 0.7131 levels. It made intraday high at 0.7153 and low at 0.7102 levels. The Reserve Bank of Australia left interest rates on hold at record-low levels on Tuesday as board members continued to assess the positive impact past rate cuts and the weaker exchange rate have on growth. For the second time in as many months the Reserve Bank of Australia signaled in its cash-rate statement that the Australian dollar was at a level which was assisting economic growth rather than hampering it. Initial support is seen at 0.7040 and resistance is seen around 0.7236 levels.

Equity Recap

The full force of the global slowdown hammered Asian markets last month, leaving many with their biggest monthly losses in more than three years.

Japan's benchmark Nikkei 225 index tumbled 1.66% to 18,576.23 points within the first hour of trade, while Tokyo's broader Topix gauge fell 1.35% to 1,516.31 points.

Hong Kong's benchmark Hang Seng index fell 0.39% to 21,586.50 points at the opening bell, and mainland China's benchmark Shanghai Composite tumbled 2.06% to 3,139.86 points at the same time.

Korea's benchmark Kospi index eased 0.56% lower to 1,930.64 points this morning in Seoul.

The benchmark Australian S&P/ASX 200 index fell 0.56% to 5,178.10 points in Sydney, with gold miners and banks weighing down on Australia's markets.

New Zealand's benchmark S&P/NZX 50 index fell 0.75% to 5,613.89points this afternoon in Wellington.

Australia's S&P/ASX 200 index closes down 2.11 Pct at 5,097.10 points.

Tokyo's Nikkei average closes down 3.84 pct at 18,165.69.

Treasury Recap

US 10-year treasuries yield at 2.184 percent vs US close of 2.200 percent on Monday.

BOJ offers to lend trln of JGBs on spot basis through 9/2 as a secondary source of JGBs.

New Zealand government bonds rose, pushing yields two basis points lower along the yield curve.

Australian government bond futures were also a bit firmer, with the three-year bond contract steady at 98.230. The 10-year contract added 3 ticks to 97.3350.

Commodity Recap

Gold rose on Tuesday as equities faltered on fresh signs of weakness in China's economy although mounting expectations that the U.S. Federal Reserve will likely go ahead with an interest rate increase this month kept gains in check. Spot gold was up 0.6 percent at $1,141 an ounce by 0558 GMT, after an uneventful session on Monday.

Oil prices fell on Tuesday after surging in the previous session, as worries over demand from China returned following the fresh PMI figures. Futures for WTI slumped 3.01% to trade at $47.73 per barrel, while Brent futures were traded 2.83% lower at $52.62 per barrel.