Asia Roundup: Aussie weighed down by retail sales data - September 3, 2015

Market Roundup

• IMF - Global growth moderate, downside risks up especially for emerging economies, advanced economies should maintain accommodative policies.
  
  
• BoJ Policy Board Kiuchi - Economy continues to recover, consumption to remain firm, CAPEX to rise, exports to pick up, China risks, still questions massive QQE, proposes tapering, 2% CPI target unlikely by even FY '17/18.
  
  
• MoF flow data week-ended Aug 29 - Japanese buy net Y582.7 bln foreign stocks, Y900.3 bln bonds, sell Y12.4 bln bills; foreign investors sell net Y630.3 bln Japanese stocks, buy Y230.1 bln bonds, trln bills.
  
  
• Japan August PMI services 53.7, highest since Oct '13, July 51.2.
  
  
• Australia July retail sales -0.1% m/m, +0.4% eyed.
  
  
• Australia July trade deficit A$2.46 bln, A$3.1 bln eyed, exports +2% m/m, imports unchanged.
  
  
• Australia August PSI 55.6, best pace since March '08 despite mixed sub-indices.
  
  
• Australia August VFACTS new vehicle sales -1.7% m/m, +2.9% y/y.
  
  
• NZ Q2 residential building work -1.0% q/q, non-residential +5.2%, total +1.6%.

Economic Data Ahead

• (0130 ET/0530 GMT) France Q2 ILO unemployment; last 10.3%.
  
  
• (0230 ET/0630 GMT) Sweden August PMI services, 56.5 eyed; last 56.6.
  
  
• (0315 ET/0715 GMT) Spain August PMI services, 59.6 eyed; last 59.7.
  
  
• (0345 ET/0745 GMT) Italy August PMI services, 53.0 eyed; last 52.0.
  
  
• (0350 ET/0750 GMT) France August PMI services, 51.8 eyed; flash 51.8.
  
  
• (0350 ET/0750 GMT) France August PMI composite final; flash 51.3.
  
  
• (0355 ET/0755 GMT) Germany August PMI services, 53.6 eyed; flash 53.6.
  
  
• (0355 ET/0755 GMT) Germany August PMI composite final, 54.0 eyed; flash 54.0.
  
  
• (0400 ET/0800 GMT) Euro zone August PMI services final, 54.3 eyed; flash 54.3.
  
  
• (0400 ET/0800 GMT) Euro Zone August PMI composite final, 54.1 eyed; flash 54.1.
  
  
• (0430 ET/0830 GMT) UK August PMI services, 57.6 eyed; last 57.4.
  
  
• (0500 ET/0900 GMT) Norway August housing prices; last +6.8% y/y.
  
  
• (0500 ET/0900 GMT) Euro Zone July retail sales, +0.6% m/m, +2.0% y/y eyed; last -0.6%, +1.2%.
  
  
• (0730 ET/1130 GMT) US August Challenger layoffs; last 105.7k.
  
  
• (0830 ET/1230 GMT) US weekly initial jobless claims, 275k eyed; last 271k.
  
  
• (0830 ET/1230 GMT) US July trade balance, $42.4 bln deficit eyed; last $43.8 bln deficit.
  
  
• (0945 ET/1345 GMT) US August Markit PMI services/composite final; flash 55.2, 55.0.
  
  
• (1000 ET/1400 GMT) US August ISM PMI non-manufacturing, 58.1 eyed; last 60.3.

Key Events Ahead

• China and Hong Kong market holidays.
  
  
• N/A EU Dijsselbloem, Austria FinMin Schelling speeches at Alpbach/Tyrol event.
  
  
• (0100 ET/0500 GMT) France Finance Minister Sapin press conference.
  
  
• (0330 ET/0730 GMT) Riksbank policy announcement, no change in -0.35% repo rate eyed.
  
  
• (0400 ET/0800 GMT) Norway NSA latest economic outlook.
  
  
• (0430 ET/0830 GMT) Spain E4-5 bln 1.15/2.15/5.15 2020/25/4 Bono auctions.
  
  
• (0430 ET/0830 GMT) Spain E0.5-1.0 bln 1.8% 2024 index-linked Bono auction.
  
  
• (0450 ET/0850 GMT) France E7.5-8.5 bln 1.75/1.0/2.5% 2023/25/30 OAT auctions.
  
  
• (0745 ET/1145 GMT) ECB policy announcement, no -0.2% depo/0.05% 7-day refi rate changes eyed.
  
  
• (0830 ET/1230 GMT) ECB President Draghi press conference.

FX Recap

EUR/USD is supported above 1.1200 levels and currently trading at 1.1218 levels. It has made intraday high at 1.1255 and low at 1.1205 levels. An eventful Asian session, though a relatively less volatile one, as China traders remained on side line as the country's markets were closed in observance of Victory day. Market sentiment remained favourable towards the US currency, with the greenback extending previous gains against its major rivals. Today EUR/USD remains under pressure ahead of the ECB meeting which is widely expected to be dovish amid the recent market volatility and lower inflation levels. Initial support is seen around at 1.1015 and resistance at 1.1363 levels.

USD/JPY is supported above 120.00 levels and posted a high of 120.69 levels. It has made intraday low at 120.28 and currently trading at 120.51 levels. The Japanese yen fell victim to a ripened taste for risk on Thursday morning in Asia, with the US dollar continuing its upwards climb as Chinese equity markets closed for a four-day break. Traders continued to take on more risk on Thursday as the safe-haven Japanese yen was sold off against the more-risky US dollar. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

GBP/USD is supported around $1.5300 levels. It made an intraday high at 1.5313 and low at 1.5288 levels. Pair is currently trading at 1.5297 levels. The pair remains pressured amid favourable environment towards the US dollar while the recent below estimates UK macro releases continue to dent investors' confidence in the UK economic prospects. On Wednesday, the UK's construction PMI gained pace and rose to 57.3 in August following the previous months reading of 57.1, while markets were expecting a reading of 57.5. Today UK will release Service PMI data for the further directions. Initial support is seen at 1.5220 and resistance is seen around 1.5436 levels.

NZDUSD is supported above 0.6300 levels and trading at 0.6340 levels and made intraday low at 0.6338 and high at 0.6373 levels. The Kiwi shed a part of early gains and remains bid as the New Zealand benefitted from the release of June-quarter building data which beat market expectations. Total building activity amounted to over $4 billion in the June quarter, up 8% on the same quarter in 2014, and the highest value ever recorded since the series began 50 years ago. The value of all building activity rose 1.6% over the quarter, beating market estimates of a 0.5% increase. Moreover, the NZD/USD pair remains lifted with returning risk sentiment after Chinese markets rebounded somewhat yesterday while the recent upbeat Fonterra's auction results also continues to support the Kiwi. Initial support is seen at 0.6195 and resistance at 0.6511 levels.

AUD/USD is supported above 0.7000 levels and trading at 0.7014 levels. It has made intraday high at 0.7060 levels and low at 0.7001 levels. The Australian dollar retreated against its US dollar on Thursday after retail sales data from the outback nation disappointed. Retail sales fell 0.1% in July after rising a revised 0.6% in June; Australian Bureau of Statistics (ABS) data showed on Thursday, however, the market forecast was for a 0.4% rise in sales in July. Moreover, Australia's trade balance has deteriorated lately as the nation runs some pretty large trade deficits as a result of the big falls in commodity prices. Coming in with a deficit of $2.46 billion the trade deficit was much better than the market forecast of a deficit of $3.1 billion. Initial support is seen at 0.6945 and resistance at 0.7122 levels.

Equity Recap

Japan's benchmark Nikkei 225 index rallied 1.72% to 18,406.08 points within the first hour of trade, with almost all 225 stocks on the index trading with gains, while Tokyo's broader Topix gauge jumped 2.02% to 1,495.52 points.

China's markets were closed on Thursday for Victory Day, and are set to open again on Monday.

Korea's benchmark Kospi index jumped 0.42% to 1,923.29 points this morning in Seoul.

The benchmark Australian S&P/ASX 200 index shed early gains to trade 0.79% lower at 5,061.30 points in Sydney, as retailers traded with sharp losses ahead of July retail data and bank reversed early gains to trade lower.

New Zealand's benchmark S&P/NZX 50 index was up 0.29% at 5,606.68 points this afternoon in Wellington.

Australia's S&P/ASX 200 index closes down 1.27 pct at 5,036.50 points.

Tokyo's Nikkei average closes up 0.48 pct at 18,182.39.

Treasury Recap

New Zealand government bonds eased, pushing yields as much as 2.5 basis points higher along the yield curve. New Zealand government bonds were largely flat.

Australian government bond futures were steady, with the three-year bond contract unchanged at 98.210. The 10-year contract was down half a tick at 97.2750.

BOJ offers to supply 800 bln yen in funds at a fixed rate for 9/7-12/7 at all offices.

Commodity Recap

Gold added to overnight losses on Thursday hurt by a stronger dollar and as investors awaited a key U.S. jobs report to gauge the timing of a Federal Reserve rate hike. Spot gold had eased 0.1 percent to $1,132.30 an ounce by 0318 GMT, after dropping 0.5 percent on Wednesday. U.S. gold slipped about $1 to $1,132.40.

The US and European oil benchmarks posted losses during Thursday's trading session as the ongoing supply glut remains the major concern for the commodity. Futures for WTI declined 0.56% to trade at $46.02 per barrel, while Brent futures were traded 0.73% lower at $50.25 per barrel.