Asia Roundup: Kiwi swings as RBNZ keeps rates on hold; signals more easing – October 29, 2015

Market Roundup

• RBNZ leaves OCR unchanged at 2.75%, as eyed, statement dovish, further easing likely, especially so if NZD keep moving up, concerns still over China, Asia growth, EM data to be eyed closely, Reuters poll - market eyed Dec OCR cut.
  
  
• Stage set for Yellen to cut through rate-hike noise.
  
  
• Japan September industrial output +1.0% m/m, -0.5% eyed, +4.1% eyed in Oct, previous estimate +4.4%, Nov eyed at -0.3%, govt upgrades assessment of sector, first upgrade in nine months, moving sideways, fears of sharp fall dispelled.
  
  
• MoF flow data week-ended Oct 24 - Japanese buy net Y158.8 bln foreign stocks, Y463.2 bln bonds, sell Y4.6 bln bills; foreign investors buy net Y324.9 bln Japanese stocks, Y771.1 bln bonds, sell trln bills.
  
  
• Japan September crude imports +1.1% y/y, LNG -5.0%, thermal coal +3.2%.
  
  
• Germany DIHK CC - Exports to China to fall 2% this year, '14 +11%.
  
  
• Australia Q3 import prices +1.4% q/q, +3.5% y/y, export prices unchanged, -5.2%.
  
  
• Australia September new home sales -4.0% m/m - HIA.

Economic Data Ahead

• (0300 ET/0700 GMT) UK October Nationwide HPI, +0.5% m/m eyed; last +0.5%.
  
  
• (0400 ET/0800 GMT) Spain October HICP - flash, -0.9% y/y eyed; last -1.1%.

• (0400 ET/0800 GMT) Spain September retail sales, +3.6% y/y eyed; last +3.1% y/y.
  
  
• (0430 ET/0830 GMT) Sweden September retail sales, +1.5% m/m eyed; last -1.7% m/m, +1.0% y/y.
  
  
• (0455 ET/0855 GMT) Germany October unemployment, 2.66 mln nsa eyed; last 2.71 mln nsa, 2.8 mln sa.
  
  
• (0455 ET/0855 GMT) Germany unemployment, -4k, 6.4% sa eyed; last +2k, 6.4%.
  
  
• (0530ET/0930 GMT) UK September mortgage approvals, 72.45k eyed; last 71.03k.
  
  
• (0530ET/0930 GMT) UK September mortgage lending, bln eyed; last bln.
  
  
• (0530ET/0930 GMT) UK September consumer credit, GBP1.1 bln eyed; last GBP860 mln.

• (0530ET/0930 GMT) UK September money supply M4; last -0.4%.
  
  
• (0600 ET/1000 GMT) EZ October business climate index, 0.32 eyed; last 0.34.

• (0600 ET/1000 GMT) EZ October economic sentiment index, 105.2 eyed; last 105.6.
  
  
• (0600 ET/1000 GMT) EZ October industrial sentiment index, -2.7 eyed; last -2.2.
  
  
• (0600 ET/1000 GMT) EZ October services sentiment index, 12.0 eyed; last 12.4.
  
  
• (0600 ET/1000 GMT) EZ October consumer confidence index - final, -7.7 eyed; flash -7.1.
  
  
• (0630 ET/1030 GMT) Belgium October CPI; last +0.07% m/m, +1.06% y/y.
  
  
• (0700 ET/1100 GMT) UK October CBI Distributive Trades retail sales index, 35 eyed; last 49.
  
  
• (0830 ET/1230 GMT) US Q3 GDP advance, +1.6% q/q eyed; last +3.9%.

• (0830 ET/1230 GMT) US Q3 PCE advance, +3.2% AR eyed; last +2.2%.
  
  
• (0830 ET/1230 GMT) US Q3 core PCE, +1.4% AR eyed; last +1.9%.
  
  
• (0830 ET/1230 GMT) US Q3 GDP deflator - advance, +1.5% AR eyed; last +2.1%.
  
  
• (0830 ET/1230 GMT) US weekly initial jobless claims, 263k eyed; last 259k.
  
  
• (0900 ET/1300 GMT) Germany Oct HICP - flash, -0.1% m/m, +0.1% y/y eyed; last -0.3%, -0.2%.
  
  
• (1000 ET/1400 GMT) US September pending home sales index, 110.5, +1.0% m/m eyed; last -1.4%, 109.4.

Key Events Ahead

• N/A London conference, ECB Constancio, BoE, Buba speakers (till Oct 30).
  
  
• N/A OECD Paris Global Forum, various speakers (till Oct 30).
  
  
• (0600 ET/1000 GMT) Italy E3.5-4 and 1.75-2.25 bln 0.65 and 2% 2020 and 2025 BTP auctions.
  
  
• (0600 ET/1000 GMT) Italy E1-1.5 bln 0.381% 2022 floating rate CCT-eu auction.
  
  
• (0910 ET/1310 GMT) Atlanta Fed Lockhart speech at Washington, DC Fed event.

FX Recap

EUR/USD: The US dollar turned to appreciation against the euro after the FOMC statement brought some hawkish hints, indicating that a December rate hike is still in game. An eventful European session awaits the EURO with the inflation and employment data from German. ECB Vice-president Vítor Constancio is scheduled to deliver a keynote speech on "The Role of Stress Testing in the European Central Bank's Policy Framework." Looking towards the New York session, all eyes will remain on the advance GDP estimate from the US for the third quarter. Further, weekly jobless claims and pending home sales along with Fed member Lockhart's speech will be also closely eyed. It made intraday high at 1.0934 and low at 1.0902 levels. Initial support is seen around at 1.0854 and resistance at 1.1560 levels.

USD/JPY: Combined production from Japan's mines, manufacturers and utilities rose at the strongest pace since June last month, coming in stronger than markets had forecast. Industrial production rose 1.0% month-on-month in September, according to preliminary data from the Ministry of Economy, Trade, and Industry (METI) on Thursday, following a 1.2% decline in August. Pair made intraday high at 121.17 and low at 120.58 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

GBP/USD: Pair trades modestly flat at 1.5259, hovering close to fresh session lows struck at 1.5254 in last hour. GBP/USD attempted recovery from two-week lows met fresh supply near 1.5270 region and therefore the pair drifted lower to daily lows, before retreating slightly to 1.5260 levels, where it now mires. The FOMC induced fall in the cable was not as severe as seen in the EUR/USD pair, as the GBP was shielding as the BOE remains the only central bank, besides the Fed, to embark on normalizing its monetary policy. In the day ahead, the pair will be influenced by the UK net lending to individuals and CBI realized sales data ahead of a batch of significant US data. Pair made intraday high at 1.5271 and low at 1.5253 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.

NZD/USD: Pair was trading at $0.6713 almost an hour after the RBNZ's rate announcement, having plunged as low as $0.6621 immediately after the Official Cash Rate (OCR) was left on hold at 2.75%. RBNZ Governor Graeme Wheeler said on Thursday that the exchange rate had been moving higher since September, "which could, if sustained, dampen tradable sector activity and medium-term inflation." He said that some further easing in the OCR "seems likely," adding that "this will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait." It made intraday high at 0.6709 and low at 0.6648 levels. Initial support is seen at 0.6235 and resistance at 0.6896 levels.

AUD/USD: Newly-built home sales fell last month in Australia, undoing a solid rise in August, adding to signs that the housing market may be running out of steam. Sales fell 4.0% month-on-month in September, according to the Housing Industry Association (HIA), after climbing 2.3% in August. Demand for housing has been bolstered by Australia's record-low interest rates in recent years, while strong house-price inflation - particularly in Sydney and Melbourne - have increased the incentive to build new homes. Pair made intraday high at 0.7118 levels and low around 0.7091 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels.

Equity Recap

Japan's benchmark Nikkei 225 index rose 0.41% to 18,979.88 points within the first hour of trade, while Tokyo's broader Topix gauge was up 0.24% at 1,550.93 points.

Korea's benchmark Kospi index jumped 0.83% to 2,059.47 points on Thursday morning in Seoul.

The benchmark Australian S&P/ASX 200 index traded 0.50% lower at 5,308.30 points in Sydney, with Australia's mighty banks weighing on the index.

New Zealand's benchmark S&P/NZX 50 index rose 0.09% to 6,004.28 points this afternoon in Wellington.

Australia's S&P/ASX 200 index closes down 1.22 pct at 5,269.90 points.

Tokyo's Nikkei average closes up 0.17 pct at 18,935.71.

Treasury Recap

Australian government bond futures were mixed, with the three-year bond contract down 1 tick to 98.240. The 10-year contract added half a tick to 97.4000, while the 20-year contract eased 3 ticks to 96.8150.

New Zealand government bonds eased, with yields 1.5 to 2 basis points higher along the curve.

US 10-year treasuries yield at 2.087 percent vs US close of  2.092 percent on Wednesday.

Commodity Recap

Gold ticked up on Thursday but stayed near its lowest level in two weeks after the Federal Reserve hinted at a possible U.S. rate hike in December, bolstering the dollar and reducing the appeal of non-interest-paying bullion. Spot gold rose 0.3 percent to $1,159.50 an ounce by 0330 GMT, following a 1 percent slide in the previous session. The metal fell on Wednesday to $1,152, its lowest since Oct. 13.

Oil prices dropped on Thursday following steep gains posted for the previous session, as US stockpiles growth largely matched expectations, while traders analyzed prospects for a December rate hike by the US Federal Reserve (Fed). Futures for WTI dropped 0.54% to trade at $45.69 per barrel, while Brent futures slipped 0.43% to $48.84 per barrel.