Asia Roundup: Yen driven by risk aversion after Asian equity Sell-Off - September 29, 2015

Market Roundup

• SF Fed Williams - GDP likely +2.25% in H2 '15, 2%+ in '16, starting to see signs of imbalances, hiking rates appropriate later this year, jobless likely sub-5% this year, CPI +2% over next two years, hike then policy reassessment, nothing to suggest China growth worse than expected.
  
  
• Government funding bill advances in the US Senate.
  
  
• Japan Tobacco nears agreement to buy Reynolds unit, $5 bln deal.
  
  
• Japan August crude imports +3.3% y/y, LNG +0.2%, total coal +1.4%.
  
  
• India repo rate decrease to 6.75 % (forecast 7.00 %) vs previous 7.25 %.
  
  
• India reverse repo rate decrease to 5.75 % vs previous 6.25 %.
  
  
• India cash reserve ratio stays flat at 4.00 % (forecast 4.00 %) vs previous 4.00 %.

Economic Data Ahead

• (0300 ET/0700 GMT) Spain August retail sales, +3.3% y/y eyed; last +4.1%.
  
  
• (0300 ET/0700 GMT) Spain September HICP - flash, -0.6% y/y eyed; last -0.5%.
  
  
• (0400 ET/0800 GMT) Norway August retail sales ex-autos, +0.3% m/m eyed; last +0.5%.
  
  
• (0430 ET/0830 GMT) UK August mortgage approvals, 69.9k eyed; last 68.76k.
  
  
• (0430 ET/0830 GMT) UK August mortgage lending, GBP2.9 bln eyed; last bln.
  
  
• (0430 ET/0830 GMT) UK August consumer credit, GBP1.2 bln eyed; last bln.
  
  
• (0430 ET/0830 GMT) UK August money supply M4; last +1.0%.
  
  
• (0500 ET/0900 GMT) Euro zone September business climate index, 0.20 eyed; last  0.21.

• (0500 ET/0900 GMT) Euro zone September economic sentiment index, 104.1 eyed; last 104.2.
  
  
• (0500 ET/0900 GMT) Euro zone September industrial sentiment index, -3.8 eyed; last -3.7.
  
  
• (0500 ET/0900 GMT) Euro zone September services sentiment index, 10.0 eyed; last 10.2.
  
  
• (0500 ET/0900 GMT) Euro zone September consumer confidence index, -7.1 eyed; last -6.9.
  
  
• (0530 ET/0930 GMT) Belgium September CPI, -0.1% m/m, +0.6% y/y eyed; last +0.07%, +0.91%.
  
  
• (0600 ET/1000 GMT) UK September CBI Distributive Trades retail sales index, 28 eyed; last 24.
  
  
• (0800 ET/1200 GMT) Germany September CPI flash, +0.1% y/y eyed; last +0.2%.

• (0800 ET/1200 GMT) Germany September HICP flash, -0.1% m/m, unchanged y/y eyed; last unchanged, +0.1%.
  
  
• (0900 ET/1300 GMT) US July CaseShiller 20, +0.8% nsa, +0.1% m/m sa eyed; last +1.0%, -0.1%.
  
  
• (0900 ET/1300 GMT) US July CaseShiller 20, +5.1% y/y eyed; last +5.0%.
  
  
• (1000 ET/1400 GMT) US September consumer confidence index, 96.1 eyed; last 101.5.
  
  
• (1030 ET/1430 GMT) US September Dallas Fed Texas services revenues/outlook indices; last 9.3, 2.1.

Key Events Ahead

• N/A OECD meeting in Tokyo, various speakers (till tomorrow).
  
  
• N/A Norges Bank Gov Olsen speeches in Trondheim.
  
  
• N/A IMF report on Sweden's economy.
  
  
• N/A Belgium E0.9-1.3 bln each 3/6-month treasury certificate auctions.
  
  
• (0530 ET/0930 GMT) ECB 7-day refinance at fixed 0.05%, E71.5 bln allotment eyed, last E71.1 bln.
  
  
• (0600 ET/1000 GMT) Italy E2 and 3 bln 0.70% and 2.0% 2020 and 2025 BTP auctions.
  
  
• (0600 ET/1000 GMT) Italy E3 bln 0.381% 2022 index-linked CCT auction.
  
  
• (0630 ET/1030 GMT) ECB/Belgium CB Coene speech in Dublin.
  
  
• (0700 ET/1100 GMT) Slovak CB Makuch press conference on quarterly economic forecast.
  
  
• (1300 ET/1700 GMT) ECB/Buba Weidmann speech in Wiesbaden.
  
  
• (1540 ET/1940 GMT) BoE Gov Carney speech in London.

FX Recap

EURUSD: A dull Monday ended with the safe-haven currencies generally higher and the dollar mixed across the board, with the EUR/USD advancing up to 1.1270 levels. Data coming from the US was soft, as the PCE figures for August showed that personal income shrank to 0.3%, while spending rose to 0.4%. Monthly basis, the PCE price index came out at 0.0%, but advanced to 1.3% from previous 1.2% yearly basis. Pending home sales retreated in the same month, down 1.4% against expectations of a 0.5% advance. FED's officers' fuelled uncertainty, with Dudley stating that he expects the FED to hike later this year, but saying that will depend on upcoming data. Chicago FED's Evans on the other hand, resulted quite dovish, saying that he prefers a later lift-off to avoid the risk of lowering inflation. Looking ahead in the European Session, German and Spain CPI figures will remain in focus.  Pair is supported above 1.1200 levels. It made intraday high at 1.1270 and low at 1.1227. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.

USDJPY: A risk-off tone dominated market sentiment overnight, sending commodities and share prices lower, while boosting safe havens including the Yen. Numerous Fed policymakers gave speeches last night, with most indicating a rate hike later this year. Pair is supported below 120.00 levels. Pair made intraday high at 120.01 and low at 119.37 levels. Looking ahead, market will focus on US macroeconomic data for the further movement. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

GBPUSD: A data-thin EUR calendar extends for the second straight session on Tuesday, with a couple of economic releases from the UK and Germany on the cards. Federal Open Market Committee (FOMC) Vice Chair and NY Fed President William Dudley indicating on Monday that he is in favour of a hike before year end, the same view San Francisco Fed President John Williams gave yesterday. Chicago President Charles Evans continued to dissent from his colleagues though, highlighting the risks in moving too early. Today UK will release money supply as well as CBI realised sales data. Pair made intraday high at 1.5177 and low at 1.5156 levels. Initial support is seen at 1.5185 and resistance is seen around 1.5725 levels.

NZDUSD: The New Zealand dollar weakened against its US namesake on Tuesday, adding to losses from the previous session, with economic fundamentals signalling a shaky outlook for growth in New Zealand. The diverging monetary policy path has been the main driver of the New Zealand dollar's depreciation, with the Reserve Bank of New Zealand (RBNZ) cutting interest rates three times so far this year, and signalling further cuts to come, while the US Federal Reserve (Fed) has signalled that it is likely to raise interest rates for the first time in almost a decade next month. It made intraday high at 0.6327 and low at 0.6288 levels. Market now awaits US macroeconomic data for the further direction. Initial support is seen at 0.6195 and resistance at 0.6511 levels.

AUDUSD: The Australian dollar became the latest victim of the market's distaste for risk on Tuesday, sliding towards its lowest level in six years. pair fell 0.48% to $0.6955 on Tuesday afternoon in Sydney, from $0.6990 at the close of trade in New York on Monday, hitting an intraday low of $0.6936, and coming close to breaking through a six-year low of $0.6912. Traders are waiting for a set of US macro data from Wednesday onwards, including the ADP report, the manufacturing ISM and the non-farm payrolls report, along with the unemployment rate from the US. Further volatility will very likely come after these events. Initial support is seen at 0.6908 and resistance at 0.7245 levels.

Equity Recap

Japan's benchmark Nikkei 225 index slumped 2.64% to 17,179.76 points within the first hour of trade, while Tokyo's broader Topix gauge plummeted 2.86% to 1,397.58 points.

Hong Kong's benchmark Hang Seng index crashed 3.0% to 20,551.26 points at the opening bell, and mainland China's benchmark Shanghai Composite fell 1.65% to 3,050.15 points at the same time.

Korea's benchmark Kospi index slipped 0.22% to 1,942.85 points this morning in Seoul.

The benchmark Australian S&P/ASX 200 plunged 2.67% to 4,977.10 points in Sydney, with almost the entire board trading in red, led by oil stocks.

New Zealand's benchmark S&P/NZX 50 index fell 1.06% to 5,638.61 points this afternoon in Wellington.

Australia's S&P/ASX 200 index closes down 3.62 pct at 4,928.50 points.

Tokyo's Nikkei average closes down 4.05 pct at 16,930.84.

Treasury Recap

BOJ offers to lend Y800 bln of JGBs on spot basis through 9/30 as a secondary source of JGBs. Japan 2-year JGB auction lowest price 100.1750, average price 100.1790, bids accepted at lowest price 29.7246 pct.

Thailand 30 bln baht, 90-day central bank bond average accepted yield 1.50651 pct. Thailand 30 bln baht, 182-day central bank bond average accepted yield 1.51412 pct.

New Zealand government bonds were largely flat.

Australian government bond futures climbed to multi-week highs, with the three-year bond contract up 8 ticks at 98.210. The 10-year contract jumped 10 ticks to 97.3800, leading to a bearish flattening of the curve.

Commodity Recap

Gold was little changed on Tuesday after a two-day losing streak, as fears over a looming U.S. rate hike offset any safe-haven bids from weaker equities, while platinum hit a fresh 6-1/2-year low on fears of reduced auto sector demand. Meanwhile, spot gold was little changed at $1,132.20 an ounce, after dropping 1.2 percent on Monday on worries that U.S. rates could increase this year.

Oil was trading flat on Tuesday, following hefty losses booked a session before, with investors staying cautious amid growing fears over China and the still high supplies. Futures for WTI ticked 0.05% down to trade at $44.41 per barrel, while Brent futures were traded 0.02% higher at $47.35 per barrel. Both benchmarks posted huge losses in the previous session, dropping 2.78% and 2.59%, respectively.