Asia Roundup: Yen eases above ¥120 on weak Industrial Data - October 1, 2015

Market Roundup

• Seeking higher returns, Japan GPIF to invest in foreign junk bonds.
  
  
• Ex-BoJ Iwata- More BoJ stimulus likely, Kuroda too optimistic on economy.
  
  
• Japan LDP Yamamoto - BoJ should ease in October but next week difficult.
  
  
• BoJ Tankan - Big manufacturing DI +12, non-manufacturing +25, +13 and +20 eyed, last +15, +23, +10 and +19 eyed in December, big firm FY '15/16 CAPEX +10.9%, +8.7% eyed, recurring profits +3.8%, USD to average 117.39, mfg sentiment drop on EM concerns, market volatility, risk for worse Non-mfg highest since Nov '91.
  
  
• MoF flow data week-ended Sept 26 - Japanese buy net Y13.6 bln foreign stocks, trln bonds, sell Y49.7 bln bills; foreign investors sell net Y191.8 bln Japanese stocks, trln bonds, Y175.7 bln bills.
  
  
• MoF flow data week-ended Sept 19 - Japanese buy net Y411.1 bln foreign stocks, Y724.7 bln bonds, Y86.3 bln bills; foreign investors sell net Y431.5 bln Japanese stocks, buy Y468.0 bln bonds, trln bills.
  
  
• Japan September final manufacturing PMI 51.0, flash 50.9, Aug 51.7, new export orders contract at fastest pace in almost three years.
  
  
• Fitch - China hard landing would hit Hong Kong, Korea, Japan, Australia hardest, would intensify global deflationary risks.
  
  
• China September Caixin manufacturing PMI - final 47.2, 6 ½-year low, flash 47.0, Aug 47.3, new orders fastest since Aug '12, Markit to discontinue flash reports.
  
  
• China September Caixin services PMI 50.5, slowest in 14-months, Aug 51.5.
  
  
• China September official manufacturing PMI 49.8, 49.6 eyed, Aug 49.7, still sub-50.
  
  
• China September official services PMI 53.4, unchanged from August, in expansion.
  
  
• Australia RBA OCR likely steady at 2.0% next week.
  
  
• Australia Sept PMI 52.1, last 51.7, Aug job vacancies +2.7% m/m, 3-year high.
  
  
• NZ September QV residential house price index +12.6% y/y, Aug +11.3%.

Economic Data Ahead

• (0300 ET/0700 GMT) Norway September PMI manufacturing, 43.6 eyed; last 43.3.
  
  
• (0315 ET/0715 GMT) Spain September PMI manufacturing, 52.8 eyed; last 53.2.
  
  
• (0330 ET/0730 GMT) Switzerland September PMI - manufacturing, 51.8 eyed; last 52.2.
  
  
• (0345 ET/0745 GMT) Italy September PMI - manufacturing, 53.3 eyed; last 53.8.
  
  
• (0350 ET/0750 GMT) France September PMI - manufacturing, 50.4 eyed; flash 50.4.
  
  
• (0355 ET/0755 GMT) Germany September PMI - manufacturing, 52.5 eyed; flash 52.5.
  
  
• (0400 ET/0800 GMT) EZ September PMI - manufacturing, 52.0 eyed; flash 52.0.
  
  
• (0400 ET/0800 GMT) Italy Q2 ISTAT public deficit/GDP; last 5.6%.
  
  
• (0430 ET/0830 GMT) UK September PMI - manufacturing, 51.3 eyed; last 51.5.
  
  
• (0730 ET/1130 GMT) US September Challenger layoffs; last 41.19k.
  
  
• (0830 ET/1230 GMT) US weekly initial jobless claims, 270k eyed; last 267k.
  
  
• (0945 ET/1345 GMT) US September Markit manufacturing PMI - final; flash 53.0.
  
  
• (1000 ET/1400 GMT) US September ISM manufacturing PMI, 50.6 eyed; last 51.1.
  
  
• (1000 ET/1400 GMT) US August construction spending, +0.5% m/m eyed; last +0.7%.
  
  
• (1330 ET/1730 GMT) US September total motor vehicle sales, 17.6 mln AR eyed; last 17.81 mln.

Key Events Ahead

• China and Hong Kong holidays, China on holiday till next Thursday.
  
  
• N/A Norges Bank Gov Olsen speech in Oslo.
  
  
• N/A ECB/Ireland CB Honohan speech at Dublin conference.
  
  
• (0530 ET/0930 GMT) Spain E3.5-4.5 bln 0.25/1.15/4.65% 2018/20/25 Bono auctions.
  
  
• (0550 ET/0950 GMT) France E7-8 bln 1.0% and 1.5% 2025 and 2031 OAT auctions.
  
  
• (0630 ET/1030 GMT) UK DMO GBP4 bln 1.5% 2021 Gilt auction.
  
  
• (0710 ET/1110 GMT) ECB Nouy speech at Prague ESE conference.
  
  
• (0930 ET/1330 GMT) ECB President Draghi speech at Atlantic Council event in Washington, DC.
  
  
• (1115 ET/1515 GMT) Buba Nagel speech in Frankfurt.
  
  
• (1200 ET/1600 GMT) SNB Vice Chair Zurbruegg speech at Zurich KOF congress.
  
  
• (1430 ET/1830 GMT) SF Fed Williams speech in Salt Lake City, Utah.

FX Recap

EURUSD: Broad based US dollar strength was the underlying theme in the Asian session as the USD bulls ride higher on the upbeat US ADP employment report released in the US last session. Yellen also refrained from commenting on the monetary policy and inflation outlook in her speech overnight. Nothing much of great significance is expected to be reported in the European session ahead, except the series of final manufacturing PMIs from across the Euro area economies. US dollar is appreciated against the Euro and currently supported below $1.1200 levels. It made intraday high at 1.1178 and low at 1.1144 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.

USDJPY: The Japanese yen was the biggest loser in Asia amid persisting improved risk-sentiment while dismal Japanese manufacturing index also weighed. The Tankan quarterly business survey showed that the large manufacturers' index fell from 15 to 12 in the September quarter, opposed to expectations of 13. The USD/JPY pair ran through the roof and now tests highs near 120.25 levels, up 0.33% on the day. The yen further lost pace versus the greenback after ex-BOJ deputy Governor Iwata, noting that further scope for easing is on the cards. Pair is supported above 120.00 levels. Pair made intraday high at 120.27 and low at 119.76 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.

GBPUSD: Sterling recovered its previous losses and trading around $1.5134 levels. The UK manufacturing PMI is seen heading slightly lower to 51.3 from 51.5 recorded in August. Looking ahead, the North American session also sees a slew of macro releases from the US including the ISM manufacturing PMI report, construction spending data and the usual weekly jobless claims. While the crucial Friday's US NFP figures remain on tap. Pair made intraday high at 1.5135 and low at 1.5118 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.

NZDUSD: The kiwi increased against the greenback on Thursday, extending its two-day leap as investors digested less business pessimism in New Zealand, while the buck had to handle the unexpectedly weaker Chicago PMI update. Pair now trades 0.30% higher at 0.6408 levels. It made intraday high at 0.6428 and low at 0.6385 levels. Initial support is seen at 0.6195 and resistance at 0.6511 levels.

AUDUSD: The Australian dollar traded up against its US namesake on Thursday after a Chinese manufacturing index came in better-than-expected. China's manufacturing Purchasing Managers' Index (PMI) rose from 49.7 in August to 49.8 last month, coming in higher than the market forecast of 49.7. Pair traded 0.55% higher at $0.7053 on Thursday afternoon in Sydney, up from $0.7015 where the pair closed in New York overnight. Pair made intraday high at 0.7067 and low at 0.6998 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels.

Equity Recap

Chinese stock markets were shut on Thursday in observance of National Day.

Japan's benchmark Nikkei 225 index rose 0.27% to 17,435.02 points within the first hour of trade, while Tokyo's broader Topix gauge jumped 0.64% to 1,420.25 points.

Korea's benchmark Kospi index advanced 0.21% to 1,966.90 points this morning in Seoul.

The benchmark Australian S&P/ASX 200 index rose 0.80% to 5,061.90 points in Sydney, with Australia's big lenders supporting the index, as well as resource stocks.

New Zealand's benchmark S&P/NZX 50 index fell 0.18% to 5,583.35 points this afternoon in Wellington.

Australia's S&P/ASX 200 index closes up 1.78 pct at 5,111.00 points.

Tokyo's Nikkei average closes up 1.92 pct at 17,722.42.

Treasury Recap

10-year US treasury yield at 2.063 percent vs US close of 2.060 percent on Wednesday.

New Zealand government bonds eased, sending yields two basis points higher on the longer end of the curve.

Australian government bond futures were quiet, with the three-year bond contract up one tick at 98.210. The 10-year contract was half a tick lower at 97.3700.

BOJ offers to lend Y232.5 bln of JGBs on spot basis through 10/2 as a secondary source of JGBs.

Commodity Recap

Gold was digesting the aftermath of a four-day losing streak on Thursday, trading near its lowest in two weeks, after strong U.S. private-sector jobs data bolstered views that the Federal Reserve will hike rates this year. Spot gold was little changed at $1,115.45 an ounce by 0040 GMT, not far from a two-week low of $1,111.60 hit in the previous session. The metal has lost 3.4 percent in the last four sessions.

Oil prices grew on Thursday as traders are still digesting the mixed inventory report along with the latest news from China, while keeping an eye on geopolitical issues. Futures for WTI added 1.44% to trade at $45.74 per barrel, while Brent futures were traded 0.85% higher at $48.78 per barrel.