October 6, 2016 / 12:02 AM / 10 months ago

IFR Markets ForexWatch Asia Regional Daily Briefing

8 Min Read

SYDNEY, Oct 6 (IFR) - Market Briefs
    * US private sector adds 154k jobs in Sep vs 166k Rtrs
f/c175k pvs -ADP

    * US Aug trade gap widens to USD40.73b in Aug vs -39.3b Rtrs
f/c, on higher imports

    * US Markit Svcs PMI Final 52.3 in Sep vs 51.9 in Aug

    * US ISM N-Mfg PMI 57.1 vs Rtrs f/c 53, 51.4 pvs, N-Mfg
Employment Idx 57.2 v 50.7 pvs, prices pd 54 v 51.8

    * Fed's Lacker:  there are signs inflation is heating up;
Strong case to raise rates more rapidly (DJ)

    * Atlanta Fed's GDPNow sees Q3 GDP growth 'unchanged' at
2.2% from Oct 3

    * IMF sees non-performing loans in European banks at about
EUR900 

    * UK's May says low rates and QE have bad side-effects, need
change

    * EZ banks tap ECB for dollars amid DB jitters, Banks borrow
USD2.8b at wkly auction, access to USDs tightest since '12

    * Oil prices hold gains after EIA data shows surprise draw
in US crude stocks


Macro Themes in Play
    * Markets mixed, crosscurrents dominate, DXY ends lower
despite stronger Dec rate hike odds, big bounce in Services ISM
drives chances to 2-in-3; like in Japan, Euro banks initially
like ECB hint at steeper yield curve; all eyes on US jobs number
Friday

    * Stocks, commodities, spread product generally holding in
despite higher rates/USD on week; combination has not been kind
to risk assets in recent past; macros in wait-and-see mode

    * EURUSD confounds, new lows in US-Euro rate diff and yet no
serious attempt at EUR down on day, risk builds for topside
break; buyers pile on USDJPY long trade as Topix finishes above
200 dma for first time this year; third data beat of week in UK
helps GBP downdraft stabilize

    * Oil up for sixth day, storage stats bullish; strong crude
rally helping insulate risk assets from impact of higher rates;
AUD, CAD hang on with higher CRB but still vulnerable; MXN best
close in three weeks


Looking Ahead - Economic Data (GMT)
    * 23:50  JP Foreign Bond Investment        w/e  
1178.6b-prev

    * 23:50  JP Foreign Invest JP Stock           w/e  
-211.7b-prev

    * 00:30  AU Trade Balance G&S (A$)*      Aug   f/c -2300m,
-2410m-prev

    * 00:30  AU Goods/Services Imports*        Aug   0.00%-prev

    * 00:30  AU Goods/Services Exports*        Aug   3.00%-prev


Looking Ahead - Events, Other Releases (GMT)
    * 05:30  AU  RBA head of economics Christopher Kent speaks
at a panel event at an economics conference.

    * 09:10  JP  Japan EconMin Nobuteru Ishihara speaks at a
Bloomberg seminar on Japan's economy.


Currency Summaries
EUR/USD  
    * NY opens near the converged 10 & 21-Day MAs, bear pressure
sees 1.1300 neared

    * ADP miss sees JPY firm & EUR/JPY fall to 115.35, EUR/USD
follows

    * JPY bid fades, EUR/USD lifts near 1.1220, gains fade
quickly

    * ISM & factory orders come in above f/c, USD & UST yields
lift, EUR/USD hits 1.1190

    * Dip gets bought, stocks up risk sentiment & EUR/JPY
rallies toward 116.15

    * EUR/USD follows and sits near 1.1215 late in the day

    * Second daily doji candle in two days suggests indecision,
likely to stay so until NFP

 
USD/JPY 
    * Big ISM services beat got USD/JPY above the 103.25 Cloud
top

    * Pair was already on the rise, helped by weak JP Services
PMI & oil rise

    * Japan Sept services PMI at 48.2 was worst since April
2014; Aug 49.6

    * Hasn't been a USD/JPY close above the Cloud since Dec 17,
2015

    * Current 103.60 hi is 100% Fibo off Sep 27-29 base; 161.8%
is at 104.69

    * Yld spreads, stocks & oil higher again to bolster USD/JPY

    * Near historic net IMM short positioning may put 21-WMA at
103.65 in play

    * CAD/JPY past 61.8% of Sep drop & cloud base @78.42: Trade
data good

    * EUR/JPY set to close above the Cloud (115.65) for 1st time
in a year

    * GBP/JPY up and a bit farther away from its post-Brexit up
TL

 
USD/CHF
    * EUR/CHF gave back the ECB tapering speculation gains made
on Tues

    * USD/CHF fell away from its failed attempt Tues to B/O past
its M-T dn TL

    * USD/CHF also failed to close above the 200-DMA at 0.9797
on Tuesday

    * A big ISM non-mfg beat failed to revive USD/CHF either

    * EUR/CHF retested Wed's 1.0975 high before nearing Tues.'s
1.0912 low

    * Cross remains in choppy range sub-1.10 & mostly above
SNB's 1.08 bid

    * Swiss Sep CPI and KOF's autumn outlook are on tap Thurs

 
GBP/USD   
    * Cable rose off fresh 31-yr low at 1.2868 as hard Brexit
fears weighed on GBP

    * Profit-taking on heavily short GBP aided recovery to
1.2750 by NY's close

    * EUR/GBP rose to 5yr high of 0.8843 in European trade, back
below 0.88 by NY close

    * Broadbent spells it out over GBP/monetary policy
 

    * Germany says takes note of May's Brexit plan announcement
 

    * Risk of a 'hard Brexit' to follow Q1 2017 A50 trigger
hurting GBP


 
USD/CAD
    * USD/CAD 1.3173/3215, Noram 1.3161/3232, close 1.3168 (NY
-45 pips)

    * Slew of strong US data spurred DXY & UST yields in AM
[page:2417]

    * Decent Canadian trade data lifted CAD on crosses, strong
exports 

    * Oil prices & stocks rallied on US data, Oil
+1.85/2.25%(Brent, WTI) SP +0.6%

    * CAD/JPY +0.94%, 78.72, AUD/CAD -0.21%, 1.0029; EUR/CAD
1.4754 -0.16% 

    * DXY -0.06% (+0.08% NY); UST/CA 2Y sprd +0.5bp, 26.25; Gold
unch 1267.70

 
AUD/USD     
    * Choppy in Europe's morning, NY opens near 0.7610, bull
pressure early

    * USD & UST yields soften on ADP miss, AUD/USD lifts above
0.7630

    * Lift stalls & slide ensues, drop intensifies on ISM &
factory order beats

    * New s-t low of 0.7593 set, losses fade though as stocks
rally

    *  Pair back near 0.7630 late in the day

    * Oz Aug trade balance a risk in Asia, impact likely limited
as US jobs data nears


NZD/USD
    * NY opens near 0.7175 after a quiet European morning, bull
pressure in early NY

    * ADP miss sinks the USD across the board, NZD/USD spikes up
to 0.7200

    * Gains fade quickly, USD & UST yields lift on ISM & factory
order data

    * NZD/USD slide resumes, daily cloud base gets pierced &
100-DMA neared

    * 0.7149 low made before bounce near 0.7185 takes hold

    * USD stays firms though and pair slips back near 0.7170
late

 
LATAM
    * USD/MXN moved steadily lower, off o/n high19.38 by 100-HMA

    * Pair ends NorAm by 19.22, just above session low 19.1990,
oil +2.25%

    * US ISM beats lift Fed Dec hike odds now 64% (CME), USTs
dip, equities rise

    * USD/BRL -0.95% to 3.2249 off session high by 2.26, Temer
pushes spending cap

    * Brazil police charge Lula in case linked to Odebrecht-
source 

    * USD/CLP closes flat by 664, copper +0.14%, IMACEC +2.5% v
2% Rtrs f/c

 
Further GBP losses would make BoE's job trickier
Sterling made its way onto the UK monetary policy radar
Wednesday. BoE deputy Gov Broadbent said "could the currency
(GBP) fall far enough, hard enough, fast enough to warrant a
reversal of course, and some removal of monetary accommodation?
The answer is yes, in principle". Broadbent said any sharp GBP
decline "has to be judged in the context of what it does to
inflation". It is 24 years since GBP had a prime
influence over UK monetary policy, but the probability of
sterling shifting the BoE monetary policy dial will increase if
EUR/GBP and/or cable get close to parity--as this would increase
the risk of UK CPI inflation spiking through the BoE's 2% target
level. EUR/GBP is currently as close to 1.00 as to 0.76--its
June 23 low before the Brexit vote results started to roll in.
See related items:  . Charts
1) tmsnrt.rs/2drLFgE 2) tmsnrt.rs/2dtumbC.

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