October 10, 2016 / 11:32 PM / 10 months ago

IFR Markets ForexWatch Asia Regional Daily Briefing

7 Min Read

SYDNEY, Oct 11 (IFR) - Market Briefs
    * US Employment trends 128.5 v 128 pvs

    * Bank of Italy's Visco: Negative rates while challenging
are becoming normal

    * USD rises broadly; cable falls on weak UK outlook; MXN
strengthens after bumps on Trump campaign trail

    * Wall St rises as Clinton seen winner of second debate, Oil
reaches 1-yr high after Russia signals joining output cap

    * OPEC chief optimistic of agreement with non-OPEC states on
production cut - Reuters News

    * UK Brexit minister Davis says need to move forward on
domestic legislation in parallel w/EU talks

    * Brazil's Temer: confident spending cap to be approved,
crucial for country; no plan B


Macro Themes in Play
    * Markets better, oil to new YTD best singlehandedly driving
risk sentiment; higher rate move overlooked, commodity complex
holds up well

    * Saudis, Russians hint at agreement next month on crude
output; markets press bets on rate hike, figure higher oil gives
Fed window to tighten, Dec trades at 7-in-10

    * Europe leads bond market rout (US closed), Bunds highest
yield since Brexit, yield curve clean break through 200 dma as
ECB tapering talk sinks in

    * USD grinds against EUR, JPY and GBP on rate hike play, US
semi-holiday kills activity; AUD, CAD, EM higher with
stocks/commodities


Looking Ahead - Economic Data (GMT)
    * 21:45  NZ Electronic Card Retail Sales mth         Sep    
-0.4%-prev

    * 21:45  NZ Elec Card Retail Sales YY*                
Sep     3.7%-prev

    * 23:50  JP Current Account NSA JPY*                 Aug    
f/c 1539.1b, 1938.2b-prev

    * 00:30  AU NAB Business Conditions                  Sep    
7-prev

    * 00:30  AU NAB Business Confidence                 Sep    
6-prev

    * 00:30  AU Housing Finance*                              
Aug     f/c -2.5%, -4.2%-prev

    * 00:30  AU Invest Housing Finance*                    
Aug     0.5%-prev

    * 05:00  JP Economy Watchers Poll*                   
Sep     45.6-prev


Looking Ahead - Events, Other Releases (GMT)
    * 02:00  US FRB-Chicago Pres Evans speaks on current
economic conditions and monetary policy before an Australian
Business Economists luncheon


Currency Summaries
EUR/USD  
    * EURUSD slips lower, all one-way in slow US semi-holiday
trade

    * USD broadly higher as Fed rate hike odds firm behind oil
prices

    * Rate spike, steeper curve in Euro bond markets limiting
EUR downside

    * ECB tapering talk having an effect, could still ruin plans
for EUR bears

    * All eyes on EURUSD pennant boundaries, 1.1090-1.1250

 
USD/JPY 
    * USD/JPY rode the USD rise & risk-on flows past the hrly &
daily Cloud tops

    * Latter rises to 103.52 on Tues, so Monday's rebound was
timely

    * Mkt now pricing in c70% risk of a Fed rate hike, w stocks
& oil also rising

    * Risk-on flows are a weight on the haven JPY & massive spec
longs

    * Might be seeing better risk flows on receding US election
vol concern, too

    * Mkt still not expecting much from BOJ's YCC or CPI
promises

    * JPY off hard v MXN, CAD and other energy-linked CCYs

    * CAD/JPY's taking another run at Cloud cover resistance &
M-T dn TL

 
USD/CHF
    * USD/CHF up on USD strength, 0.9839 high nearly identical
to Friday's

    * Higher low & close add to the bullish bias, despite
mediocre NFP Friday

    * Market pricing in roughly 70% probability of Dec Fed hike
now

    * Stocks, oil and EM up, helping risk & weighing on CHF &
JPY havens 

    * EUR/CHF rose to 1.0972, by last week's 76 highs before a
late slide

    * Seeing some topping and tailing inside 1.09-1.10; SNB's
bid c1.08

 
GBP/USD   
    * GBP/USD opens NorAm 1.2426 moves steadily lower to 1.2360
by sessions end

    * Flows light owing to US Columbus day holiday, Bond marts
closed, no significant data

    * Pair holds abv Fri.'s recovery low, Hard Brexit remains
the focus 

    * EUR/GBP flat on the day, ends NY 0.9015, early 2017 Brexit
sees rising vols

    * Traders defensive, despite recent spate of decent UK data,
pot'l lack of c/a funding weighs

 
USD/CAD
    * USD/CAD 1.3225/88 O/N, Noram 1.3140/3270, close 1.3170 (NY
-90 pips)

    * DXY +0.3%; US bond mkt closed-Columbus Day, Canada
closed-Thanksgiving

    * Consequently UST/CA 2Y sprd "unch". USD/CAD plunged as oil
soared 

    * Brent/WTI +1.9/2.7% on Russia headlines Gold
+0.17%

    * CAD/JPY +1.63, 78.67, AUD/CAD -0.6%, 1.0010; EUR/CAD
1.4660 -1.56% 

    * Tue- Light data, Canada housing starts, US empl trends,
NFIB [page:2417]

 
AUD/USD     
    * AUD/USD opened NY  0.7590, NY range 0.7587/7629, O/N range
0.7581.0.7614

    * Oz closing c 0.7605, +0.26% DXY +0.30% (+0.15% NY) AUD/JPY
78.84, +1.12%

    * AUD/CAD -0.25%, 0.9796, S&P -0.17% (+0.08% NY) Iron ore
+2.2%, copper +0.15%

    * Gold -0.5%. CAD led commodity ccys lower [page:2346]
AUD/CAD +0.3% in NY trade

    * AUD/NZD traded 1.0616/79 in NY, close 1.0662; EUR/AUD
1.4645, -0.78%

    * Z credit card data & Aussie weekly cons conf, Japanese
data due O/N [page:2417]


NZD/USD
    * NZD/USD opened NY 0.7139, traded 0.7123/46, closed @33
(O/N 0.7134/0.7202)

    * A quiet Noram session with Canada &  US bank holidays DXY
+0.31% (+0.16% NY) 

    * S&P +0.57% (+0.10% in NY) Kiwi traded soft all day vs
commodity ccy peers

    * NZD/CAD -1.25%, 0.9383 after Brent & WTI spiked on Russia
h'lines 

    * Brent +2.1%, WTI +2.85%, Nov milk -1.4%, gold +0.2%, corn
+1.0%, wheat +2.5%

    * NZ credit card data & Aussie weekly cons conf, Japanese
data due O/N [page:2417]

 
LATAM
    * USD/MXN falls 2.25%, set to end NorAm 18.8880 near 1-mos
lows

    * Trump in crisis after lewd remarks about women come to
light 

    * Peso gains as key focal points, oil, US rates and US
election now MXN positive

    * USD/BRL moves lower in sympathy, drops 0.25% to 3.2115 by
NY session end

    * Brazil's Temer confident of spending cap but has no plan B
 

    * USD/CLP steady at 670, Chilean mkts closed for holiday,
likely rises Tues as copper +1.4%

 
GBP fall may be focus at BoE Saunders' TSC hearing 
Michael Saunders, the newest member of the BoE MPC, will attend
his TSC appointment hearing Tuesday starting 0900GMT. Saunders
joined the MPC in August, shortly after the BoE loosened UK
monetary policy. Saunders, who last week said he had not decided
how to vote when the MPC meets next month, is likely to face
questions on the impact of recent GBP losses on inflation and
the outlook for monetary policy. Back in May, the Telegraph
reported a "private warning" from Saunders via a third party,
that Brexit "will force rates up to 3.5% within 18 months". A
GBP collapse sending UK inflation sharply higher was the mooted
justification. The recent GBP fall to a 31-year low
against the USD and 7-year low against the EUR has lessened the
probability of another BoE rate cut on Nov 3, and raised the
risk of BoE rate rises to fight an inflation spike. See related
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