October 12, 2016 / 11:37 PM / 9 months ago

IFR Markets ForexWatch Asia Regional Daily Briefing

8 Min Read

SYDNEY, Oct 13 (IFR) - Market Briefs
    * Fed policymakers closer to rate hike, but inflation doubts
remain-minutes

    * Voting Fed policymakers generally agreed case for hikes
had strengthened    

    * Some voters said cautious approach to hikes could help
labor market heal more    

    * Fed can be 'gentle' in hiking rates, Dudley says

    * Dudley: don't want to push employment too high for fear of
overshooting

    * Dudley: not sure US at full employment given discouraged
workers are returning    

    * U.S. JOLTS job openings fall to eight-month low in August

    * JOLTS job openings 5.443 mln below fcast 5.724 mln, prev
5.831 mln

    * UK PM May says wants maximum possible access to EU market
post-Brexit

    * Foreigners cut down on EM Asia bonds on belief US rate
hike coming-Rtrs

    * Norway's central bank governor says currency rally quicker
than expected    



Macro Themes in Play
    * Markets steady/lower as stronger rates and USD weigh; S&P
holds uptrend support for second day; credit/EM quiet despite
continued meltdown in Alcoa (had triggered broad selloff
yesterday)

    * Fed minutes show board paralyzed by overthinking, some
worried over message if policy goals achieved but no rate hike,
credibility referenced four times, market sees as x-factor in
aggressive pricing Dec meeting, trades 7-in-10

    * EUR down as ECB floats yield curve steepening Plan B,
tapering long end not well received, now talk of allowing bond
purchases through depo rate, buy front end bonds, US-EUR rate
diff falls to new low

    * Cable bounces small, still doesn't trade short; USDJPY up
on US rate trade, weak but JP bank and real estate sectors could
be problem for bulls

    * AUD, CAD small retrace of prior day, nothing; Gold hangs
lifeless below 200 dma, feels like next move lower


Looking Ahead - Economic Data (GMT)
    * 21:45  NZ  Food Price Index  Sep  1.30% -prev

    * N/A    CN  Exports YY  Sep  -3.00%  f/c,  -2.80% -prev

    * N/A    CN  Imports YY  Sep  1.00% f/c,  1.50% -prev

    * N/A    CN  Trade Balance USD  Sep 53.00b f/c,  52.05b
-prev


Looking Ahead - Events, Other Releases (GMT)
    * 1000 --  New Zealand Treasury publishes government's
financial statement for the 2015-16 year. Finance Minister Bill
English will give a presentation 


Currency Summaries
EUR/USD  
    * Limited action in NY after bear pressure applied in
Europe's morning

    * NY opens near 1.1020, dips below 1.1010 early, dip bought
as USD bid stalls

    * Lifts to 1.1045, gains erode quickly as USD resumes &
intensifies

    * Sharp drop to 1.1004 ensues, USD bid stalls, bounces near
1.1020 into minutes

    * Fed minutes initially sink USD, bid emerges though and
EUR/USD sinks

    * Back near the day's low late in the day

 
USD/JPY 
    * JPY sold far and wide, even against the EUR/JPY after
Tues's tumble there

    * USD/JPY ran buy stops into Ldn close above 104.17/32 -
Oct/Sep highs 

    * Rise finally ran into exporter & spec offers by 104.50

    * Dip back into Cloud was ltd. 61.8% of Jul-Aug drop @104.46
key on close

    * FOMC Minutes triggered a quick dip toward Tues's 104.07
high

    * Few vanilla expiries above 105 the next few wks; July's
107.49 hi is huge

    * EUR/JPY scampers back above thin Cloud it crashed below
Tues

    * Sep's 116.37 high the mark to beat for bulls

    * GBP/JPY goosed higher by GBP softer-Brexit hopes & O/S
rebound

    * AUD/JPY still struggling above 79

    * Eye on JP banks after Harada said 10-yr 0 target's more
cap than floor    

 
USD/CHF
    * USD/CHF quickly closing the gap on July & May highs at
0.9952/56

    * Today's 0.9910 high & range largely above the upper Bolli
a little frothy

    * USD broadly higher on rising rates, but dipped after FOMC
Minutes

    * 61.8% of this yr' range at 0.99946 remains a M-T closing
pivot pt

    * EUR/CHF got sucked into its 1.0895/929 daily Close (Thur
levels)

    * 1.0893 low got only a tic below the Tenkan & 50% of the
Sep-Oct rise

    * Reuters story on ECB QE options is food for
thought

 
GBP/USD   
    * Pair slides in Europe's morning after rally near Asia high
stalls,NY opens near 1.2260

    * Bear pressure resumes due to comments from Brexit Minister
Davis

    * Davis says is govt's right to trigger A50, sharp drop to
1.2167, EUR/GBP up to 0.9052

    * Slide stalls and USD bid abates a bit steady lift ensues,
1.2260 hit after Fed minutes

    * Dovish bent to minutes fades & USD bid resumes, GBP/USD
hits 1.2190

    * Bounces toward 1.2215 late in the day, Sep RICS housing
data a risk in Asia 

    *  

USD/CAD
    * USD/CAD 1.3209/63 O/N, Noram 1.3219/87, close 1.3238 (NY
unch to the pip)

    * A surging CAD/JPY undid an oil-related USD/CAD rally,
-1.0/-1.1% (Brent/WTI)

    * Technical CAD/JPY stops the trigger DXY
+0.21%; S&P +0.25% 

    * Oil weak on Sep production, cap viability doubts, physical
hedgers 

    * UST/CA 2Y spread unch, 26.2. CAD/JPY +0.85%, 78.68,
AUD/CAD +0.24%, 1.0015

    * EUR/CAD 1.4590 -0.43% gold +0.1%, Al +0.1%, Cu -0.35%
Thur- Light data [page:2417]

 
AUD/USD     
    * A bit heavy in Europe's morning, slides sees NY open near
0.7575

    * Slide intensifies as USD broadly bid & equities are soft,
nears 0.7555

    * Slight bounce near 0.7580 ensues but it's short lived as
USD bid extends

    * 0.7550 neared, USD bid abates, some profit taking hits,
AUD/USD nears 0.7575

    * Fed minutes initially sees USD fall, 0.7590 neared but
gains erode quickly

    * USD bounces, AUD/USD back below 0.7570 late in the day

    * No major data to drive pair until US sales data on Friday


NZD/USD
    * Limited action in NY, opens near 0.7065, bear pressure
early on

    * Broad based USD bid sees early dip below 0.7050

    * Lifts near 0.7070 as AUD/NZD slips from 1.0735 high &
equities rally

    * USD bid intensifies as USD/JPY nears 104.50, NZD/USD hits
new trend low

    * 0.7045 hit, stops below untouched, USD bid fades & Fed
minutes sink USD

    * NZD/USD lifts above 0.7090 late, little pullback seen,
near highs late

    * Daily techs now warn shorts,after new low set pair up on
day & RSI diverges

 
LATAM
    * USD/MXN little changed on the session, ends NY 18.92, MXN
-0.1% vs last night

    * MXN IP disappointed on the monthly print but somehow held
Y/Y f/c 

    * Risk attitudes turned positive in NY, SP futures opened
-0.05%, closed +0.2%

    * Oil prices clawed back some of their earlier losses, still
soft, -1.0/1.1% 

    * Brazil was closed for feast of Our Lady of Aparecida
USD/BRL ends NY +0.25% 3.2225

    * USD/CLP -0.16% to 665.70, copper- 0.37%front contract;
Bolsa (IPSA) +0.21%


Wary Fed awaits December for hike
It might not be what the Fed hoped for when it started this
so-called normalization cycle at the end of last year, but 2016
will be another one-hike year, if that. Today's minutes (Full
Story) from policymakers' "close call" meeting in September
reflected that. After the early-year markets turmoil subsided,
the calendar tightened, with a surprisingly poor jobs report for
May and the UK's June Brexit vote cluttering the schedule until
well into the U.S. political campaign. Hardly the environment
for the Fed's notoriously cautious leadership to hike,
especially with lingering doubts expressed in the minutes about
the strength of inflation. They're unlikely to want to hike at
their next meeting because it's the week before the election.
The question, then, is whether anything might occur in the weeks
leading up to the Dec 13-14 gathering that could blow them off
course again. Stranger things have happened.

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