October 17, 2016 / 11:42 PM / a year ago

IFR Markets ForexWatch Asia Regional Daily Briefing

SYDNEY, Oct 18 (IFR) - Market Briefs
    * Fed's Fischer: downshift in potential means "not that
simple" to raise rates

    * Fed 'very close' to employment, inflation goals - Fischer 

    * NY Fed's Empire State business conditions index at lowest
since May

    * Empire misses at -6.8, vs f/c for +1.50 and down from -2.0
in Sept

    * U.S. Sept industrial output +0.1%, bang in line with
forecast Previous month revised down to -0.5% from -0.4%

    * Sterling trade jumped three times on day of "flash crash"
-Thomson Reuters    

    * "Tired of fog? Try the frogs!" Paris tries to poach London
business after Brexit-Rtrs

    * Economists trim Brazil 2016 inflation, rate fcasts ahead
of expected c.bank easing

    * Brazil to ease local content requirements in oil, gas
auctions -report

    * Trump ramps up voter fraud claim, digs in against women
accusers-Rtrs    


Macro Themes in Play
    * Markets broadly lower, concerned about Rosengren hint at
joining ECB and BOJ to steepen yield curve, low long rates
priced in to structure of all risk assets, lower oil weighs, S&P
closes/consolidates below trend support for third day

    * Short rates softer after US Industrial Production down YoY
for 13th month; Dec rate hike slips small to 2-in-3 from 7-in-10
last week, Nov meeting trades in single digits; Yellen speech
Friday not a confidence-booster

    * USD lower across the board with rates, corrective; Cable
still trades long

    * Oil, CRB toppy; copper approaches major trend support


Looking Ahead - Economic Data (GMT)
    * 21:45  NZ  CPI QQ  Q3  0.00% f/c  0.40%-prev

    * 21:45  NZ  CPI YY  Q3  0.10%  f/c  0.40%  -prev

    * 22:30  AU  New Motor Vehicle Sales m/m  Sep  0.10% -prev


Looking Ahead - Events, Other Releases (GMT)
    * 0030 -- Reserve Bank of Australia will release the minutes
of October Monetary Policy Meeting


Currency Summaries
EUR/USD  
    * Pair sees limited action in NY session and can't benefit
much from broad USD weakness

    * US Empire Mfg data weakens USD & UST yields but EUR/USD
can only lift near 1.1010

    * Pair's action limited due to combination falling EUR/JPY
and USD

    * Comments by Fed's Fischer have almost no impact

    * Pair essentially trades 10 pips either side of 1.1000 for
NY's session

    * Daily techs warn bears, RSI diverges on new low & pair
closes day green after new low

    * US Sep CPI and Oct NAHB housing reports are data risks
tomorrow

 
USD/JPY 
    * USD/JPY drifted lower after uninspiring US data &
Fischer's comments

    * Rising 200-HMA by 103.75 in close proximity after Fischer
 

    * Rising daily Tenkan will also be above 104 on Tues to
press bulls' case

    * US CPI is out Tues to provide more guidance on US rates,
nominal & real

    * 2.3% y/y core CPI v Fed Funds at 37.5bp is ostensibly a
very easy policy

    * JPY generally firmer in a risk-off session: stocks, DM
ylds, oil all down 

    * EUR/JPY traded wholly below it's thin Cloud finally:
114-115 key on close

    * GBP/JPY & AUD/JPY drifted back slightly

 
USD/CHF
    * USD/CHF uptrend again stalled w highs just beyond 0.99 for
4th straight day

    * US data & Fed VC Fischer didn't help the USD's cause, nor
did yields

    * USD's recent rise is in need of consolidation & solid US
econ data

    * Rebounding TIPS spreads & slippage in oil starting to
loosen longs' grips

    * EUR/CHF a shade lower & trading wholly below the 1.0895
Cloud base now

    * Cross looks headed for another run-in with the SNB's 1.08
soft-floor bids

    * ECB meeting Thur's eye for any QE tweaks: Greek debt talks
also in the mix

    * Swiss Sep M3 & Trade data are also out on Thur    

 
GBP/USD   
    * GBP/USD helped out of small loss by mediocre US data,
Fischer comments

    * Brexit planning intrigue never-ended and
fractious

    * Some hope that surge in Gilt ylds is by near-term top as
Brexit gap is filled

    * Talk of "darkest before dawn" GBP trades at some stage
 

    * Cable's falling 10-DMA, last at 1.2384, is about to press
bears' case

    * EUR/GBP also consolidating after last wk's spike toward
GFC highs

    * Heavy UK data calendar this week, but traders remain
forward-looking

    * ECB meeting Thur looked to for QE expansion/tapering clues


USD/CAD
    * O/N range 1.3065/3183, Noram range 1.3122/62, close 1.3124
(NY -23 pips)

    * AUD/CAD up 20 pips in NY at 1.0010, WTI & Brent -0.8%
 

    * DXY -0.17% (-0.10% in NY) soft NY Fed mfg data [page:2417]
2Yr spread 21.77

    * CAD/JPY was choppy, 78.93/79.31, slipped 0.2% in NY,
closed 79.06, -0.29%

    * S&P -0.28% (-0.1% NY) energy stocks EUR/CAD
1.4438 +0.19% 

    * Gold +0.4%, Cu -0.2%, Al -0.9% Tue- Cda Mfg sales due, US
CPI [page:2417]

 
AUD/USD     
    * Bull pressure in Europe's morning carries over to NY
session, NY opens near 0.7605

    * USD data miss adds to USD's woes and also sends UST yields
lower

    * AUD/USD sees a slow steady climb towards 0.7635, action
quiets though

    * Pair lingers in 0.7620/30 area for remainder of session

    * RBA minutes a risk in Asia, unlikely to be anything
earth-shattering noted


NZD/USD
    * NY opens just above the 200-HMA after Europe adds a bit to
Asia's gains

    * Bull pressure persists in NY after NY Fed Mfg data is well
below f/c

    * USD & UST yields slide, NZD/USD lifts and nears Oct 11
high

    * Little pullback seen and pair lingers just below the day's
high late in the session

    * NZ Q3 CPI a data risk, RBA minutes might impact via
AUD/NZD if any surprises seen

 
LATAM
    * USD/MXN 18.8525/19.0060 in NY after 18.9575/19.0550 O/N,
last 18.8850

    * Pair trades heavy after recent widening of Clinton's lead
in presidential election polls

    * Soft oil prices in NY session lifted USD of the lows, WTI
& Brent -0.8% 

    * USD/BRL set to end NY by 3.2050 +0.05%, inflation poll
sees IPCA lower 

    * USD/CLP ends NY near 'unch' at 670.10, despite copper dip
(-0.3%)

    * Fischer on dificulties of setting monetary policy
 and 


GBP could be poor man's CHF one day
Sterling bears continue to feast on expectations that Britain is
heading for a "hard Brexit". Those bears include investor Jim
Rogers, who recently said cable will "certainly go under" 1.00
if Scotland leaves the UK (BBC). Things will certainly look dark
for GBP if Britain leaves the EU via a "hard Brexit" and
Scotland votes "yes" to independence (Full Story). However, if
the darkest hour is just before the dawn, this combination could
sow the seeds for a long-run turnaround in sterling's
fortunes--notwithstanding Keynes' quote that "in the long run
we're all dead". The looser the post-Brexit ties between the UK
and the EU, the greater the prospective safe haven allure of GBP
if/when there is another euro crisis. Former ECB chief economist
Issing recently sounded a warning on another potential euro
crisis, saying "one day, the house of cards will collapse" bit.ly/2eGJwfQ
 & bit.ly/2eHnI3R.

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