October 20, 2015 / 11:59 PM / 2 years ago

IFR Markets ForexWatch Asia Regional Daily Briefing

SYDNEY, Oct 21(IFR) - Market briefs  
    * Demand for rental apartments buoys U.S. housing starts, Sep +1.206m v Rtrs
f/c 1.15m
    * BoE's McCafferty (hawk): says he is not isolated among rate-setters, there
is good debate to be had on rates at turn of the year, impact of china slowdown
on UK econ could easily be overstated - RTRS
    * Wall St little changed as earnings gain momentum, IBM slumps after
results, biggest drag on Dow, S&P 500 - RTRS
    * CAD stronger after initial weakness following Liberal victory - RTRS
    * Dairy prices fall, volumes drop at auction -NZ's Fonterra ( NZD/USD moves
    * Gold snaps three-day losing streak, rises as euro reclaims ground ahead of
    * Copper steadies on weaker dollar, short-covering - RTRS
    * Ireland names economics professor Philip Lane as central bank chief - RTRS

Macro themes in play
Stocks drop, follow commodities lower; October corrective bounce inspired by
lower rates and lower dollar likely over
Oil at lowest in 2 ½ weeks; EM wobbly, MXN, BRL, CLP lead lower
CAD higher in post-election rate push, 2 yr yield above 200 dma for first time
in 2015; markets bet political shift means more borrowing/spending
Early AUD strength fades at 200 hma; NZD beaten on milk results; EUR, JPY, GBP
all rangebound, await Thursday ECB; Bunds down hard on QE doubts
Looking ahead - Economic data (GMT)
    * 23:50  JP Exports YY*                          Sep   f/c 3.4%, 3.10%-prev
    * 23:50  JP Imports YY*                          Sep   f/c -11.7%,
    * 23:50  JP Trade Bal Total Yen*                 Sep   f/c 84.4b,

Looking ahead - Events, other releases (GMT)
    * No significant events

Currency Summaries
    * Stop run in Europe's morning sees 10-DMA pierced & 11390/00 res neared
    * Just below day's high into NY open, bear pressure applied on broad USD bid
    * Mkt ignores slightly tighter DE-US spreads, hourly sup near 1.1325/35
    * Little bounce from low and pair near 1.1340 late in the day
    * Pair likely to chop around the 10-DMA heading into the ECB
    * If ECB is status quo on QE recent rally off September low likely resumes

    * JPY broadly softer Tues; longs cut in stages, 1st v GBP & EUR, then USD
    * US Housing Starts helped USD/JPY eventually clear Wed's 119.80 high
    * Usual cadre of offers by 120 have held since; Cloud base key at 120.35
    * Back above 10-DMA, Tenkan & Kijun, but bearish Ichi alignment persists
    * EUR/JPY goosed pre ECB on Q3 lending report, but other data were soft
    * Cross has used the daily Cloud as a springboard of late
    * EUR/JPY bulls have to end pattern of lower recovery highs
    * Most other crosses higher, NZD a notable exception on Fonterra news
    * Japan Sep Trade out tonight; may swing to a surplus again

    * Cable put in a early European high at1.5506 on back of a GBP/JPY buy order
    * 1.5508 was last Thursday's 3-wk high, GBP offers above daily cloud top
    * BoE's McCafferty says he is not isolated among rate-setters, good rate
debate by YE
    * The pound was unable to hold gains as oil moved lower lifting the USD 
    * GBP/USD moved to lows by 1.5436 before rising to end NY session by 1.5450
    * EUR/GBP rallied as profit taking lifted the EUR and cross ahead of ECB
    * Reuters poll shows 19/20 traders don't expect QE to be modified Thurs
    * EUR/GBP ended the NY session by 0.7343, well off the day's low at 0.7313

    * EUR/CHF dived to 1.0798 into the Ldn open, then rallied to Mon's high in
    * Failure to take out Fri's 1.0784 low & an ECB qtrly lending report propped
    * Cross's been inside the daily Cloud & is straddling the up TL fm Jun-Jul
    * Friday's 1.0853 high has been capping since then
    * USD/CHF's O/N slide also held above last week's low, triggering
    * Pair is resisted by the daily Cloud base at 0.9582
    * US HS data firm, Tsy yields & spreads supporting
    * Swiss trade surplus widened but exports fell 
    * Watch exports largest drop since 2009, poor sales in HK/China spread

    * CAD better on post-election rate push; markets betting political shift
means more spending, more bonds
    * Both ends of CAD yield curve break above 200 dma; 2yr above 200 dma for
first time this year
    * Oil fades in NorAm session, pares CAD gains; Toronto up small
    * USDCAD in middle of 2-week old range; 1.2830/35 still big hurdle for bears

    * Bull pressure in Europe's morning sees 10-DMA tested, NY opens just below
    * Bulls press further, test near 0.7300 but run out of steam as commodities
    * Stock slide sees more gains erode, pair tests 0.7240/45 support & holds
    * Further losses likely avoided due to AUD/NZD's lift toward the 200-DMA
    * AUD/USD near 0.7260 late, no major data risks in Asia
    * L-T charts look bullish, daily suggests further pullback due

Mild bull pressure in Europe's morning persists in early NY, 0.6850 neared
Bears emerge though as commodities slide, near 0.6800 into Fonterra auction
Results show GDT PI -3.1% & WMP -4.6% on a 2.1% drop in volumes sold
Pair dives quickly, pierces 200-HMA, 0.6736 low hit, little bounce, near 0.6750
L-T techs lean bullish but daily suggests lower levels, 100-DMA & Oct 14 low
Bearish outside candle & RSI biased down support view of lower levels
    * Chinese growth concerns weighed on LatAm CCYs after Mon's weak Q3 GDP
    * Chile taking it hardest -1.1% despite steady copper, exports exp'd to
remain weak
    * USD/MXN rose 0.6% back into the daily cloud as oil fell 0.7%
    * USD/BRL ends NY 3.9065 BCB meet begins, no change to rates exp'd on Wed
    * May see BCB stmt change as inflation target remains elusive
    * Primary deficit may be announced weighing on BRL

USD/JPY-1995-98 pattern appears to be repeating
Major USD/JPY tops since the '90s have all come after bearish divergences from
y/y pct change charts, followed shortly by strong rebounds in oil prices, both
of which are plausible M-T risks. Markets are focused on Fed-BOJ policy
divergence as a possible cause for the Abe-era uptrend to persist. though it's
unlikely that Fed rate hikes, when and if they commence, will be sustained or
well-received by global markets that are very long duration and risk. Moreover,
assuming the BOJ expand QQE by another 5-10 tln at their Oct 30 meeting, trying
to shock the market after Kuroda et al have all argued against the need for more
easing now, the impact will be far less than from last October's QQE2. If they
pass on QQE3 it will be viewed by some a relative tightening and an excuse to
sell USD/JPY. 

 (Reporting by Peter Whitley)

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