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IFR Markets ForexWatch Asia Regional Daily Briefing
February 28, 2017 / 11:08 PM / 10 months ago

IFR Markets ForexWatch Asia Regional Daily Briefing

    SYDNEY, March 1 (IFR) - 
    
JPY & CHF trample CAD pre-Trump speech 
Market Briefs
    * US Q4 GDP (2nd est) 1.9% v 2.1% Rtrs f/c, 1.9% pvs, Q4 GDP sales 0.9% v 1%
Rtrs f/c 0.9% pvs

    * US Q4 consumer spending (prelim) 3% vs 2.5% pvs

    * US Feb Chicago PMI 57.4 v 53 Rtrs f/c, 50.3 pvs

    * US Feb consumer confidence 114.8 v 111 Rtrs f/c, 111.6pvs

    * Fed’s Kaplan: exact timing of rate move is not important, path of rate
move is

    * JP Morgan’s Dimon: biggest impact of corp tax cuts would be higher wages

    * Oil prices fall 1 pct, rising U.S. supplies offsets OPEC cuts

    * Dollar weakens before Trump speech to Congress

    * BOJ's bond operation plan fixes dates, leaves size uncertain; New way will
curb 'excessive market volatility' - BOJ official

    * One out of four investors (25.2%) expects euro zone to lose a member,
greater risk than in 2012/13 - Sentix survey

    * More austerity beckons as Greece, lenders resume talks

    * European funds cut equities, French debt on election jitters, Equities cut
to 43.9 pct from 46.5 pct in January


Looking Ahead - Economic Data (GMT)
    * 21:45  NZ  Terms of Trade QQ*                                        Q4   
-1.8%-prev          

    * 21:45  NZ  Terms of Trade - Imports*                  Q4    -1%-prev   

    * 21:45  NZ  Terms of Trade - Exports*                 Q4   
-2.8%-prev            

    * 22:30  AU  AIG Manufacturing Index                   Feb  51.2-prev

    * 23:50  JP   Business Capex (MOF) YY*              Q4   
-1.3%-prev            

    * 00:30  AU  GDP QQ*                                         Q4    f/c 0.7%,
-0.5%-prev         

    * 00:30  AU  GDP YY*                                          Q4    f/c
1.9%, 1.8%-prev          

    * 00:30  AU  GDP Final Consumption*                  Q4    0.3%-prev 

    * 00:30  AU  GDP Capital Expenditure*                 Q4   
-2.7%-prev            

    * 00:30  JP   Nikkei Mfg PMI                                Feb  53.5-prev

    * 01:00  CN  NBS Non-Mfg PMI*                           Feb  54.6-prev

    * 01:00  CN  NBS Manufacturing PMI*                   Feb  f/c 51.1,
51.3-prev

    * 01:45  CN  Caixin Mfg PMI Final                         Feb  f/c 50.8,
51-prev


Looking Ahead - Events, Other Releases (GMT)
    * --:--       JP Bank of Japan board member Takehiro Sato to meet with
business leaders.


Macro Themes in Play
    * Tale of two markets ahead of Trump address, STIR continues to price
greater chance of near –term rate hike, however FX sees problem with reflation
trade, USD broadly lower, not obvious yet what markets signaling, Q4 US GDP and
Core PCE miss

    * March rate hike chances trade above 40% for first time, fiscal plans (to
be revealed tonight)likely to initially worsen US budget deficit, divergence
between rates and USD a possible scenario

    * Equity markets mixed, Dow down, breaks winning streak after twelve
straight record days; Europe firm, bulls confident as French election narrows to
a two-horse race, spreads better

    * EURUSD squeezy but quiet, bears the weaker hand, know EUR should have gone
much lower last week at peak of bad political news; USDJPY still sick, fifth day
of lower highs; Cable down with UK rates, first close below 40 dma in five weeks

CAD, MXN hit hard, stock markets roll over, warning sign for energy bulls; AUD
slips, gold rejection yest at 200 dma looks like important turn; crude wobbles
on conflicting talk of OPEC production compliance

Currency Summaries
EUR/USD  
    * Pair hugs the 200-Hour SMA in Europe's morning, NY opens near 1.0595

    * EUR/JPY slips in early NY, EUR/USD follows, trades sub-1.0585 but bounces

    * USD weakness trumps EUR/JPY slide, EUR/USD rallies to 1.0630, USD fall
ends

    * EUR/USD slides as USD bounces, nears 1.0595 late in the day

    * Market awaits Trump, big USD drop possible if he fails to deliver USD
buillish theme


USD/JPY 
    * USD/JPY in steady Asia/Ldn/NY retreat after late Monday's spike up

    * US Q4 GDP revs were underwhelming & strong Chi PMI/Conf data ignored

    * Doubts about Trump tax plan/speech outweighing most influences now

    * Sen Hatch saying changing tax system is "very difficult" got a 111.69 low 

    * Feb/2017 low at 111.59, 111.50-110.00 barriers (every 50) possible props

    * But mkt short gamma sub 110.00 could see erratic JPY gains

    * 100-DMA at 111.91 breached; a close below it be fresh sell signal

    * Weekly Cloud top & 38.2% of Aug-Dec rise at 111.39/36 key techs

    * EUR/JPY dragged down by JPY gains. 118.08 is key tech support

    * GBP/JPY probed the 100- & 200-DMS at 128.81-82; heavy


USD/CHF
    * USD/CHF fell in Europe/NorAm after Cloud @1.0101/1.0115 rejection

    * Subsequent slide to 1.0009 broke Feb up TL; US GDP revs were weak

    * Kijun at 1.0001 looks pivotal after the twisted Cloud's topside resistance

    * Doubts about Trump tax plan/speech outweighed strong Chi PMI data

    * Swiss KOF indicator rises to 107.2 in Feb, highest since the end of 2013

    * KOF said CHF rise since early 2015 largely overcome             

    * Swissmen: 46% of Swiss industrial companies considering relocation abroad

    * CHF strength still a challenge for many             

    * EUR/CHF fell amid risk-off, JPY-led flows, reversing Monday's rebound

    * Cross lingers above, thanks to SNB, 1.0623 Brexit day lows 


GBP/USD   
    * Cable trades muted 1.2405-1.2471 range, ends NorAm by 1.2414

    * Brexit fears and Trump Address angst weigh on GBP

    * Multiple MA's (100/21-DMA) supt b/w 1.24-1.2410, then daily cloud top
1.2379

    * 1.2384 was Monday's 12-day low amid Scottish indyref2 fears

    * EUR/GBP +0.38% to 0.8540, Euro up as French election favors Macron over Le
Pen

    * Another ex-UK PM weighs in on Brexit, Major                          


USD/CAD
    * O/N range 1.31 64/96 O/N, Noram range 1.3168/3287, last 1.3279 (NY +106
pips)

    * Cda PPI/RMPI higher than expected, had little impact with US data deluge

    * US GDP revised lower but consumer spending revised up, Chi PMI beat
[page:2417]

    * UST/GoC 2-Yr spread +4 pips to 47.4 on strong local FI demand             

    * Soft oil prices popped USD/CAD              losses pared OPEC news
            

    * Tomorrow's focus is the BoC, though little is expected with no presser to
follow

 
AUD/USD     
    * Limited action as market awaits Trump speech to congress, NY opens near
0.7670

    * Choppy early-on, bull pressure emerges on broad based USD sales

    * 0.7695 high gets set, USD slide stalls and losses erode, AUD/USD slides

    * Nears day's 0.7666 low, sits just above it late in the day

    * Trump speech, Oz Q4 GDP & China Feb NBS & Caixin Mfg PMIs are risks in
Asia

    * Highly volatile trading conditions are possible with these upcoming risks


NZD/USD
    * Quiet European morning, NY opens near the 200-Hour SMA, bull pressure
takes hold

    * Broad based USD sales see a steady ascent, 21-Day SMA & Feb 27 high get
cleared

    * USD bounces, NZD/USD gives back some gains, slips back below the 21-Day
SMA

    * Pair sits near 0.7215 late as large risk in Asia session loom

    * Trump, NZ Q4 ToT and China Feb NBS & Caixin Mfg PMIs are due


LATAM
    * USD/MXN remains bid ends near 1-wk high by 20.09 +0.9%

    * Lower oil, higher March Fed hike sentiment and pre-Trump address angst hit
peso

    * Resistance by 10-DMA at 20.0937, Feb 22 high at 20.0995, supt 21-HMA
19.9536

    * USD/BRL holds by 3.11, mkt closed due to Carneval, expect higher USD
higher Wed

    * USD/CLP  +0.6% ends NY 650.3, shrugs off higher copper

    * Trump Address at 9PM NYT, any whiff of delay on reflation or tax cuts risk
negative


Market's buy on dips mentality to persist for now
Investors' buy-on-dips mentality suggests that U.S. equity markets are likely to
remain biased toward more record highs as long as the risk of
protectionism/trade war does not crystallize. You have to go all the way back to
early October 2016 to find the last time the S&P500 registered a down day
greater than 1%. The index registered another record closing high Monday,
leaving it some 13.5% higher since the US election. Despite concern over Trump's
foreign policy or implementation of domestic policy, market psychology switched
toward focusing on equities as a source of return. It's a switch that has had
many false starts since the financial crisis, but one that has a greater
fundamental backing which goes beyond monetary policy stimulus. As President
Trump addresses a joint session of Congress later Tuesday, and markets look for
clues on tax, spending, regulation, trade and foreign policy, the above shift in
market psychology will be difficult to reverse. Full comment              

CHART OF THE DAY (EUR/JPY)
    * EUR/JPY still consolidating Fri.'s breakdown below the daily Cloud

    * Macro focus more on USD/JPY weakness via Trump reflation trade doubts

    * OATs-Bunds tighter, but Bunds-JGBs still not far from Fri.'s pre-US vote
lows

    * Bears in control while below offers at 119.50 & nearby 100-DMA

    * Weekly Kijun & 50% of Sep-Dec rise at 118.08 are pivotal

    * Weekly close below 38.2% of Jun-Dec rise at 118.84 targets 116.69


 (Reporting by IFR and NY buzz team)
  

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