Asia Roundup: Aussie Hits Fresh Highs Vs Dollar, Euro; Geopolitical Tensions Spark Rally in Oil Prices – Wednesday, 25th

Market Roundup

• Australia Q3 construction work done -3.6% q/q, -2.1% eyed.
• BoJ Oct 3 Policy Board minutes – Optimistic on overseas economies, China but weakness could affect Japan, moderate recovery at best? Export rise maybe difficult, firms delaying investment? Consumption resilient but growth likely at slower pace, 2% price target may not be met but expectations rising.
• BoJ Shirai – May mull more ease if prices don’t hit target, recovery to remain moderate, consumption too, downside risks large, CAPEX delays? Optimistic on price trend, core CPI 1%+ FY ’16, @1.5% average FY ’17, upping size of BoJ asset buys first option if BoJ decides to ease again – Reuters.
• Japan Oct corporate service prices +0.1% m/m, +0.5% y/y.
• Moody’s – Japan corporates to remain cautious in ’16, China impact limited, auto sector to benefit from solid US/EZ demand and weaker JPY.
• Minutes – Nine US Fed banks called for discount rate hike – Reuters.
• BoC DepGov Patterson – Canada rebounding, adjusting to oil/commodity price declines, lower borrowing rates, lower CAD, GDP 1%+ this year – Reuters.
• BoE DepGov Broadbent – Lack of credit growth in UK striking, not trying to validate any given market path for bank rate – Daily Mail, Reuters, MNI.
• Hastings group beats China’s State Grid to Australia power network – Reuters.

Economic Data Ahead

• (0200 ET/0700 GMT) Switzeland Oct UBS consumption indicator; last 1.65.
• (0200 ET/0712 GMT) France Nov consumer confidence index,       95.0 eyed; last  96.0.
• (0300 ET/0800 GMT) Sweden Nov consumer confidence index,       98.8 eyed; last  98.8.
• (0300 ET/0800 GMT) Sweden  Nov manufacturing confidence index, 111.9 eyed; last 112.0.
• (0330 ET/0830 GMT) Sweden Oct PPI; last -0.3% m/m, -1.4% y/y.
• (0400 ET/0900 GMT) Norway Sep labor force survey – unemployment, 4.6% eyed; last 4.6%.
• (0400 ET/0900 GMT) Italy Sep industrial orders/sales; last -5.5% m/m/+2.1% y/y and -1.6%/-2.4%.
• (0430 ET/0930 GMT) GB Oct BBA mortgage approvals, 45.5k eyed; last 44.49k.
• (0500 ET/1000 GMT) Italy Sep retail sales, +0.5% m/m eyed; last +0.3% m/m, +1.3% y/y.
• (0830 ET/1330 GMT) US Oct personal income,      +0.4% m/m eyed; last +0.1%.
• (0830 ET/1330 GMT) US Oct personal consumption, +0.3% m/m eyed; last +0.1%.
• (0830 ET/1330 GMT) US Oct core PCE price index, +0.1% m/m eyed; last +0.1% m/m, +1.3% y/y.
• (0830 ET/1330 GMT) US Oct durable goods orders, +1.5% m/m eyed; last -1.2%.
• (0830 ET/1330 GMT) US Oct – ex-transport, +0.3% m/m eyed; last -0.3%, ex-defense -1.9%.
• (0830 ET/1330 GMT) US Oct – non-defense ex-air, +0.4% m/m eyed; last -0.1%.
• (0830 ET/1330 GMT) US w/e initial jobless claims, 270k eyed; last 271k.
• (0900 ET/1400 GMT) US Sep FHFA monthly home prices; last +0.3% m/m, +5.5% y/y, index 224.9.
• (0945 ET/1445 GMT) US Nov Markit PMI services index  – flash, 55.0 eyed; last 54.8.
• (0945 ET/1445 GMT) US Nov Markit PMI composite index – flash; last 55.0.
• (1000 ET/1500 GMT) US Oct new home sales, 500k AR, +6.0% m/m eyed; last 470k, -11.5%.
• (1000 ET/1500 GMT) US Nov U.Mich sentiment index – final, 93.1 eyed; prelim 93.1.
• (1300 ET/1800 GMT) US Oct Dallas Fed trimmed mean PCE inflation index; last +1.7%.

Key Events Ahead

• (0330 ET/0830 GMT) Riksbank Financial Stability Report, press conference.
• (0430 ET/0930 GMT) ECB 91-day LTRO, E30 bln allotment eyed, E33.1 bln maturing.
• (0500 ET/1000 GMT) ECB VP Constancio presents biannual Financial Stability Review.
• (0500 ET/1000 GMT) Italy E1 bln total 2.6/1.25% ’23/32 BTPei, E1-1.5 bln ’17 CTZ auctions.
• (0530 ET/1030 GMT) RBA AsstGov Debelle speech at London FX Week Europe conference.
• (0530 ET/1030 GMT) Germany E3 bln 1% ’25 Bund, Portugal -1 bln 2.875% ’25 OT auctions.
• (0540 ET/1040 GMT) BoE Rule speech at London symposium.
• (0730 ET/1230 GMT) UK ChancExch Osborne presents Autumn Statement and Spending Review.

FX BeatUSD: A surprise drop in U.S. consumer confidence and rising  Russia-Turkey tensions sends dollar lower. The dollar index fell 0.2 percent to 99.599. Looking ahead, markets will be watching for US data later in the global trading day – including durable goods and new home sales – for any direction about the timing of a Fed hike. USD/JPY: The dollar hit a session low against the Japanese yen after the GDP release, and was down 0.3 percent to 122.47 yen. Decline in consumer confidence, to its lowest since September 2014 and rising Europe tensios weighed on the Greenback. Risk-off sentiment appears to have eased heading into early Europe, lending support to the recovery in USD/JPY from weekly lows. Recovery in the pair stalls near 122.50, USD/JPY struggles to extend beyond 122.50 over the last hours. Markets now await the European open for further cues on the risk-off/on sentiment, which is likely to impact USD/JPY. Immediate support is at 122.20 (Nov 16 Low) and resistance is located at 122.59 (daily pivot).AUD/USD: The Aussie stays firm in Asia, continues to grind away at topside against majors. A commodity rally and upbeat comments from the central bank governor Glenn Stevens encouraged buying in the Aussie across the board. The Australian dollar hit multi-month highs against the euro, pound and yen on Wednesday. AUD/USD popped higher to 0.7259, having climbed to a one-month peak of 0.7276 after a key level around 0.7250 finally gave way. 0.7295-05 offers solid technical resistance, while supports on the downside are seen at 0.7216 (Cloud top) and further below at 0.7208 (100-Day MA)NZD/USD: The New Zealand dollar rose to $0.6562, from a low of $0.6505 on Tuesday, tracking the Australian dollar higher.  USD weakness continues to underpin NZD gains. The pair opened Asia at 0.6555 and was last trading at 0.6578 at the time of writing. Trendline resistance at 0.6580 is the next immediate hurdle, while support on the downside is at 0.6546 (cloud base) EUR/USD: The euro added 0.1 percent against the greenback to 1.0661, buoyed by data from Germany that showed business sentiment in the euro zone’s biggest economy was at its highest in more than a year, according to an IFO survey. The current weakness could extend lower, pair is consolidated on the hourly chart and capped by the 100 SMA while recovery attempts are shallow and lack conviction. On the downside any break below 1.06200 confirms weakness , a decline till 1.0590 is possible. GBP/USD: Cable gains 0.12% and currently trades at 1.5100, re-attempting recovery from hourly 10-SMA at 1.5092 levels. The bulls appear to face exhaustion after recovering more than 50-pips from two-week lows and struggles to extend gains beyond 1.51 handle. The dollar did rise against sterling on Tuesday after BoE’s Haldane, said there were downside risks to inflation and growth, while Governor Mark Carney reiterated a low interest rate environment is likely to persist. Immediate resistance is seen at 1.5119 (1h 50-SMA), while support lies at 1.5051 (Nov 24 Low)Equities RecapAsian stocks were on edge on Wednesday as geopolitical tensions flared after Turkey downed a Russian fighter jet, while crude oil prices extended gains.MSCI’s index of Asia-Pacific stocks outside of Japan edged up 0.1 percent but shares in Hong Kong, Australia and South Korea slipped. Japan’s Nikkei unofficially closed down 0.39 pct at 19,847.58, and Seoul down 0.30 pct.Commodities RecapCrude oil futures extended gains on Wednesday after prices hit two-week highs in the previous session following Middle East tensions. Brent extended its gains by 14 cents to $46.26 a barrel by 0443 GMT, reversing an earlier fall on profit-taking. The benchmark had settled up $1.29 at $46.12 on Tuesday, after hitting its highest since Nov. 11 at $46.50.U.S. West Texas Intermediate futures rose 4 cents to $42.91 a barrel. WTI finished up $1.12 on Tuesday at $42.87, having touched $43.46 during the session, also its highest since .Prices of metals such as zinc, copper and nickel, which had recently plumbed multi-year lows, bounced on the back of the dollar’s retreat. Treasuries RecapAustralian government bond futures were a touch firmer, with the three-year bond contract steady at 97.860. The 10-year contract added 1 tick to 97.0600, while the 20-year contract was up 1.5 ticks to 96.5400.New Zealand government bonds slipped, sending yields up around 1.5 basis points at the longer end of the curve.The benchmark 10-year U.S. note yield stood at 2.239 percent after touching a 3-week low of 2.206 percent overnight.

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