Asia Roundup: Yen Nurses Broad based Losses, Poor China Data Fails to Support, Antipodeans Edge Lower – Monday, February

Market Roundup

• Japan Jan PMI mfg – final 52.3, flash 52.4, December 52.6.
• China Jan Caixin PMI mfg 48.4, 48.0 eyed, Dec 48.2, 11th straight shrinkage  but new orders sub-index 48.5, highest in 7 months.
• China Jan official PMI mfg 49.4, 49.6 eyed, lowest since Aug ’12, Dec 49.7.
• China Jan official PMI services 53.5, December 54.4.
• Australia Jan AIG PMI -0.4 pts to 51.5, inventories up, employment down.
• Australia Jan TD/MI inflation gauge +0.4% m/m, +2.3% y/y, last +0.2%, +2.0%.
• Australia city home prices rebound in January, Melbourne hot – CL RP Data.
• New Zealand Dec migration gain, short-term visitors +10.5% y/y.
• Specs further reduce USD bets, net longs lowest in 3-months, JPY net longs at highest since mid-Feb as of last Tuesday, market again CHF net short.
• Japan Abe government enjoys strong support despite scandal – Nikkei.
• SF Fed Williams – Smidgen slower rate hikes than before – Reuters.
• BoI Visco – Int’l uncertainties, volatile markets pose risk to growth, no limits to ECB’s ability to support recovery – Reuters, MNI.

Economic Data Ahead

• (0230 ET/0730 GMT)  Sweden Jan PMI mfg, 56.0 forecast last  56.0.
• (0300 ET/0800 GMT)  Norway Jan PMI mfg, 47.0 forecast last  46.8.
• (0315 ET/0815 GMT)  Spain Jan PMI mfg, 52.4 forecast last  53.0.
• (0330 ET/0830 GMT)  Switzerland Jan PMI mfg, 50.9 forecast last  52.1.
• (0345 ET/0845 GMT)  Italy Jan PMI mfg, 55.0 forecast last  55.6.
• (0350 ET/0850 GMT)  France Jan PMI mfg, 50.0 forecast flash 50.0.
• (0355 ET/0855 GMT)  Germany Jan PMI mfg, 52.1 forecast flash 52.1.
• (0400 ET/0900 GMT)  Eurozone Jan PMI mfg, 52.3 forecast flash 52.3.
• (0430 ET/0930 GMT)  Great Britain Jan PMI mfg, 51.8 forecast last  51.9.
• (0430 ET/0930 GMT)  Great Britain Dec mortgage approvals, 69.6k forecast last 70.41k.
• (0430 ET/0930 GMT)  Great Britain Dec mortgage lending, GBP3.7 bln forecast last bln.
• (0430 ET/0930 GMT)  Great Britain Dec consumer credit,  GBP1.3 bln forecast last bln.
• (0430 ET/0930 GMT)  Great Britain Dec money supply M4; last +0.4%.
• (0830 ET/1330 GMT)  United States Dec personal income,      +0.2% m/m forecast last +0.3%.
• (0830 ET/1330 GMT)  United States Dec personal consumption, +0.1% m/m forecast last +0.3%.
• (0830 ET/1330 GMT)  United States Dec core PCE price index, +0.1% m/m forecast last +0.1% m/m, +1.3% y/y.
• (0945 ET/1445 GMT)  United States Jan Markit PMI mfg – final; prelim 52.7.
• (1000 ET/1500 GMT)  United States Jan ISM PMI mfg, 48.0 forecast last 48.2.
• (1000 ET/1500 GMT)  United States Dec construction spending, +0.6% m/m forecast last -0.4%.
• (1300 ET/1800 GMT)  United States Dec Dallas Fed PCE; last +1.6%.

Key Events Ahead

• N/A   Budapest conference/Lamfalussy lectures, various attendees.
• N/A   Netherlands E1-2 bln 3/6-mo DTC, France max E7 bln 3/3/6/12-mo BTF sales.
• (1100 ET/1600 GMT) ECB Pres Draghi addresses European Parliament in Strasbourg.
• (1300 ET/1800 GMT) FOMC ViceChair Fischer speech in New York.

FX Beat USD: The greenback benefits from the growing monetary policy divergence between the U.S. and its counterparts in Europe and Asia. Against a basket of currencies, the dollar index touched a peak of 99.82 on Friday and is currently 0.04 percent down at 99.50.EUR/USD: The euro trades 0.17 percent up at 1.0847 levels, drifting away from Fridays low of 1.0809. The expectations for further easing by the European Central Bank increased after the BoJ adopted negative rates on Friday, sending German 2-year yields to a fresh trough of nearly 50 basis points below zero. Markets now await for final manufacturing PMI releases from across the Eurozone economies and for U.S. ISM manufacturing PMI & PCE Price Index data for further momentum on the pair. Currently the pair trades at 1.0847 levels, hovering towards sessions high of 1.0852. Immediate resistance is seen at 1.0868 (10-DMA), while support is located at 1.0809 (Jan 29 Low).USD/JPY: The dollar trades 0.13 percent up at 121.28 yen, after having jumped nearly 2 percent on Friday – its biggest one-day rally in over a year. The yen nursed broad losses on Monday after the Bank of Japan adopted negative interest rates and sent bond yields sliding across the globe, particularly in Europe. However, the yen received little help from Chinese economic data, as it failed to impress the markets but it was not sufficient to revive safety flows into the Japanese currency. The pair moves between a tight range of 121.10 – 121.48. Immediate resistance is located at 121.68 (Previous Session High), while on the downside, support is located at 120.81 (Dec 23 Low).AUD/USD: The Australian dollar skidded down after Chinese economic releases disappointed the markets. China’s January Purchasing Managers’ Index dropped to 49.4, from 49.7, while non-manufacturing PMI eased to 53.5, from 54.4. However, the Caixin/Markit China Manufacturing Purchasing Managers’ Index edged up to 48.4 in January, beating market expectations of 48.0. Further ahead, market await for Tuesday’s Reserve Bank of Australia meeting, however, markets expect the central bank to keep the cash rate at a record low 2.0 percent. Currently the pair trades at 0.7075 levels, having touched sessions low of 0.7042. Immediate resistance is located at 0.7086 (Jan 7 High), while support is seen at 0.7003 (10- DMA).NZD/USD: The New Zealand dollar followed its fellow antipodean movement as Chinese manufacturing data failed to impress the market. The kiwi trades at 0.6475 levels, after making a low of 0.6449. Immediate support is seen at 0.6424 (Jan 26 Low), while resistance is located at 0.6506 (20- DMA). New Zealand’s jobs data and a speech by the head of the Reserve Bank of New Zealand will be closely watched on Wednesday. RBNZ’s Graeme Wheeler will be speaking on ‘The Global Economy, New Zealand’s Economic Outlook and the Policy Targets Agreement’. USD/CNY: The yuan eased against the dollar on Monday as downbeat manufacturing data added to worries about the risk of further capital outflows, and after the central bank set the midpoint rate at 6.5539 per dollar prior to the market open, 0.04 percent weaker than the previous fix of 6.5516. The spot market opened at 6.5761 per dollar and was trading at 6.5788 at midday, 0.03 percent softer than the previous close. China’s manufacturing activity contracted at its fastest pace in almost three-and-a-half years in January, suggesting the economy is off to a weak start in 2016.Equities RecapAsian stocks started off on a cautious note on Monday, with the Bank of Japan’s policy easing sparking some buying but further signs of economic weakness in China and a drop in oil prices keeping investors on guard.MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent, after losing 8 percent in January, while Taiwan stocks closed up 0.1 pct at 8,156.96 points. Shanghai Composite Index eased 0.8 percent in early trade, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen dropped 0.6 percent. Australia’s S&P/ASX 200 Index climbed up 0.73 Pct at 5,042.20 points, while Nikkei advanced 1.98 pct at 17,865.23, with Seoul Shares edged up 0.46 pct.Commodities RecapGold escalated on Monday, extending gains after ending January with its biggest monthly gain in a year, amid a softer dollar and uncertainty over the global economy. Spot gold edged up 0.3 percent at $1,120.75 an ounce by 0312 GMT, while U.S. gold for April delivery was up 0.5 percent at $1,121.60 an ounce. Spot silver gained 0.2 percent to $14.29 an ounce, platinum dropped 0.4 percent to $867.68, while palladium edged up 0.2 percent at $499.55.Oil prices plunged after China and South Korea posted downbeat economic data and on worries the prospect of a coordinated production cut by leading crude exporters seemed remote. Front-month Brent crude was trading at $35.54 per barrel at 0157 GMT, down 45 cents, or 1.25 percent, from the last close. U.S. West Texas Intermediate was down 35 cents at $33.27 a barrel.Treasuries RecapU.S. 10-Year Treasuries yield stood at 1.915 percent down by 0.014. The 2-year yield dropped to a 3-month low of 0.766 percent on Friday before bouncing to 0.779 percent. Australian bond yields dropped, with the 10-year nearing a 3-month low of 2.6 percent. Reflecting the lower yields, bond futures rose with the 10-year contract gaining 2.5 ticks to 97.390, while the 3- year bond contract gained 1 tick to 98.140.New Zealand government bond yields were 1.5 basis points lower at the short end and 4 basis points lower at the long end.

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