Article / 17 October 2017 at 7:00 GMT

Morning Markets: USD gains as risk-aversion eases

Senior Editor / Saxo Bank
Denmark

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Watchlist

  • UK: PPI (0830 GMT)
  • UK: CPI (0830 GMT)
  • EU: Harmonised CPI (0900 GMT)
  • Germany: ZEW Indicator of Economic Sentiment (0900 GMT)
  • US: Industrial production, capacity utilisation (1315 GMT)
  • US: API statistical bulletin (2030 GMT)

The US dollar is broadly higher as the European trading day kicks off after indications that US president Donald Trump (a) favours a policy hawk to replace Fed chair Janet Yellen and (b) hasn't completely ruled out diplomacy as a route towards ending the nuclear arms standoff with North Korea.

The resulting slight uptick in risk sentiment has undermined the usual safe havens, sending gold back below $1,300/oz and depressing core bond prices. Crude oil, meanwhile, has slipped off overnight highs which came as Iraq's efforts to suppress rebellious Kurds in the northern part of the country have been stepped up. Some 275,000 barrels a day of oil exports have been shut down temporarily because of the conflict.

Equities were mostly buoyant today in Asia, thanks to a robust performance on Wall St overnight. The Shanghai Composite made strong early gains but backtracked in the latter half of the session – thanks at least in part to efforts to support stocks on the eve of China's Party Congress. Power plays are in the spotlight this week in Asia, with leaders of the top two economies in the region seeking to firm up their support – at the ballot box on Sunday, for Japan's Shinzo Abe, and through promoting his policies and support at a pivotal congress, in the case of China's Xi Jinping.

Market signals

Asian session

  • Crude prices have climbed on concerns about supply interruptions in Iraq
  • The US says it wants to start free trade agreement talks with Japan
  • Japan's Kobe Steel apparently falsified quality data for years
  • The Nikkei 225 rebounded after an early fall; it was up 0.37% to 21,334.61 at 0438 GMT
  • Beijing is intervening to prop up stock prices for Party Congress, which starts tomorrow
  • The Shanghai Composite was up by a slim 0.07% to 3,380.71 at 0507 GMT
  • Hong Kong's Hang Seng index hit a 10-year high on Tuesday
  • The Hang Seng added to its gains today; it was up 0.18% to 28,744.01 at 0405 GMT
  • The troubled US retailer Toys "r" Us may float its Asian business in Hong Kong
  • The chairman of the investment fund Vanguard has warned of a stock market tumble
  • Aussie banks and top miners buoyed the S&P/ASX200; it closed up 0.73% at 5,889.60

Forex ahead

  • AUD weakened on the release of the RBA minutes; it was worth 0.7848 at 0544 GMT
  • USD lost ground against the yen; it was worth just ¥112.1830 at 0545 GMT


In opinion

Aussie recovery
The ASX has continued its upward roll, based mostly on recovering commodity prices, but there are doubts about whether the climb can continue, says Saxo Capital Markets


Red metal boost
Robust producer prices in China have given copper a boost, and metals traders will watch the Party Congress in Beijing, for any impact on the red metal, says Saxo APAC Sales Trading

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Power plays ... Japan's Shinzo Abe, left, aims for re-election when Japan votes on Sunday, while Xi Jinping will firm up his support at China's Party Congress this week. Photo: Shutterstock

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