Video

Clive Lambert - FuturesTechs
Clive Lambert of FuturesTechs explains why he is buying USDJPY. He is looking to buy at current levels around 112.55 and add on a move above 112.75. He works a stop below 112.20 and is looking for 113.50 initially, then 113.90 and 114.60, the latter being the recent high from November 6th. Finally, he has a bigger picture target at 115.60.
Article / 12 September 2017 at 2:06 GMT

Morning Report APAC: Asian markets follow Wall St in relief rally

APAC Sales Trading Desk / Saxo Capital Markets
Singapore







  • Tensions eased over North Korea and Hurricane Irma
  • Asian markets climbed after the S&P 500 closed at an all-time high overnight
  • Japan's Nikkei 225 rose 1.08% in early trade 
  • The US dollar held onto overnight gains against the yen
  • USD had rallied overnight, as the market repriced risks from Irma and North Korea
  • Overnight gold dropped 1.40%, Treasuries fell 8 bps and WTI jumped 1.24% 


By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

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Speeches

1720 – UK – Bank of England markets director Chris Salmon speaks in Barcelona

2145 – EC – European Central Bank Vice President Vítor Constâncio speaks in Frankfurt


Overnight news

THE WORLD IS NICE!: Hurricane Irma, once a Category 5 hurricane, hit the coast of Florida over the weekend. Irma has gradually lost strength, however, and has been downgraded to a tropical storm as it continues to move its way across land. Storm surges were also much smaller than the National Hurricane Center expected. 

Tensions over North Korea cooled down. The US watered down a proposal to punish North Korea, omitting an oil embargo and a freeze of Kim Jong-un's assets, a European diplomat said. A ban on textile exports would stay. The UK and France back the plan but it's unclear whether Russia and China do. The UN Security Council votes on the draft resolution at 6 pm New York time on Monday. 

Gold dropped 1.40%, Treasuries fell 8 basis points and the yen weakened 1.5%. WTI jumped 1.24%, and base metals rallied across the board. 

The new Iphone 8 is coming out tonight. 

And, just like that, the S&P 500 closed at an all-time high!!!

China: (Courtesy of Deutsche Bank) China rolls back reserve requirements 

The PBoC has done away with reserve requirements on FX forward purchases onshore, as well as on CNH deposits with correspondent banks. Sameer has just shared expanded thoughts on your Bloomberg. Our quick four-point take:

1. REINTRODUCING THE DOLLAR BID – This move suggests authorities might be getting concerned about the pace of appreciation in the RMB
2. CALLING FROM HELP FROM CORPORATE CHINA – PBOC may not want to intervene to buy USD given US sensitivity, and is looking to corporates to increase the RHS (free market intervention!)
3. WILL THIS TURN THE TIDE? Not necessarily. Onshore USD forward purchases might normalize back up, but we can’t forget USD supply which is driven much more by expectations of the USD trend
4. EXPECT CONVERGENCE BETWEEN CNH AND ONSHORE CNY FORWARD CURVES. Improved CNH liquidity and migration of the RHS bid to onshore could keep pressure on CNH points to compress towards onshore. There could be another 300pts of narrowing in the 12M spread. 

 








Foreign exchange

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USD rallied across the board with the market repricing the global risks from Hurricane Irma and North Korea. The 2 “sage heaven currencies”, JPY and CHF, depreciated the most overnight. The move overnight in FX should not last but the search for yields in emerging markets will continue. There is no particular reason to see the USD rallying.

DXY still trades below the support of 92.00, which becomes a good resistance, and there is still nothing underneath to stop it. The pain trade is still lower.

EURUSD was not able to hold above 1.2000 but we trade just on the uptrend support line which started in June. The support is at 1.1943.

GBPUSD remains very well supported and didn’t react last night on the USD buying. It’s a strong sign that the pain trade remains on top.

USDJPY is whippy, to say the least. I have talked last night to the PM of a large fund and he told me that the buyside has been selling USDJPY the past few days following frustration to keep missing the moves and, unfortunately, a lot of them got stopped out yesterday in this strong USDJPY rally. It’s hard to see any clear trade in USDJPY at this level but the trend should remain lower.

Emerging Markets: USDCNH has rebounded from the lows following the changes in regulation from PBoC but we should see some offers coming back at 6.5500. USDEM rallied slightly overnight but we should expect good foreign inflows this morning in Asia into equities and bonds to help the USD selling.



Foreign exchange movement


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Following the PBoC change of regulation, the whole CNH volatility curve dropped a lot and the risk reversal (still favouring the topside) has also come off in the further part of the curve .

For G10, there is good Gamma selling (short-dated vols) across the board after the repricing of risk overnight.


Rates
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US yields surged on risk appetite resumed after tension surrounding North Korea eased and Hurricane Irma’s damage is expected to be much lower.

European bonds were taking the tone of risk-on and dropped. Hawkish-tilted risk added to the pressure for gilts.



Commodities 

 

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Equities

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US stock-market indices logged their biggest one-day gains in months. The S&P 500 ended the session at an all-time high on Monday, in a broad rally led by financials and technology shares.

Global X Lithium & Battery Tech ETF jumped as much as 5.1%, to the highest in more than six years, after China said it will set a deadline for automakers to end sales of fossil-fueled vehicles. Its biggest holdings FMC Corp., Soc. Quimica & Minera de Chile SA, Samsung SDI Co. and Tesla Inc. rallied.

Tesla (up 5.9%) was also in the news as the electric carmaker announced the next generation of its Superchargers, aimed at dense cities, and sent out a free software update temporarily extending the battery life for some of its cars to help owners evacuate the looming Irma storm.

Apple Inc. jumped 1.8% as it prepared to unveil its latest iPhone on Tuesday, despite an unreleased build of iOS 11 that was leaked to the press over the weekend spilled almost all of the beans on Apple's big announcements this week.

Danish pharmaceuticals company Lundbeck tumbled 13.8% after CEO Kare Schultz resigned from his position and opted to join rival Teva Pharmaceutical Industries Ltd., which surged 19%.


Asia Pacific Stocks

Hong Kong 

Analyst Ratings: 

  • FIT Hon Teng (6088 HK): Downgraded to Hold at CICC; Price Target HK$6.02 
  • ASM Pacific (522 HK): ASM PACIFIC Initiated at JPMorgan with Overweight; PT HK$130 
  • Ningbo Huaxiang Electronic (002048 CH): Ningbo Huaxiang Electronic Initiated at SWS with Buy 

Preview: 

  •  BOC Aviation (2588 HK) $500m 5Y +117.5, $500m 10Y +140 
  •  Baoshan Steel (600019 CH): SocGen Says Warburg Pincus Bought 49% Stake in Fortune SG 
  •  Bohai Financial (000415 CH): PRICE TALK: Avolon $5b TLB-2 L+225-250, 0.75%, Par; Due Sept. 14 
  •  Chalco (2600 HK): Chalco Shares to Suspend Trading on Possible Asset Restructuring 
  •  China Mer Port (144 HK): China Merchants Port Plans Acquisition of 51% of Zhongshan Port 
  •  China National Nuclear (601985 CH): CNNP Plans to Set up Nuclear Power JV in Hebei Province 
  •  China State Const (601668 CH): Union Properties Hires Chinese Firm to Develop Dubai MotorCity 
  •  Country Garden (2007 HK): Country Garden Is Said in Talks w/Wadhwa on Mumbai Project:Mint 
  •  GCL System (002506 CH): Chinese Solar-Cell Maker to Explore Future in Electric Vehicles 
  •  Cnooc (883 HK): BP, Bridas to Combine PAE and Axion Energy in Cash-Free Deal 
  •  Cosco Ship Port (1199 HK): Cosco Shipping Ports to Buy 76% of Port Operator in Belgium 
  •  Dongfeng Motor (489 HK): Dongfeng Group Aug. Vehicle Sales Volume 255,344 Units 
  •  Dongxing Securities (601198 CH): Dongxing Securities HK Markets $300m Loan to Syndication 
  •  Geely Automobileb (175 HK): JSW Is Said in Talks With Geely on Electric Vehicles JV: Mint 
  •  Glencore (GLEN LN): Glencore Zambian Unit Says It’s in Negotiating Period on Tariff 
  •  Guodian Technology (1296 HK): Hong Kong’s SFC Says Guodian, Shenhua Can Skip Mandatory Offer 
  •  HSBC (5 HK): HSBC Has Spent GBP499.4M Buying Back 67.1M Shares Since Aug. 1 
  •  Huishan Dairy (6863 HK): Huishan Dairy Says HSBC Said Its Loans Are Immediately Due 
  •  ICBC (601398 CH): Spain Judge Orders Proceedings Vs ICBC in Money-Laundering Case 
  •  Jiangxi Copper (358 HK): Jiangxi Copper Names Long Ziping as Chairman, Replacing Li 
  •  Jingrui Holdings (1862 HK)L: Jingrui Holdings Agrees to Sell 50% Stake in Hangzhou Xiaoying 
  •  Standard Chartered (2888 HK): StanChart Is Said to Meet With U.K. FCA Over Bribe Allegations 
  •  Sunny Optical (2382 HK): Sunny Optical Aug. Handset Lens Sets Shipments Jump 95.5% Y/y 
  •  Wynn Macau (1128 HK): New Deal: Wynn Macau $1.35b 7NC3, 10NC5 Sr Notes 

Japan

Analyst Ratings: 

  •  Daido Steel (5471): Cut to sell from neutral at Haitong 
  •  Fast Retailing (9983): Raised to buy at Deutsche Bank 
  •  Harmonic Drive (6324): Raised to outperform from neutral at Tokai Tokyo Securities 
  • Haseko (1808): Rated new neutral at Nomura 
  •  Japan Steel Works (5631): Raised to outperform from neutral at SMBC Nikko 
  •  Makino Milling (6135): Raised to buy from neutral at Nomura 
  •  Saizeriya (7581): Cut to neutral from buy at Mizuho 
  •  Shoei Foods (8079): Cut to neutral from buy at Nomura 
  •  Sony (6758): Cut to neutral at Citi 
  •  Sumitomo Heavy (6302): Raised to outperform at Mito Securities 
  •  Sumitomo Rubber (5110): Raised to buy from neutral at Okasan Securities 
  •  Toyo Tire (5105): Rated new buy at Okasan Securities 
  •  Yokohama Rubber (5101): Raised to buy from neutral at Okasan Securities 

Preview:

  •  Ci:z Holdings (4924): Full-year operating profit +4.6% to 8.6b yen; forecasts 9b yen for current FY 
  •  Gumi (3903): 1Q operating profit -14% to 218m yen 
  •  Japan Lifeline (7575): In pact with Endologix for development and commercialization of endovascular stent graft systems in Japan 
  •  Japan Logistics Fund (8967): To raise as much as 9.5b yen from share sale 
  •  Japan Post Holdings (6178): Government to sell ~1.3t yen of shares in co. as Japan takes steps to continue privatization 
  •  Kansai Electric Power (9503): To buy Orix business that sells wholesale high-voltage electricity to apartment buildings 
  •  Kyowa Hakko Kirin (4151): Co. and Ultragenxy report positive data from phase 2 studies of burosumab 
  •  Machine tools: Orders rose 36.3% y/y in Aug. 
  •  Mitsubishi Corp. (8058), Fast Retailing (9983): Mitsubishi to buy shares in Fast Retailing’s Russia unit 
  •  Mizuho Financial Group (8411): Brokerage unit gets authorization for Seoul branch 
  •  Okamoto Industries (5122): To buy back as much as 1.01% of shares 
  •  Seven & i Holdings (3382): 7-Eleven Japan Aug. convenience store sales +0.2% y/y 
  •  Shoei Foods (8079): 9-month operating profit +26% to 4.59b yen; cut to neutral from buy at Nomura 

Australia

Analyst Ratings: 

  •  AAD AU: Ardent Raised to Buy at Morningstar 
  •  MQG AU: Macquarie Group Raised to Buy at UBS, PT A$91 

Preview:

  •  ALL AU: Slot-Machine Lawsuit Alleges Crown, Aristocrat Misled Players 
  •  ARV NZ: Arvida Agrees to Buy Three Villages, Plans 1-for-5 Rights Issue 
  •  CBA AU: Liar Loans for Housing on the Rise at Australian Banks: Chart 
  •  NCM AU: PRECIOUS: Gold Drops as Dollar Rebounds, Irma Concerns Recede 
  •  RMD AU: ResMed Reader Interest Rises; Options Volume High



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Storm surges from Hurricane Irma were much smaller than the National Hurricane Center expected. Photo: Shutterstock

 

– Edited by Susan McDonald


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