Article / 04 October 2017 at 2:05 GMT

Morning Report APAC: Dairy auction price tumble impacts NZDUSD

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • US indices traded higher yesterday with the Dow leading the major indices
  • Industry data showed higher US gasoline stockpiles and increased inventories
  • Metals have made gains on the back of the weaker USD
  • Dairy auction prices have hit a six-month low, impacting NZDUSD
  • Arabica coffee fell for the fifth straight session, in its longest slump since August
  • Cocoa jumped 2.2% to eight-week high as demand outlook improved

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)
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Speeches (Singapore Time)

  • No important speeches scheduled for today


Overnight news, North Korea

  • Defence Secretary Jim Mattis backed U.S. diplomatic efforts with Iran and North Korea. Mattis told a Senate panel he supports Rex Tillerson's efforts to defuse the crisis with Pyongyang after President Trump said the secretary of state "is wasting his time." The Pentagon chief also said preserving the Iran nuclear accord is in America's interest, provided Tehran lives up to its side of the deal.

Overnight news, New Zealand

  • Dairy auction prices hit a six-month low. The average price dropped by 2.4% in the fortnightly auction to $3,223 a tonne. Butter and whole milk powder prices also dropped. Whole milk powder, which helps determine the payout to farmers, fell by 2.7% to $3037 a tonne, going against expectations it would lift. Butter nudged back by 3.6% from its record high to $5,837 a tonne.

 

Foreign exchange

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  • USD was quiet with no specific news overnight and the market is still considering whether the tax reform will have an immediate impact on the rates.
  • DXY is still within the range of 93.00/94.00 and trying to keep any sort for momentum. Despite the strong data coming out of the US, like ISM, the USD is not really following due to the low inflation number.
  • EURUSD is still trading below the short term resistance of 1.1846 the 50 day moving average. The near support is at 1.1682 the Aug. 16th low. The risk reward allows to sell EUR at this level with a stop above the 50d MA
  • NZDUSD was the biggest mover of the night following the poor dairy auction result (see above). NZDUSD now trades at the strong support made by the 200 day moving average at 0.7155 and AUDNZD has bounced off the 50 day moving average without confirming a break lower. 
  • Emerging Markets: USD is trading offered against EM helped by the continuous rally in equities which made it difficult for funds to completely get out of them and miss on a possible even stronger rally. USDINR is trading around the 200d MA and the risk reward favors a short USD at this level.

Foreign exchange movements

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  • The market seems to have accumulated of Short gamma position on the topside of EURUSD. Watch any break above 1.1850 for bigger stops.


Rates
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  • US Treasuries held gains into the close, leaving front-end of the curve marginally higher on the day, pushing 5s30s steeper by 1 basis point on the day.
  • Spanish bonds underperformed for second day with 10Y climbed 3 basis points, while soft construction data in the U.K. caps slide in Gilts after 10 rose as much as 5bps.

Commodities 

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Equities

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  • US indices continue to trade higher yesterday with the Dow leading the major indices as it grinded higher on upbeat data in their vehicle sales in September as US light vehicles surged to 18.6mn units, the best monthly total so far in this expansion.
  • Automotive was one of the best performing sectors yesterday as U.S. automakers reported better-than-expected sales in September. Ford Motor Co.'s new CEO plans to cut billions in costs and focus on growth area as share price gained 2.07% and closed at $12.34.
  • GM also continued its ascend recently, gaining 3.08% as it looks comparatively much cheaper on P/E valuation than its peers.
  • Tesla also gained 1.58% despite them missing the goal of building 1,500 Model 3 vehicles during the quarter.
  • Walmart  rose more than 1% after the retailer acquired small New York-based company Parcel. The acquisition is a play to go head-to-head with Amazon.com Inc.


Asian equities preview

Japan analyst views

  • Advantest (6857): Raised to buy at Deutsche Bank.
  • Coca-Cola Bottlers Japan (2579): Rated new buy at Nomura.
  • Daito Construction (1878): Cut to neutral from buy at Haitong Intl.
  • Fancl (4921): Upgraded to hold from underperform at Jefferies.
  • Okuma (6103): Raised to buy from neutral at Mizuho.
  • Tayca (4027): Rated new buy at Ichiyoshi Research.
  • Tokyotokeiba (9672): Rated new buy at Ichiyoshi Research.

Japan stocks

  • Aomori Bank (8342): To raise as much as 11.7b yen from new share sale.
  • Autos - Sept. U.S. Sales: Honda (7267) +6.8% vs est. +1.5%; Nissan (7201) +9.5% vs est. -8.7%;
  • Toyota (7203) +14.9% vs est. +9.3%.
  • JAL (9201): To set up financial-products company with SBI Holdings.
  • Retail - September sales (y/y): ABC-Mart (2670) same- store sales up 2.9%; Adastria (2685) same-store sales up 2%; Fast Retailing (9983) domestic Uniqlo sales up 6.3%; Hiday Hidaka (7611) same-store sales up 3.9%; Ryohin Keikaku (7453) same-store sales up 8%; United Arrows (7606) same-store sales up 7.9%.
  • Seven Seas Holdings (3750): ACA Inc. to launch tender offer for co. shares at ¥2,088/piece.
  • Takeda (4502): FDA approves Alunbrig 180mg tablets.
  • Toshiba (6502): To buy Kazatomprom’s stake in Westinghouse for ¥59bn; S&P moves outlook to negative from "watch negative".

Australia analyst views

  • APN Outdoor (APO AU): Raised to Buy at UBS, price target $A4.75.
  • CML Group (CGR AU): New Buy at Canaccord, PT $A0.45.
  • Commonwealth Bank (CBA AU): Raised to Buy at Bell Potter, PT A$82.10.

Australia stocks

  • Propertylink (PLG): Unnamed Investor Seeks Up to 19.89% Propertylink Interest, Terms Show
  • Rio Tinto (RIO): Guinea’s CBG Plans To Complete Quay-Extension Works This Month
  • Bank of New York Australia ADR Index is up 0.3% to 271.6
  • BHP Billiton ADRs are up 0.5% to A$26.23 equivalent, a 0.3% premium to last Sydney close
  • Rio Tinto ADRs are up 1% to A$61.80 equivalent, a 9.8% discount to last Sydney close
  • Companies trading above 20/50/200 DMAs, Bollinger upper band with RSI above 70: ORE, SDA
  • Companies trading below 20/50/200 DMAs, Bollinger lower band with RSI below 30: HT1, NUF, SXL, TNE
  • Companies trading ex-dividend today: APZ, CLH, RDH
  • Newcrest (NCM), Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): Gold Holds Near Seven-Week Low as Trading Volumes Dip
  • Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil’s Bull Market Rally Stalls as Traders Await Inventory Data
 Industry data showing higher US gasoline stockpiles and increased inventories is weighing on crude prices. Photo: Shutterstock

 

– Edited by Robert Ryan


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