Article / 21 September 2016 at 1:53 GMT

Morning Report APAC: Oil up but everything else on hold

APAC Sales Trading Desk / Saxo Capital Markets


  • Asian stocks and JPY at one-week highs ahead of central bank decisions
  • JPY steady versus the greenback as traders awaited BoJ policy statement
  • Futures indicating a 22% chance of an interest-rate hike from the Fed
  • Oil moved up to $45/b on prospects major producers will agree to cap output

By Saxo APAC Sales Trading



-      BoJá governor Kuroda holds post BoJ press conference at 1430 SG/HK time
-      Federal Reserve Bank press conference kicks off around 0200 SG/HK time.
Overnight news

US: After the strong NAHB housing data the previous day, yesterday’s housing starts number saw a surprise to the downside with a -5.8% contraction month on month, much more than the -1.7% expected. Building permits also missed and contracted last month by -0.4%, painting an overall mixed US housing picture over the past 48 hours.
Germany’s PPI contracted again on a year on year basis by -1.6%. This data has contracted every month since July of 2013. It’s little wonder the European Central Bank is struggling to manage higher inflation expectations.
Out this morning Japanese trade data was dire, with exports falling -9.6% year-on-year  against -4.7% expected. Prior month was -14%, so this data is a slight improvement but still woeful. Imports declined by -17.3% up from -24.7% year on year prior.  


Forex markets traded in tight ranges overnight waiting for the Bank of Japan and Federal Reserve Bank meetings ahead today. USDJPY in a 50 point range for the session.

was the exception, falling from 1.3065 to a low of 1.2947  after some harsh headlines from the EU regarding terms of Brexit.

These included: ''Zero Chance of Having Brexit Cake and Eating it'' and ''Zero Chance to Split Trade, Free-Movement in Brexit''. These comments coming from the Czech Brexit negotiator.

Emerging markets were also quiet with a slight bid yesterday, price action will be dictated by the twin central bank meetings today.

Foreign exchange movements

Volatilities have remained in a holding pattern since Monday as the market awaits today's central bank outcomes.

We continue to see some buyers of US election dates, most notably against the USDMXN. Yesterday, there was some USDCNH Vega selling seen in the market.
US Treasury yields fell overnight and the curve flattened as investors braced themselves for BoJ and Fed meetings.

BoJ monetary-policy decisions: 14 out of 43 economists surveyed by Bloomberg expected a rate cut from -0.1%; estimates ranged from -0.2% to -0.4%, at least nine saw an increase in monetary base target and at least 7 forecast an increase in Japanese government bond purchases.





All three major US exchanges were quiet with thin trading volume ahead of the two important central bank meetings. The Dow Jones industrial index traded 9.79 points higher to 18,129.96 while the S&P 500 traded closed a mere 0.64 point higher to 2139.76.
European equities were predominantly lower with the Stoxx Europe 600 down 0.27 to 341.00. The London FTSE 100 closed higher to 6,830.79 or 0.25% higher, but the CAC 40 Index closed 5.59 points lower to 4,388.60.

Sarepta Therapeutics (SRPT:xnas) extended its surge from Monday after its approval related to its Duchenne muscular dystrophy (DMD) treatment, Eteplirsen, was approved by the US FDA. The Stock has gained more than 80% after Monday's surged.

Allergan targets Tobira Therapeutics (TBRT:xnys), a liver disease drugs maker, in an acquisition deal worth $1.65 billion. The stock Flew from $4.71 to $38.91, up 721% on Tuesday.

Asia-Pacific stocks

China highlights
- BOC H.K. (2388 HK): Said to cut mortgage rates amid competition: Sing Tao
- North China Pharma (600812 CH): Chinese vitamin C makers win dismissal of $147m judgment
- Vitop Group (1178 HK): Sees higher level of loss versus last year
Japan highlights
- Hitachi Kokusai 6756 JP): To keep payout ratio at 30% or higher: Nikkei
- Mitsubishi Heavy (7011): Hopes to see Edison arbitration resolved by March
- NTT Data (6098 JP): To post 13b yen gain from sale of Recruit stake: Nikkei
Southeast Asia highlights
- Ayala (AC PM): Sells stake in Vietnam infrastructure co. to partner
- Hoang Anh Gia Lai (HNG VN): Sells sugar unit to Thanh Thanh Cong for 2.2t dong: Infonet
- Indosat (ISAT IJ): Ooredoo said to explore stake sale in Indonesian unit Indosat.

Information sources: Bloomberg

 Waiting for guidance: Globally markets are on ice as they await decisions
from the Bank of Japan and the Federal Reserve: Photo: iStock

– Edited by Adam Courtenay

This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform. Follow us on @SaxoStrats on Twitter

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