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Asia Summary

Asian equity markets have traded mixed with markets in China and South Korea remaining closed for holidays. Markets in Taiwan are also closed on today’s session in observance of a national holiday. Japan’s Topix has underperformed amid weakness in the banking sector. Equity markets in the Philippines and Indonesia trade at record highs.

In corporate news, Amazon Japan is said to be planning to invest in the area of fashion. On the inflation front, beer maker Asahi Group is reported to be planning to raise prices by ~10% in March, which would be the first increase in 10-years. Shares of Japan Display have gained over 25%.

Following the US equity close, Fitch downgraded the credit ratings of banks including Fifth Third and Wells Fargo.

The US dollar has traded with a generally weaker tone ahead of the later today release of the ADP monthly payrolls report. The declines also have come amid lower Treasury yields and speculation related to the Fed chair position.

Bank of Japan (BoJ) Deputy Gov Nakaso did not rule out a deficit related to the central bank’s exit strategy from easing measures, but suggested that officials are prepared for this.

The World Bank raised China’s 2017 and 2018 GDP growth forecasts, putting them in line with those of the IMF.

Key economic data

(AU) Australia Sept AiG Perf of Services Index: 52.1 v 53.0 prior

(JP) Japan Sept Nikkei PMI Services: 51.0 v 51.6 prior

(NZ) New Zealand Sept ANZ Commodity Price: +0.8% v -0.8% prior

(UK) UK Sept BRC Shop Price Index Y/Y: -0.1% v -0.3% prior (smallest decline since May 2013)

Speakers and Press China

(CN) World Bank raises forecast for 2017 China GDP growth to 6.7% (6.5% prior); raises 2018 GDP growth forecast to 6.4% (6.3% prior)

Other

(JP) BoJ Dep Gov Nakaso: Does not rule out BoJ deficit in exit strategy - Japan Press; Revenue fluctuations in the short-term from exit strategy will not hurt policy execution as BoJ had been saving some of its revenues for future losses.

(US) President Trump aides said to deliver shortlist for Fed Chair; According to a separate report, Treasury Sec Mnuchin is said to have given support to Jerome Powell for the position.

(US) DoubleLine's Gundlach: 2018 will be ' much tougher' market environment; expects liquidity to marginally reverse in 2018 and hurt assets; Says 'no chance' President Trump wants Yellen to continue at Fed; "No way' Gary Cohn will be Fed Chairman.

(US) White House said to be readying request for $29B in disaster aid, flood insurance claims – AP

(US) Rep Jim Jordan (R-Ohio): Confirms expects House to pass budget on Thursday

(US) US President Trump: Puerto Rico's debt will have to be 'wiped out' - US media interview

(KR) North Korea negotiator said to meet former US officials later in Oct - US financial press

(MY) Malaysia expected to amend its tax act to include digital economy - Local Press

Uber: Board said to approve $1.0-1.25B investment from Softbank (implied valuation $69B) and corporate governance reforms; said to set 2019 deadline for IPO - US financial press

Asian Equity Indices/Futures (00:30ET)

Nikkei +0.2%, Hang Seng +0.8%, Shanghai Composite closed, ASX200 -0.7%, Kospi closed

Equity Futures: S&P500 flat; Nasdaq flat, Dax +0.2% , FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1736-1.1780; JPY 112.51-112.91; AUD 0.7830-0.7875; NZD 0.7185-0.7206

Aug Gold +0.3% at 1,278/oz; Aug Crude Oil -0.8% at $50.01/brl; Sept Copper +0.1% at $2.963/lb

GLD SPDR Gold Trust ETF daily holdings -0.6% to 854.3 metric tons

(AU) Australia sells A$700M in April 21, 2027 bonds, avg yield 2.7655%, bid to cover 4.46x

Equities notable movers Japan

Japan Display,6740.JP Japan government backed OLED firm said to consider mass production; +25%

Asahi Group, 2502.JP Expected price increase; +3.3%

US markets on close: Dow +0.4%, S&P500 +0.2%, Nasdaq +0.2%, Russell +0.2% - Best Sector in S&P500: Industrials +0.4%

Worst Sector in S&P500: Utilities -0.3%

At the close: VIX 9.51 (+0.06pts); Treasuries: 2-yr 1.475% (-1bp), 10-yr 2.318% (-1bp), 30-yr 2.868% (flat)

US Market Summary

The benchmark US stock indices all set fresh records today, with the S&P 500 notching its sixth consecutive session of gains in a row. The VIX stayed pinned around 9.5 after Warren Buffett acknowledged Berkshire has avoided making some equity sales in anticipation of potential changes to the tax code next year. Airlines climbed after Delta adjusted its Q3 outlook and reported Sept metrics. Sept auto sales topped expectations, helped by the effect of the hurricanes. Crude prices drifted lower, adding onto yesterday's losses. All sectors were in the green for the day except for real estate and utilities.

US Afterhours Movers - CTMX Announces strategic collaboration with Amgen in Immuno-Oncology; Amgen to make $40M upfront payment and acquire $20M in CytomX stock; +37% afterhours

ODP Announced acquisition and cut FY17 forecast; -8.5%

NLNK Files to sell $50M public offering of common stock (15.6% of market cap); -5.7% afterhours

RIGL Files to sell $40M of common stock via Jefferies and BMO (10% of market cap); -8.7% afterhours

For the 24 hours to 23:00 GMT, the AUD traded flat against the USD and closed at 0.7834.

LME Copper prices declined 0.1% or $8.0/MT to $6447.0/MT. Aluminium prices rose 2.3% or $47.5/MT to $2114.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7861, with the AUD trading 0.34% higher against the USD from yesterday's close.

Overnight data revealed that Australia's AiG performance of services index dropped to a level of 52.1 in September. In the previous month, the index had recorded a reading of 53.0.

The pair is expected to find support at 0.7806, and a fall through could take it to the next support level of 0.7752. The pair is expected to find its first resistance at 0.7895, and a rise through could take it to the next resistance level of 0.7930.

Going forward, investors will focus on Australia's trade balance and retail sales data, both for August, slated to release overnight.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR marginally rose against the USD and closed at 1.1742.

On the macro front, the Euro-zone's producer price index (PPI) advanced 2.5% on an annual basis in August, beating market expectations for a gain of 2.3%. The PPI had recorded a rise of 2.0% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.1770, with the EUR trading 0.24% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1717, and a fall through could take it to the next support level of 1.1665. The pair is expected to find its first resistance at 1.1801, and a rise through could take it to the next resistance level of 1.1833.

Going ahead, investors will closely monitor the final Markit services PMI for September across the Euro-zone along with the region's retail sales data for August, slated to release in a few hours. Additionally, the US ISM non-manufacturing index, ADP employment change and MBA mortgage applications data, all set to release later today, will pique significant amount of investor attention.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.27% against the USD and closed at 1.3240, after latest data showed that UK's construction sector suffered an unexpected contraction in September.

Data indicated that Britain's Markit construction PMI declined to a level of 48.1 in September, dropping into the contraction territory for the first time in thirteen months, as the Brexit blight of uncertainty led to a drop in new orders. In the prior month, the construction PMI had recorded a reading of 51.10, while investors had envisaged for an unchanged reading.

Losses in the Pound were extended, amid rumbling uncertainty over Brexit negotiations, following comments from the Brexit Minister, David Davis.

The Brexit Secretary stated that Britain seeks to negotiate a Brexit agreement with the European Union (EU), but is ready to walk away without a deal.

Separately, the EU's Chief Brexit negotiator, Michel Barnier again warned that Brexit talks are progressing too slowly and added “serious divergences” persist, including regard to the divorce bill.

Separately, according to the Bank of England's (BoE) Financial Policy Committee (FPC) meeting minutes, policymakers warned that Brexit poses “substantial risk” to the ability of British companies to borrow from European banks and to some clearing activity which might have to relocate from London once Brexit takes place. Further, the central bank added that the committee judged the risk of disruption to wholesale UK banking services could be larger than previously estimated.

In the Asian session, at GMT0300, the pair is trading at 1.3267, with the GBP trading 0.2% higher against the USD from yesterday's close.

The pair is expected to find support at 1.3230, and a fall through could take it to the next support level of 1.3193. The pair is expected to find its first resistance at 1.3296, and a rise through could take it to the next resistance level of 1.3325.

Moving ahead, market participants will eye the release of UK's Markit services PMI for September, slated to release in a few hours.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.1% against the JPY and closed at 112.83.

In the Asian session, at GMT0300, the pair is trading at 112.66, with the USD trading 0.15% lower against the JPY from yesterday's close.

Data released overnight showed that Japan's Nikkei services PMI registered a drop to a level of 51.0 in September, expanding at its weakest pace in eleven months, amid a slowdown in new orders. The PMI had registered a level of 51.6 in the prior month.

The pair is expected to find support at 112.38, and a fall through could take it to the next support level of 112.1. The pair is expected to find its first resistance at 113.07, and a rise through could take it to the next resistance level of 113.48.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.09% against the CHF and closed at 0.9734.

In the Asian session, at GMT0300, the pair is trading at 0.9722, with the USD trading 0.12% lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9692, and a fall through could take it to the next support level of 0.9663. The pair is expected to find its first resistance at 0.9769, and a rise through could take it to the next resistance level of 0.9817.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.19% against the CAD and closed at 1.2491.

In the Asian session, at GMT0300, the pair is trading at 1.2468, with the USD trading 0.18% lower against the CAD from yesterday’s close.

The pair is expected to find support at 1.2438, and a fall through could take it to the next support level of 1.2407. The pair is expected to find its first resistance at 1.2519, and a rise through could take it to the next resistance level of 1.2569.

Amid no macroeconomic releases in Canada today, investors will look forward to global macroeconomic news for further direction.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 1.2464; (P) 1.2501; (R1) 1.2522; More....

A temporary top is formed at 1.2537 in USD/CAD and intraday bias is turned neutral first. With 1.2326 minor support intact, further rise is expected. Above 1.2537 will target 1.2777 resistance first. Decisive break of 1.2777 will target 38.2% retracement of 1.4689 to 1.2061 at 1.3065 next. However, break of 1.2326 will dampen our bullish view and turn bias back to the downside for 1.2061 instead.

In the bigger picture, current development argues that USD/CAD has defended 50% retracement of 0.9406 (2011 low) to 1.4869 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. Break of 1.2777 will further affirm this bullish case. That is, larger up trend from 0.9406 is not completed. However, on the other hand, firm break of 1.2048 will indicate that fall from 1.4689 is at least a medium term down trend and should target 61.8% retracement at 1.1424 and below.

Daily Pivots: (S1) 0.7800; (P) 0.7819; (R1) 0.7853; More...

Intraday bias in AUD/USD remains neutral for the moment, with focus on 0.7807 key near term support. Considering bearish divergence condition in daily MACD, firm break of 0.7807 support will indicate near term reversal. Outlook will then be turned bearish for 55 week EMA (now at 0.7674) first. Meanwhile, rebound from 0.7807 will retain bullishness. Above 0.7907 minor resistance will turn bias back to the upside for retesting 0.8124 high.

In the bigger picture, rise from 0.6826 medium term bottom is seen as corrective pattern. In case of further rally, strong resistance should be seen at 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside. Meanwhile, firm break of 0.7807 is the first signal that such correction is focused. Break of 0.7328 will bring retest of 0.6826 low.

Daily Pivots: (S1) 1.1702; (P) 1.1738 (R1) 1.1780; More...

No change in EUR/USD's outlook. With 1.1832 minor resistance intact, fall from 1.2091 is expected to extend through 1.1661 support. Decline from 1.2091 is correcting whole rise from 1.0569. Deeper fall should be seen to 38.2% retracement of 1.0569 to 1.2091 at 1.1510, where we're expecting support to bring rebound. On the upside, break of 1.1832 minor resistance will suggest that the corrective fall is completed and turn bias back to the upside.

In the bigger picture, rise from medium term bottom at 1.0339 is not finished yet. It's expected to continue after pull back from 1.2091 completes. And, next target will be 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall from 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside.