Asia treads water ahead of “Big Wednesday”

A mostly quiet session in Asia today. We have a Japanese holiday, “Respect for the Aged Day,” although I’ve not noticed anyone being any nicer to me here in Singapore this morning. The street seems to have gone into hibernation mode ahead of the BoJ and FOMC “Big Wednesday.”

The USD continues to be generally bid across the board following Fridays much better than expected CPI numbers. It remains doubtful that this makes this week’s meeting a live one, it has, however, given further hope to USD bulls for December. The Street is not expecting anything from the BoJ this Wednesday, who, like the plethora of other central banks so far this month, are waiting for the Federal Reserve to go first and who can blame them? Having said that, given the consensus
is for nothing from either except more hot air, if either were to move, we could expect FX fireworks.

OIL

The exceptions of note have been WTI and Brent Crude following on from their late session rallies in New York to Asia today. There are a number of factors adding support. Gasoline prices in the Eastern United States continue to ramp up as the Colonial Pipeline One that carries most of it stubbornly refuses to either stop leaking of be repaired. Rumours again of an OPEC/Russia production ceiling from Venezuela. Nigeria downgraded to junk. Particularly bad timing as they are about to launch their first euro bond issue since 2013. And the failure of oil shipments to resume from Eastern Libya due to guerilla activity.

As I said last week, the markets will be headline driven into the central bank frenzy on Wednesday. Whether oil is making a significant turn or this is a “dead cat bounce” will no doubt be revealed then.

WTI has found decent support in the 42.50 regions in the short term. Resistance lies above at 44.10.

Brent is challenging short term resistance at 46.50 with short term support quite a long way away in the 45.50 area.

FX

On a quiet Japanese holiday, the Australasians have been a standout. Both AUD/USD and NZD/USD rallying. Sparking house price data out of China, lending support to high beta AUD. House prices climbed strongly in China A-List cities.

Beijing:-
New home prices m/m: 3.6% v 1.5% prior; y/y: 23.5% v 20.7%prior-
Existing home prices m/m: 3.9% v 1.6% prior; y/y: 34.8% v 32.2% prior
Shanghai:-
New home prices m/m: 4.4% v 1.2% prior; y/y: 31.2% v 27.3% prior- Existing home prices m/m: 3.7% v 2.0% prior; y/y: 34.4% v 31.0% prior
Shenzhen:-
New home prices m/m: 2.1% v 2.0% prior, y/y: 36.8% v 40.9% prior-
Exiting home prices m/m: 2.0% v 1.8% prior, y/y: 30.8% v 33.9% prior
Source TradeTheNews.com

Those sorts of numbers frankly, make me nervous.

Decreasing Chinese coal inventories also gave AUD a fillip.

AUD is eying resistance at 0.7570 with support at 0.7475 previous daily low and the 100 Day moving average.

NZD is forming a wedge pattern on the short term charts. Resistance at 0.7310 with support at 0.7260. New Zealand’s Performance of Services Index came in at 57.9 vs. 54.58 prior.

Overall a quiet day in Asia and we can expect short headline driven frenzies in between long lulls in activity ahead of “Bid Wednesday.”

Jeffrey Halley
Based in Singapore, Jeffrey has over 25 years experience in the financial markets, having traded currencies, options, precious metals and futures. Jeffrey started his career at Barclays Bank in New Zealand. However he has spent most of it in London and Asia.Jeffrey focuses on the Asia time zone across asset classes. A regular commentator on business news TV and Radio, he is originally from New Zealand and holds an MBA from Cass Business School, London.