APAC Summary: U.S. Healthcare Makes Dollar/Stocks Sick

More healthcare bill turmoil in the U.S. sees the dollar lower, dragging down stocks. Meanwhile, AUD and NZD diverge.

Today turned into a game of three halves in the Asia session. New Zeland got the show rolling by posting disappointing flat inflation for Q2 which saw the NZD come under early pressure as traders reassessed their RBNZ rate outlook. The Kiwi made a comeback later as the U.S. fell in general. The RBA meeting minutes caused some surprises with the central bank upbeat about global growth and suggesting that policy had been very accommodating in recent years. What got tongues wagging was a mention that the neutral policy rate for Australia was 3.50%. A long way above where we are today. The AUD flew higher by some 120 points to be the best performer in the G10 space today.

It was news from the U.S. that set the tone for Europe. Two Republican Senators announcing that they would vote no on the Obamacare repeal bill this week which effectively would torpedo its chances. The Senate leader moved to damage control by announcing there would be a two year transition period but the horse had bolted. With the U.S. Congress becoming a seemingly ungovernable Bermuda Triangle for any and of the President’s legislative agenda (the U.S. Government needs the money saved from Obamacare to pay for tax cuts. Do the maths.) traders threw in the U.S. dollar towel and it traded lower across the board. The stock market didn’t like it either, and the U.S. futures dragged Asian bourses down with it.

The highlight in Europe today will be the U.K. CPI due shortly with the street forecasting 2.90 unchanged. A miss either way should see GBP move strongly one way or another.

FX

NZD

First of the taxi rank was the Kiwi, falling 70 points post a zero percent increase in CPI. The headline figure and the components were quite bearish implying an RBNZ on hold for most of 2018. NZD found support at 7260 and rallied all the way back to 7345 as the dollar collapsed.

NZD has resistance at 7370, multiple daily highs with a break implying a test of 7400 are on the cards. Support is found at 7260 and then 7200.

AUD

The RBA minutes were unexpectedly hawkish as mentioned above.  AUD flew higher from 7785 to 7920 to be the best performing G10 currency of the day. Traders are rushing to reassess their rates outlook now on AUD which should stay stronger against the NZD and JPOY also.

AUD is now potentially poised for a move towards 8150 as it has made two-year highs today. Interim resistance is just above at 7925.

Support is at 7830, the previous high from May 2016 followed by the more important 7750 regions.

EUR

Rises 0.40% for the session, carving through 1.1500 in a bullish technical development and on high volume. 1.1500 will be an intra-day pivot point now followed by support at 1.1470. Resistance lies at 1.1540 and then 1.1620.

GOLD

Spiked to 1139.00 and supported by political turmoil in Washington and a weaker dollar and stocks. Profit taking late in the session sees it falling to 1135.00 into early Europe.

Support at 1130.00 should limit drops for now with the 100-day moving average lurking at 1147.50 the next major technical level.

INDICES

ASX

Sydney decreased by 1.10% as the prospect of higher Australian rate weighed. The U.S stock sell-off gave it another shove lower as the index fell from 5755 to 5665 before finishing at 5680.

The ASX is just above critical long term support in the shape of the 200-day moving average at 5663 followed by 5648 and 5628.

Resistance is at 5775 and then 5787, the 100-day moving average.

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