7 Aug 2015
BOJ stands pat, All eyes on Non-Farm Payrolls
FXStreet (Mumbai) - Central banks’ monetary policy statement releases kept Asian traders busy with the yen absolutely unperturbed by Bank of Japan’s (BOJ) steady policy announcement while Reserve Bank of Australia’s (RBA) quarterly publication lifted the Aussie back towards 0.7400 levels. Kiwi showed some signs of strength following Fonterra’s new support measures announced in mid-Asia.
Key headlines in Asia
BOJ announces no changes in monetary policy
Fonterra announces farmer support plan
Fonterra cuts payout forecast to $3.85/kg ms for 2015/16
RBA's SoMP: Growth outlook trimmed, more optimistic on jobs
Dominating themes in Asia - centered on JPY, AUD, NZD
A macro data-empty Asian calendar, although dominated by Central banks’ event across the Asia-pac economies. RBA quarterly monetary policy statement was published which revealed that the lower level of AUD was providing support to the economic growth. The central bank trimmed its growth outlook, although remained upbeat on the jobs scenario. The overall upbeat tone delivered by RBA boosted the AUD bulls, driving AUD/USD to the upper band of 0.73 handle.
On the other, BOJ unchanged policy stance had no major impact on the Japanese currency, keeping USD/JPY frozen near 124.80 levels. BOJ maintained its same old rhetoric noting that the Japanese economy is recovering at a moderate pace and the ongoing QQE is having its intended effect while the inflation trend is seen rising. Markets now await BOJ Kuroda’s comments at the presser scheduled at 6.30GMT for further momentum on the pair.
The NZD/USD pair recovered from session lows at 0.7530 and inched higher on Fonterra’s latest announcement on pay out forecast cut and farm support plan as markets seem to cheer the news, lifting the Kiwi further away from multi-year lows.
Asian markets are mostly trading mixed with Nikkei in Tokyo advancing 0.31% to trade at 20728 post BOJ. While Chinese markets are top performers, SSEC +1.90%. The Australian benchmark S&P/ASX 200 is the biggest loser so far, down -1.90% at 5504 as rising AUD on RBA statement weighs on exporters’ stocks. While South Korea’s Kospi trades -0.21% at 2008.
Heading into Europe - centered on EUR, GBP
The European session ahead brings in a slew of economic releases across the Euro zone with industrial production and trade balance data from Germany and the UK’s trade balance data on the cards.
Germany will report trade activities in June, with the trade balance expected to reach €20.3 billion, better than the €19.5 billion seen in May. Germany will also report the results of industrial production in June, with 0.3% growth seen m/m, compared to a flat result registered in May, and a 2.1% advance y/y, after 2.1% growth seen a month ago.
Looking ahead, traders await the week's highlight in the form of July's non-farm payrolls due later in the American morning, with a forecast of 225,000 added jobs after 223,000 in June. The upcoming labor market figure has grown in importance amid the debates over the Federal Reserve's potential September rate hike after the closely watched employment cost index rose at the slowest pace in thirty-three years during the second quarter.
While employment figures form Canada will also be watched with careful eyes.
Millan Mulraine from TD Securities says "again above 200,000 jobs will likely be interpreted as enough to justify a September lift-off. Alternatively, a sub-200,000 print could bring a September hike into question." He adds that "even though it will not rule out a lift-off at that meeting entirely, it will raise the hurdle for the August jobs report to clear to keep September in play."
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “Technically, the 1 hour chart (of EUR/USD) shows that the pair is unable to advance beyond its 100 SMA, whilst the technical indicators have turned lower around their mid-lines, lacking bearish strength, but at least suggesting the upside will remain limited."
"In the 4 hours chart the price is hovering around a bearish 20 SMA, the Momentum indicator heads south below its 100 level, and the RSI indicator hovers around 48, supporting the shorter term view, and maintaining the risk towards the downside.”
Key headlines in Asia
BOJ announces no changes in monetary policy
Fonterra announces farmer support plan
Fonterra cuts payout forecast to $3.85/kg ms for 2015/16
RBA's SoMP: Growth outlook trimmed, more optimistic on jobs
Dominating themes in Asia - centered on JPY, AUD, NZD
A macro data-empty Asian calendar, although dominated by Central banks’ event across the Asia-pac economies. RBA quarterly monetary policy statement was published which revealed that the lower level of AUD was providing support to the economic growth. The central bank trimmed its growth outlook, although remained upbeat on the jobs scenario. The overall upbeat tone delivered by RBA boosted the AUD bulls, driving AUD/USD to the upper band of 0.73 handle.
On the other, BOJ unchanged policy stance had no major impact on the Japanese currency, keeping USD/JPY frozen near 124.80 levels. BOJ maintained its same old rhetoric noting that the Japanese economy is recovering at a moderate pace and the ongoing QQE is having its intended effect while the inflation trend is seen rising. Markets now await BOJ Kuroda’s comments at the presser scheduled at 6.30GMT for further momentum on the pair.
The NZD/USD pair recovered from session lows at 0.7530 and inched higher on Fonterra’s latest announcement on pay out forecast cut and farm support plan as markets seem to cheer the news, lifting the Kiwi further away from multi-year lows.
Asian markets are mostly trading mixed with Nikkei in Tokyo advancing 0.31% to trade at 20728 post BOJ. While Chinese markets are top performers, SSEC +1.90%. The Australian benchmark S&P/ASX 200 is the biggest loser so far, down -1.90% at 5504 as rising AUD on RBA statement weighs on exporters’ stocks. While South Korea’s Kospi trades -0.21% at 2008.
Heading into Europe - centered on EUR, GBP
The European session ahead brings in a slew of economic releases across the Euro zone with industrial production and trade balance data from Germany and the UK’s trade balance data on the cards.
Germany will report trade activities in June, with the trade balance expected to reach €20.3 billion, better than the €19.5 billion seen in May. Germany will also report the results of industrial production in June, with 0.3% growth seen m/m, compared to a flat result registered in May, and a 2.1% advance y/y, after 2.1% growth seen a month ago.
Looking ahead, traders await the week's highlight in the form of July's non-farm payrolls due later in the American morning, with a forecast of 225,000 added jobs after 223,000 in June. The upcoming labor market figure has grown in importance amid the debates over the Federal Reserve's potential September rate hike after the closely watched employment cost index rose at the slowest pace in thirty-three years during the second quarter.
While employment figures form Canada will also be watched with careful eyes.
Millan Mulraine from TD Securities says "again above 200,000 jobs will likely be interpreted as enough to justify a September lift-off. Alternatively, a sub-200,000 print could bring a September hike into question." He adds that "even though it will not rule out a lift-off at that meeting entirely, it will raise the hurdle for the August jobs report to clear to keep September in play."
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “Technically, the 1 hour chart (of EUR/USD) shows that the pair is unable to advance beyond its 100 SMA, whilst the technical indicators have turned lower around their mid-lines, lacking bearish strength, but at least suggesting the upside will remain limited."
"In the 4 hours chart the price is hovering around a bearish 20 SMA, the Momentum indicator heads south below its 100 level, and the RSI indicator hovers around 48, supporting the shorter term view, and maintaining the risk towards the downside.”