13 Aug 2015
USD bulls regain control in Asia, ECB minutes, a slew of US data - In focus
FXStreet (Mumbai) - FX markets settles today after two rocky previous sessions led by PBOC yuan fix uncertainties. Risk-on trades returned to markets and that translated to a broadly stronger greenback as Yuan fix implications on Fed rate hike faded. The Antipodeans traded mixed amid respective fundamentals impacting the currencies while USD/JPY rebounded higher on further easing seen on cards by BOJ as revealed by Japan’s PM adviser.
Key headlines in Asia
PBOC Yuan reference rate set at 6.4010 vs prior close 6.3858
Briefing on the yuan by PBOC's Yi Gang: Yuan could return to appreciation in future
Fighting talk from Japan PM adviser, hints at further BoJ easing
Dominating themes in Asia - centered on JPY, AUD, NZD
Calm was spread across the FX board in Asia with the third PBOC price action on Thursday creating no major moves as markets are now getting accustomed to China’s new currency regime. The US dollar rebounded against its major competitors after the PBOC Yuan fix led concerns over disinflationary effects on the US currency and hence a delay in Fed rate hike peter out.
As a result, USD/JPY was firmly bid near 124.50 levels, extending the overnight recovery. Moreover, the major also rebounded higher after the yen weakened following Japan’s PM Adviser Hamada hinted at further BOJ easing to counter the effects of Yuan devaluation. While worse than estimates Japan’s core machinery orders data also dampened the sentiment around the Japanese currency.
While the antipodean currencies reversed early gains and turned in the red zone on rising greenback. While the Kiwi was weighed came under fresh selling pressure and halted its recovery from session lows after news crossed the wires that S&P rating agency places Fonterra rating on credit watch negative, noting high debt levels and financial troubles in the dairy giant as key reasons for the move. The Aussie is consolidating below 0.74 handle while the NZD/USD pair looks to test 0.66 barrier.
Asian markets rebounded from two consecutive days of losses; however, Shanghai stocks bucked the trend. The Japanese benchmark Nikkei 225 is up nearly 1% at 20591. The benchmark Australian S&P/ASX 200 index trades 0.74% higher at 5421 points. While Hong Kong's benchmark Hang Seng index erased losses and now gains 0.44% at 24016 while mainland China's benchmark Shanghai Composite loses -0.62% now and trades near 3862.
Heading into Europe - centered on EUR, GBP
There is nothing of great significance to be reported in a rather data-quiet European session ahead, with only the German Final CPI and ECB policy meeting accounts to be published.
Germany will release its final inflation data for the seventh month of the year, with CPI seen at 0.2% on a monthly basis, while growing 0.2% annually in July, confirming preliminary figures.
Later in New York session, there is plenty to offer in terms of economic data releases including the crucial US retail sales and weekly jobless claims. Markets are forecasting rebounded by a solid 0.5% in July. While housing data from Canada will also be reported.
Gennadiy Goldberg, US strategist at TD Securities noted, "Retail sales will be in particular focus as the market attempts to gauge whether spending has recovered from last month's disappointing levels."
EUR/USD Technicals
The AceTrader Team explained, “Despite euro's brief sell-off to as low as 1.856 on Friday following the release of solid U.S. jobs report, subsequent rally to 1.1214 yesterday suggests up-move July's trough at 1.0808 has once again resumed and consolidation with upside bias would be see for further gain towards 1.1279. However, near term loss of momentum would prevent sharp gain beyond there and reckon resistance at 1.1292 would hold and yield retreat.”
“On the downside, only below 1.0925 would indicate aforesaid recovery has ended and risk would shift to the downside for further weakness towards 1.0873.”
Key headlines in Asia
PBOC Yuan reference rate set at 6.4010 vs prior close 6.3858
Briefing on the yuan by PBOC's Yi Gang: Yuan could return to appreciation in future
Fighting talk from Japan PM adviser, hints at further BoJ easing
Dominating themes in Asia - centered on JPY, AUD, NZD
Calm was spread across the FX board in Asia with the third PBOC price action on Thursday creating no major moves as markets are now getting accustomed to China’s new currency regime. The US dollar rebounded against its major competitors after the PBOC Yuan fix led concerns over disinflationary effects on the US currency and hence a delay in Fed rate hike peter out.
As a result, USD/JPY was firmly bid near 124.50 levels, extending the overnight recovery. Moreover, the major also rebounded higher after the yen weakened following Japan’s PM Adviser Hamada hinted at further BOJ easing to counter the effects of Yuan devaluation. While worse than estimates Japan’s core machinery orders data also dampened the sentiment around the Japanese currency.
While the antipodean currencies reversed early gains and turned in the red zone on rising greenback. While the Kiwi was weighed came under fresh selling pressure and halted its recovery from session lows after news crossed the wires that S&P rating agency places Fonterra rating on credit watch negative, noting high debt levels and financial troubles in the dairy giant as key reasons for the move. The Aussie is consolidating below 0.74 handle while the NZD/USD pair looks to test 0.66 barrier.
Asian markets rebounded from two consecutive days of losses; however, Shanghai stocks bucked the trend. The Japanese benchmark Nikkei 225 is up nearly 1% at 20591. The benchmark Australian S&P/ASX 200 index trades 0.74% higher at 5421 points. While Hong Kong's benchmark Hang Seng index erased losses and now gains 0.44% at 24016 while mainland China's benchmark Shanghai Composite loses -0.62% now and trades near 3862.
Heading into Europe - centered on EUR, GBP
There is nothing of great significance to be reported in a rather data-quiet European session ahead, with only the German Final CPI and ECB policy meeting accounts to be published.
Germany will release its final inflation data for the seventh month of the year, with CPI seen at 0.2% on a monthly basis, while growing 0.2% annually in July, confirming preliminary figures.
Later in New York session, there is plenty to offer in terms of economic data releases including the crucial US retail sales and weekly jobless claims. Markets are forecasting rebounded by a solid 0.5% in July. While housing data from Canada will also be reported.
Gennadiy Goldberg, US strategist at TD Securities noted, "Retail sales will be in particular focus as the market attempts to gauge whether spending has recovered from last month's disappointing levels."
EUR/USD Technicals
The AceTrader Team explained, “Despite euro's brief sell-off to as low as 1.856 on Friday following the release of solid U.S. jobs report, subsequent rally to 1.1214 yesterday suggests up-move July's trough at 1.0808 has once again resumed and consolidation with upside bias would be see for further gain towards 1.1279. However, near term loss of momentum would prevent sharp gain beyond there and reckon resistance at 1.1292 would hold and yield retreat.”
“On the downside, only below 1.0925 would indicate aforesaid recovery has ended and risk would shift to the downside for further weakness towards 1.0873.”