19 Aug 2015
China stocks rout sparks risk-off, Bundestag vote, US CPI, FOMC minutes – Key events
FXStreet (Mumbai) - Chinese stocks extend sell-off impacting risk-flows across the board and negatively affecting China’s top trading partners. The Aussie slipped further towards 0.73 handle after the Shanghai benchmark tumbled another 4% today, reignites concerns over the ailing Chinese economy. The yen gained versus the greenback on flight to safety, shrugging off widening Japan’s trade deficit numbers.
Key headlines in Asia
Vietnam Central Bank devalues Dong 1% - 3rd time in 2015
Japan's trade deficit widens in July
China drags Asian stocks lower; ASX ditches the trend
Dominating themes in Asia - centered on JPY, AUD, NZD
A calmer Asian session, with the Antipodeans seen under heavy selling pressured triggered by China slowdown concerns after the Chinese equities extended their ongoing downslide as investors still digest the impact of the recent yuan moves by the PBOC.
The Aussie tumbled to fresh weekly lows just ahead of 0.73 barrier while its OZ sister kept the red below 0.66 handle. The yen enjoyed gains versus the US dollar backed by increased demand for safe-havens amid China slowdown risks resurfacing. USD/JPY trades around 124.30 levels, recovering from a dip to 124.22 lows.
Asian markets extended losses largely dragged by China stocks rout. The Japanese benchmark Nikkei 225 tanked -1.28% at 20293. While Hong Kong's benchmark Hang Seng index is down -1.23% at 23182 and mainland China's benchmark Shanghai Composite drops -3.12% at 3631. Bucking the trend, the benchmark Australian S&P/ASX stood firmer, reversing previous losses to trade at 5371 points, up 1.28%.
Heading into Europe - centered on EUR, GBP
A completely eventless European session ahead, with the focus now shifting back to the main German parliamentary vote on Greek third bailout today.
While on Thursday Greek big bond repayment to ECB looms. August 20 is the very day when Greece is scheduled to honor a big €3.5 billion bond repayment to the European Central Bank (ECB).
Big Wednesday
Looking ahead towards the New York session, all eyes are set on US crucial releases – CPI and FOMC minutes which is likely to provide fresh cues on Fed’s next moves – Sept/ Dec rate lift-off.
Wall Street economists are projecting the CPI edged 0.2% higher in July from a month earlier. A less volatile "core" component of the indicator is expected to rise at a similar pace. A massive slump in energy costs over the preceding 12 months means that the former has risen only 0.2% since July last year.
Analysts at Deutsche Bank noted,"Rising service prices, led by higher shelter costs, will continue to trump weakness in core goods prices. Case in point, the CPI excluding food, energy and shelter is up 1.7% annualized over the last six months, the highest growth rate since the six months ending February 2013."
On FOMC minutes due to be reported later tonight, apart from a couple of exceptions, Federal Reserve officials have been uncharacteristically quiet in the weeks following the July meeting. The voices calling for a delay to policy normalization is expected to grow louder in the wake of the renewed slide in oil prices and China's currency devaluation.
EUR/USD Technicals
The AceTrader Team noted, “Although euro's decline from Monday's 1.1125 high to 1.1018 yesterday in NY session confirms euro's recent erratic rise from July's bottom at 1.0808 has made a top earlier last week at 1.1214 and as long as said Monday's high holds. Downside bias remains for further weakness, near term loss of momentum would prevent steep fall today and minor chart support at 1.0960 is expected to remain intact, yield subsequent rebound.
On the upside, a daily close above 1.1125 would be the 1st signal pullback from 1.1214 has ended and yield stronger gain towards 1.1189.”
Key headlines in Asia
Vietnam Central Bank devalues Dong 1% - 3rd time in 2015
Japan's trade deficit widens in July
China drags Asian stocks lower; ASX ditches the trend
Dominating themes in Asia - centered on JPY, AUD, NZD
A calmer Asian session, with the Antipodeans seen under heavy selling pressured triggered by China slowdown concerns after the Chinese equities extended their ongoing downslide as investors still digest the impact of the recent yuan moves by the PBOC.
The Aussie tumbled to fresh weekly lows just ahead of 0.73 barrier while its OZ sister kept the red below 0.66 handle. The yen enjoyed gains versus the US dollar backed by increased demand for safe-havens amid China slowdown risks resurfacing. USD/JPY trades around 124.30 levels, recovering from a dip to 124.22 lows.
Asian markets extended losses largely dragged by China stocks rout. The Japanese benchmark Nikkei 225 tanked -1.28% at 20293. While Hong Kong's benchmark Hang Seng index is down -1.23% at 23182 and mainland China's benchmark Shanghai Composite drops -3.12% at 3631. Bucking the trend, the benchmark Australian S&P/ASX stood firmer, reversing previous losses to trade at 5371 points, up 1.28%.
Heading into Europe - centered on EUR, GBP
A completely eventless European session ahead, with the focus now shifting back to the main German parliamentary vote on Greek third bailout today.
While on Thursday Greek big bond repayment to ECB looms. August 20 is the very day when Greece is scheduled to honor a big €3.5 billion bond repayment to the European Central Bank (ECB).
Big Wednesday
Looking ahead towards the New York session, all eyes are set on US crucial releases – CPI and FOMC minutes which is likely to provide fresh cues on Fed’s next moves – Sept/ Dec rate lift-off.
Wall Street economists are projecting the CPI edged 0.2% higher in July from a month earlier. A less volatile "core" component of the indicator is expected to rise at a similar pace. A massive slump in energy costs over the preceding 12 months means that the former has risen only 0.2% since July last year.
Analysts at Deutsche Bank noted,"Rising service prices, led by higher shelter costs, will continue to trump weakness in core goods prices. Case in point, the CPI excluding food, energy and shelter is up 1.7% annualized over the last six months, the highest growth rate since the six months ending February 2013."
On FOMC minutes due to be reported later tonight, apart from a couple of exceptions, Federal Reserve officials have been uncharacteristically quiet in the weeks following the July meeting. The voices calling for a delay to policy normalization is expected to grow louder in the wake of the renewed slide in oil prices and China's currency devaluation.
EUR/USD Technicals
The AceTrader Team noted, “Although euro's decline from Monday's 1.1125 high to 1.1018 yesterday in NY session confirms euro's recent erratic rise from July's bottom at 1.0808 has made a top earlier last week at 1.1214 and as long as said Monday's high holds. Downside bias remains for further weakness, near term loss of momentum would prevent steep fall today and minor chart support at 1.0960 is expected to remain intact, yield subsequent rebound.
On the upside, a daily close above 1.1125 would be the 1st signal pullback from 1.1214 has ended and yield stronger gain towards 1.1189.”