7 Sep 2015
Risk-sentiment rebounds in Asia on China re-open, US markets off on Labor Day
FXStreet (Mumbai) - A major shift in risk conditions during the Asian session was witnessed heading into a new week, with Tokyo dominated by risk-off moods only to see risk sentiment rebounding as China re-opened, boosting Asian indices higher along with USD/JPY and AUD/USD among the Asian currencies.
Key headlines in Asia
China's market risk released to some extent - China's securities regulator
Major turnaround in risk conditions as China comes online
Dominating themes in Asia - centered on JPY, AUD, NZD
A volatile Asian session at the start of a fresh week, with Chinese traders back in the markets after a four-day holiday. The China markets re-open brought in fresh optimism and spurred a renewed wave of risk-sentiment across the financial markets.
The Japanese yen slid versus the US dollar as risk sentiment improved on Chinese stocks rebound with markets now gearing up for a fresh round of Chinese macro data due later this week. USD/JPY rose sharply higher and swung back above 119 handle and beyond, from 118.80 lows seen in early Tokyo.
The Antipodeans traded mixed despite a turnaround in risk conditions. The Australian dollar extends its recovery mode from fresh multi-year lows and remains well bid above 0.69 handle on the back of upbeat Aus construction sector data. The AiG Construction Index indicated on Monday that Australia's construction sector expanded for the first time since March in August, with the index rising from 47.1 in July to 53.8 last month, the highest reading since September 2014.
While the Kiwi was unmoved by the Aussie rebound and mired near six and a half year lows below 0.63 handle as markets remain cautious awaiting the crucial China trade data and the CPI report and RBNZ cash rate statement due later this week for further direction.
Meanwhile, the sell-off in the Asian indices halted as Chinese equities set the tone for other Asian markets higher with the Japan’s benchmark index, the Nikkei higher nearly 0.50% at 17867. While the Hong Kong's benchmark Hang Seng index trades 0.14% up at 20,870 and the Shanghai Composite stands +0.88% at 3188. The benchmark Australian S&P/ASX 200 loses -0.30% at 5,025. While Korea's benchmark Kospi index trades muted at 1,886 points in Seoul.
Heading into Europe - centered on EUR, GBP
The coming week will be occupied by waiting for these events, as the glimpse on the macro calendar reveals only some low-profile prints.
This includes July's industrial production data from Germany due out later this session, which is expected to rebound to 0.9% growth m/m, up from the 1.4% dip seen previously, but slow down to a mere 0.1% uptick on an annual basis, down from the 0.6% growth in the prior month.
While the US and Canadian markets remain closed today on account of Labor Day, low volumes amid thin trading are likely to be witnessed on Monday.
EUR/USD Technicals
Analyst at TitanFX explain, “On the upside, the 1.1180 represents a major resistance, as it is coinciding with a bearish trend line and the 61.8% Fib retracement level of the last drop from the 1.1242 high to 1.1086 low. The pair is well below the 100 and 200 hourly simple moving averages, which is a bearish signal.”
“However, we do have a few positive signs, as the hourly RSI is above the 50 level. Let’s see whether buyers can overcome hurdles or not moving ahead.”
Key headlines in Asia
China's market risk released to some extent - China's securities regulator
Major turnaround in risk conditions as China comes online
Dominating themes in Asia - centered on JPY, AUD, NZD
A volatile Asian session at the start of a fresh week, with Chinese traders back in the markets after a four-day holiday. The China markets re-open brought in fresh optimism and spurred a renewed wave of risk-sentiment across the financial markets.
The Japanese yen slid versus the US dollar as risk sentiment improved on Chinese stocks rebound with markets now gearing up for a fresh round of Chinese macro data due later this week. USD/JPY rose sharply higher and swung back above 119 handle and beyond, from 118.80 lows seen in early Tokyo.
The Antipodeans traded mixed despite a turnaround in risk conditions. The Australian dollar extends its recovery mode from fresh multi-year lows and remains well bid above 0.69 handle on the back of upbeat Aus construction sector data. The AiG Construction Index indicated on Monday that Australia's construction sector expanded for the first time since March in August, with the index rising from 47.1 in July to 53.8 last month, the highest reading since September 2014.
While the Kiwi was unmoved by the Aussie rebound and mired near six and a half year lows below 0.63 handle as markets remain cautious awaiting the crucial China trade data and the CPI report and RBNZ cash rate statement due later this week for further direction.
Meanwhile, the sell-off in the Asian indices halted as Chinese equities set the tone for other Asian markets higher with the Japan’s benchmark index, the Nikkei higher nearly 0.50% at 17867. While the Hong Kong's benchmark Hang Seng index trades 0.14% up at 20,870 and the Shanghai Composite stands +0.88% at 3188. The benchmark Australian S&P/ASX 200 loses -0.30% at 5,025. While Korea's benchmark Kospi index trades muted at 1,886 points in Seoul.
Heading into Europe - centered on EUR, GBP
The coming week will be occupied by waiting for these events, as the glimpse on the macro calendar reveals only some low-profile prints.
This includes July's industrial production data from Germany due out later this session, which is expected to rebound to 0.9% growth m/m, up from the 1.4% dip seen previously, but slow down to a mere 0.1% uptick on an annual basis, down from the 0.6% growth in the prior month.
While the US and Canadian markets remain closed today on account of Labor Day, low volumes amid thin trading are likely to be witnessed on Monday.
EUR/USD Technicals
Analyst at TitanFX explain, “On the upside, the 1.1180 represents a major resistance, as it is coinciding with a bearish trend line and the 61.8% Fib retracement level of the last drop from the 1.1242 high to 1.1086 low. The pair is well below the 100 and 200 hourly simple moving averages, which is a bearish signal.”
“However, we do have a few positive signs, as the hourly RSI is above the 50 level. Let’s see whether buyers can overcome hurdles or not moving ahead.”