Forex Today: Asia risk-off at full steam, Yen pops, AUD drops ahead of a light session

Risk-averse market conditions extended into Asia, as the Asian markets joined the meltdown in its global peers amid worries over rising interest rates. Among the Asian equities, the Nikkei 225 index was the worst hit, down almost 7% so far. Consequently, the demand for the safe-havens propped up, triggering an extensive rally in the Yen and gold at the expense of the higher yielding/ risk assets such as the Aussie, oil, Treasury yields etc.  

However, the Kiwi bucked the trend and defended the minor-bids while the status-quo maintained by the RBA exacerbated the pain in the AUD/USD pair. Meanwhile, the US dollar extended its recent upbeat momentum against its main competitors, now regaining the bid tone just ahead of the 89.50 barrier.

Main topics in Asia

RBA keeps rates on-hold at 1.50%, as widely expected

The Reserve Bank of Australia (RBA) at its monetary policy meeting today, left the official cash rate (OCR) unchanged at a record low of 1.50%, as widely expected.

Nikkei down 6% on the day, heading towards 21,000.00

The Nikkei Index is yet one more equities index to fall into the risk trap that began last Friday, with inflation fears sparking traders to run for the hills, piling into safe havens like the Japanese Yen.

BoJ’s Kuroda: Watching market moves carefully

BoJ Governor Kuroda is out on the wires now, via Reuters, speaking in Parliament in Tokyo.

Australia trade balance recorded a deficit in December

Australia trade balance recorded a deficit of AUD 1,358 million in December, Australian Bureau of Statistics (ABS) reported today. 

Australia retail sales dropped 0.5% in December

Australia Bureau of Statistics (ABS) reported a 0.5 percent month-on-month drop in December retail sales today. 

Key Focus ahead

With volatility gradually seeping back into the markets, attention turns towards today’s economic releases due on the cards in Europe as well as in the NA session. There is nothing of note to be reported from the Euroland, except for the second-liner retail PMI data. However, the German factory orders data will be reported ahead of the EU open.

Markets also look forward to the speech by the German Bundesbank President Weidmann for fresh insights on the inflation outlook. Meanwhile, the broad market sentiment will also play a key role today.

Later in the NA session, the trade figures from both the US and Canada will be released followed by the NZ GDT price index and JOLTS job openings data among other minority reports.

EUR/USD - Put bias strengthens, focus on EUR/JPY

The two-day decline in the EUR/USD (from 1.2518 to 1.2362) has revived demand for the EUR puts, show risk reversals.  

GBP/USD sights set on 1.3825 as markets roil

GBP/USD has dropped heavily through two consecutive London-NY sessions, and is geared up to follow suit for lucky number three, with risk assets and equity markets around the globe plummeting today…

US House to vote on short term funding measure Tuesday - Reuters

Republican members of the US House noted that they will be voting on another short-term funding solution to avert another government shutdown. 

GBPUSD: short term momentum indicators though look heavy

Sterling fell hard late in the day, breaking below 1.4000 to trade down to 1.3963, not helped by the weak PMI data, which came 2 days ahead of the BOE meeting. Rates expected to remain on hold.