FXStreet (Barcelona) – Prashant Newnaha, Strategist at TD Securities, summarizes the key developments and financial market performance during the Asian trading session.
Key Quotes
“Price action was contained and orderly with moves in cross currency basis and EUR risk reversals limited overnight. Fixed income markets are little changed in Asia, taking in stride S&P & Fitch downgrades to Greece and in our time zone S&P’s cut to CCC– to Puerto Rico’s rating.”
“Right now, fixed income has carved out a very narrow 1-2bps range in Asia, with US 10s at 2.32%, unchanged from NY close, ACGBs +1.5bps, while the mild rise in NZGB yields makes no sense given business confidence and activity data hit multi year lows.”
“The NZD did respond accordingly to this data, the NZD the worst G10 performer, -0.6% and with the AUD little changed, the AUDNZD is heading towards our 1.13 target. Otherwise there are no major themes in FX, the ¥ is up +0.2% and the EUR is off -0.4%, consistent with the short EURJPY outlined yesterday.”
“In China today we had another session of sharp moves. The 7 day interbank repo rate declined 23bps with officials injecting 50b Yuan via 7 day reverse repos (to address the month/qtr end squeeze) while the Shanghai composite was down as much as 5.1% intraday and is now +3% as speculation surfaced the government would introduce measures to support equities.”
“Gold is little changed, but metals in China were under pressure, nickel limit down while steel rebar futures were also limit down. There was no fundamental news to drive the move lower in nickel, but we suspect news that Shanghai accepting metal directly from Norilsk as the driver.”
(Market News Provided by FXstreet)