FXStreet (Mumbai) – Risk-off sentiment returned to markets in Asia this Friday after the oil prices resumed the dominant bear trend, rattling investors’ confidence once again. The yen was a clear winner amongst the G10 currencies, while the Antipodes dives towards multi-month lows.
Key headlines in Asia
PBOC sets USD/CNY at 6.5637 vs 6.5616
Oil: Sell-off resumes as Iranian supply prospects loom
QQE policy has a risk for BOJ’s finances – BOJ’s Kuroda
Dominating themes in Asia – centered on JPY, AUD and NZD
Risk-sentiment turned negative once again this Friday, following a rebound in risk-on trades during the last US session. Safe-havens are back in demand on reducing appetite for risk amid negative equities and falling oil prices. Investors flock to safety assets such as the yen, euro, CHF and gold in times of market unrest and panic. As a result, the dollar-yen pair continues to benefit from risk-averse conditions, now breaking lower near 117.70, after failing to sustain above 118 handle. While EUR/USD also extends its post-ECB minutes recovery and now looks to test 1.09 handle as the demand for low-yielding currencies rise to fund the investments in higher-yielding/ risk assets.
The riskier/ higher yielding currencies such as the AUD, NZD, and GBP saw sharp declines on the back of renewed weakness in oil prices. The AUD/USD pair drops -0.50% at 0.6948, having faced rejection at 0.7000. NZD/USD halted its overnight recovery near 0.65 handle and resumed the downslide, now languishing near multi-month lows reached yesterday at 0.6419 levels.
On the equities space, the Japanese stocks snapped the rebound and fell back in the red, with the Nikkei index dropping -0.50% to 17,157. Australia’s S&P/ASX index drops to 4,887, recording a -0.45% loss into the closing hours. The Chinese equities keep falling, with the Shanghai Composite losing -1.54% to 2,961 while Shenzhen’s CSI300 index trades -1.52% lower. Hong Kong’s the Hang Seng falls -1.02% to 19,615.
Heading into Europe and North America
A data-dry EUR calendar extends into the last trading day of the week, with the Euro zone trade balance, the UK’s BOE’s Credit conditions survey lined up for release. However, the oil price action and global stock market moves have overshadowed the economic news so far this year.
Looking ahead, focus is likely to remain on a host of US macro data to be released in the NY session, especially after a data-dry US economic calendar this week. The US retail sales, PPI and consumer sentiment data will remain the main highlight, with the retail trade volumes expected to decline 0.1% m/m, deteriorating from still marginal growth of 0.2% in November. While the flash University of Michigan (UoM) confidence survey might marginally improve to 93.0 points, from 92.6 in December.
Separately, capacity utilization and industrial production will be also reported.
Besides, New York Fed President William Dudley is scheduled to speak at the Economic Leadership Forum in New Jersey.
(Market News Provided by FXstreet)