FXStreet (Mumbai) – The safe haven assets such as yen, euro, gold, Swiss franc etc. were caught by fresh bid waves as the latest Chinese trade figures added to the persisting negative sentiment surrounding China’s economy, dampening investors’ sentiment.
Key headlines in Asia
Australia: Aug business confidence deteriorates, conditions edge up
China Aug trade surplus up, imports collapse
China: Yuan likely to strengthen, no sizable devaluation on cards – Macquarie
Dominating themes in Asia – centered on JPY, AUD, NZD
A volatile Asian session with Chinese equities extending their sell-off from Monday as a renewed wave of risk-aversion caught the markets following the release of weak Chinese trade figures.
The Japanese yen erased losses and swung higher versus the US dollar as risk-off sentiment gained momentum amid falling Chinese stocks post the dismal Chinese economic news which revealed that although the country’s surplus widened, the exports and imports remained weak. USD/JPY dropped sharply lower below 119 handle.
While the Antipodeans seem to be unaffected by the ongoing risk-off trades as the Australian dollar remains lifted on the back of improved business conditions. National Australia Bank’s (NAB) Business Conditions Index surged from 6 in July to 11 last month, the strongest reading since October, where a reading above zero signals an improvement in conditions.
While the Kiwi also tracks the Aussie higher and rebounds from fresh six and a half year lows, still keeping range below 0.63 handle as markets remain cautious ahead of Chinese CPI and RBNZ cash rate statement due later this week for further direction. While an upward revision to the NZ CPI data also supports the NZD/USD pair.
Meanwhile, the sell-off in the Asian indices extends as Chinese equities led other Asian markets lower post China data with the Japan’s benchmark index, the Nikkei dropping -1.72% at 17550. While the Hong Kong’s benchmark Hang Seng index trades -0.25% down at 20,546 and the Shanghai Composite keeps falling and now trades -1.38% lower at 3038. While Korea’s benchmark Kospi index trades -0.70% at 1,870 points in Seoul. However, the benchmark Australian S&P/ASX 200 bucked the trend and rallies over 1% to 5,089.
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.
In the session ahead, Germany will reveal its July current account figures and the headline gauge is projected to decrease to €21.5 billion, down from the €24.4 billion seen previously. Both exports and imports are projected to show stronger figures – 1.4% and 0.5% growth month-on-month respectively, up from the 1.0% and 0.5% dip seen in June.
Later in the day, Eurostat will show its final Q2 GDP data. The preliminary figures missed estimates, as they said that the 19-country euro area grew by 0.3% quarter-on-quarter in the April-June period for a 1.2% growth year-on-year.
Looking ahead, the US calendar also remains data-light with the 2nd tier release in the labor market conditions index to be reported.
All of these prints, however, are of lesser significance and most likely won’t cause any major reaction on the markets.
(Market News Provided by FXstreet)