FXStreet (Mumbai) – Chinese Premier Li’s comments coupled with better China CPI print have failed to lift market sentiment this Asia, with risk-aversion still prevalent as Asian indices continue to tumble. The yen remains better bid while the Antipodeans were heavily dumped amidst reduced appetite for riskier assets.
Key headlines in Asia
Economy still on track to achieve 2015 growth targets – China’s PM Li
China CPI rises at fastest pace since Aug 2014, beats expectations
Australia’s Aug job figures beat expectations
RBNZ cuts interest rate by 25bp to 2.75%, further easing likely
Dominating themes in Asia – centered on JPY, AUD, NZD
A volatile Asia, with the risk-off sentiment extended from overnight Wall Street after investors fretted over the timing of the Fed rate hike and its implications on the global economic prospects. While the latest upbeat macro updates from across the Asia-Pac region also did little to better the risk-off situation.
The Japanese yen was the winner in Asia as falling Asian markets continued to boost the safe-haven appeal of the Japanese currency as risk-off gains momentum. USD/JPY trimmed losses and reclaimed 120 handle and beyond with the yen bulls struggling to defends gains.
On the other hand, the Antipodeans were reversed previous rally and fell deep in the red with the Kiwi relentlessly sold-off after RBNZ slashed the OCR by 0.25bp to 3%, while also keeping doors open for further rate cuts this year. The AUD/USD pair wavers around 0.70 barrier, recovering partially from 0.6946 lows after better than expected Australian jobs report and Chinese CPI figures boosted the sentiment around the Aussie.
According to the National Bureau of Statistics (NBS), China’s CPI rose 2.0% y/y in August, the fastest pace in a year, and beating the market forecast of a 1.9% rise. While the Australian unemployment rate fell from 6.3% in July to 6.2% last month, and a net 17,400 jobs were added to the economy last month, beating the market forecast of 5,000.
Meanwhile, the Asian markets reversed previous rally on Thursday tracking negative cues from the US markets overnight with the Japan’s benchmark index, the Nikkei, leading the drop, down -3% at 18,207. While the Hong Kong’s benchmark Hang Seng index trades -2.37% at 21,606 and the Shanghai Composite falls -0.96% at 3211. The benchmark Australian S&P/ASX 200 also tanked over 2% to 5,104.
Heading into Europe – centered on EUR, GBP
After a data-packed Asian session, the European calendar holds nothing of relevance in terms of macro data from the Euro zone economies. However, BOE ‘Super Thursday’ is expected to be the main market mover in the session ahead.
BOE ‘Super Thursday’ – Key
The Bank of England (BOE) is releasing the rate and QE announcement, accompanied by the MPC minutes, later today. Markets expect Ian McCafferty, one of the members of the nine-strong rate-setting committee, to continue to vote for an immediate 25 basis point rate hike in September, after the BOE saw in August the first split on the rate vote since December last year.
In the August MPC Minutes, BoE policymakers judged that “[Asian equities] volatility was likely to have little direct impact on domestic demand in China, where equities accounted for only a small fraction of household wealth.”
The BOE’s base interest rate has been stuck at the rock bottom level of 0.5% since March 2009, in order to spur demand after the 2008 financial credit crunch.
Looking towards the New York session, the usual weekly jobless claims from the US will be reported along with import prices data. While housing data from Canada will also be published.
EUR/USD Technicals
The AceTrader Team notes, “Despite euro’s selloff to 1.1090 following the release of mixed U.S. jobs report, subsequent rebound to 1.1229 on Tuesday, then to 1.1245 today at Asian open suggests further choppy trading above last Thursday’s low at 1.1087 would continue with mild upside bias and gain towards 1.1270/80 would be seen. However, resistance at 1.1294 should remain intact this week and bring another retreat later.”
“On the downside, only below 1.1087 would revive bearishness for a resumption of recent decline and extend weakness towards 1.1050/52.”
(Market News Provided by FXstreet)