Asian equity markets were in catch-up mode over night taking cues from gains in the futures markets Friday night following the US employment report. In commodity markets, the focus was on oil. WTI rose some 5% as a meeting between energy ministers from Russia, and Saudi Arabia raised hopes that a production curb announcement would occur at next month’s OPEC meeting in Algiers. However, when the Saudi oil minister stated there is no explicit agreement and further commented there is nothing decided on output with nothing forthcoming, in typical buy the rumor sell the fact fashion, Oil prices came plummeting lower
Australian Dollar
The Australian Dollar continues to perform well as Aussie dollar bulls have some breathing room as the odds for a September US interest rate lift-off has considerably decreased.
Also, the” risk on”appeal from a ” Goldilocks ” type NFP number has underpinned the Aussie, as it has with most commodity-related currencies.
We have the RBA later today. While the markets are expecting no change in the Bank’s policy rate, the Aussie dollar remains supported approaching the key .7600 level in the pre-announcement trade as traders are expecting a hawkish rather than a dovish course from the accompanying statement, especially in the wake of the recent run of buoyant domestic economic data.
While the markets are poised for no change in the Bank’s policy rate, the Aussie dollar remains supported approaching the key .7600 level in the pre-announcement trade as traders are expecting a hawkish rather than a dovish course from the accompanying statement, especially in the wake of the recent run of buoyant domestic economic data.
Japanese Yen
The Yen continues to be the primary driver of USD sentiment. While glued near 103.40 most of Europe as well as through a holiday-thinned US markets, there has been some absorbing price action.
Besides the ongoing abstractions and debate surrounding the vagaries of the US Non-Farm Payroll report, Governor Kuroda Speech at Kisaragi-kai Meeting in Tokyo, continues to resonate.
While delivering his customary “whatever it takes “ stance regarding BoJ stimulus, the Central Bank is apparently weighing earlier FSA warnings by referencing the negative impact that NIRP has on financial institutions.
Kuroda’s guarded comments sent USDJPY lower as the market awaits the next US Dollar driver.
The current move in USDJPY is running counter to the technical setup which favors a move through 104. Also, Bond Yield’s and Bond flows are currently not supportive of a stronger Yen outlook.
Regardless of set ups , there continues to be a lot of moving parts in this discussion and the jury’s out on the next significant USDJPY move.
Yuan
Traders are stuck in no man’s land with markets held in neutral. While expectations for a September US interest rate lift-off are diminishing, it’s likely a short-term reprieve for the Yaun as it continues to trade with a long-term bias towards a gradual rate of depreciation.
There is still a substantial likelihood the Federal Reserve Board will raise interest rates in 2016, and this should continue to weigh on Yaun near-term sentiment.
Also, Traders are less inclined to rock the RMB boat ahead of October Yuan SDR inclusion Market is likely to stay neutral up until the BoJ meetings Sept 20-21 if not through to the October SDR composition.
USDASIA
I suspect the markets were fundamentally flat going into NFP and have been slow to re-engage Long EM Asia position primarily driven by the uncertainty regarding US interest rates . Even the movements in Oil prices overnight failed to get much of a rise from Ringgit dealers.
Given range trade mentality expect exporter offers to come in 4.08 with USD support at 4.05
