FXStreet (Mumbai) – Risk-aversion persisted in the Asian session, although a profit-taking wave hit the currency markets, with the Antipodeans rebounding from Friday’s heavy sell-off, while the USD/JPY pair also extends the recovery on 117 handle.
Key headlines in Asia
BOJ’s Kuroda: Annual core consumer inflation likely to hover around 0%
New RRR rules will not affect domestic liquidity – PBOC
Dominating themes in Asia – centered on JPY, AUD and NZD
Despite the sharp declines seen in most major Asian stocks, sentiment continue to improve across the fx board, with the demand for higher-yielding/ risk currencies back in vogue. While the safe-haven currencies were sold-off into PBOC’s announcement-led better risk conditions. Over the weekend, the Chinese central bank announced implementation of reserve ratio on the offshore yuan accounts, in a bid to stabilize CNH markets. While, the reports of Western sanctions lifted on Iran dragged oil prices to fresh twelve year lows and weighed negatively on the energy and resource stocks, triggering a renewed sell-off in the Asian equities.
The riskier/ higher yielding currencies such as the AUD, NZD, and GBP were strongly bid and extended the recovery from multi-month lows. The AUD/USD pair now rises 0.65% to 0.6907, while the NZD/USD pair filled up the bearish opening gap and tested 0.6480 levels, before consolidating the upside for another leg higher. The USD/JPY pair also followed suit, as the demand for the risk currency USD was on the rise and hence, the prices recovered ground somewhat and holds above 117 handle.
On the equities space, the Japanese stocks led the Asian markets decline, with the Nikkei index dropping -1.66% to 16,865. Australia’s S&P/ASX index drops to 4,857, recording a -0.73% loss into the closing hours. The Chinese equities waver between gains and losses, with the Shanghai Composite defending mild gains near 2900 levels, while Shenzhen’s CSI300 index trades 0.20% higher. Hong Kong’s the Hang Seng falls -1.07% to 19,308.
Heading into Europe and North America
The EUR macro calendar remains absolutely empty this Monday, making for a dull start to an eventful week ahead. While thin trading is likely to persist as the US markets remain closed today, in observance of Martin Luther King Day.
Besides, officials from Greece’s creditors, the ECB, European Commission and the International Monetary Fund (IMF), are expected to visit Athens to discuss a review of its bailout program with Greek officials. While ECB board member Yves Mersch will speak at a conference on ‘Card payments in Europe, Latest trends & challenges’, organized by the Bank of France in Paris.
Later this week, we have plenty of risk events in store from across the global, including China’s GDP, CPI figures from the US, New Zealand’s GDT and inflation report. While from the Euro land, we have flash PMIs, inflation and Germany’s ZEW survey results. Apart from the data, the ECB policy meeting will take centre-stage this week.
(Market News Provided by FXstreet)