30 Jan 2015
Asia Recap: Yen well bid, shrugs off JP inflation
FXStreet (Bali) - The Japanese Yen was the main winner in Asia, with the US Dollar a touch softer following a very solid performance on Thursday, on the back of upbeat US unemployment claims, giving a decent boost to the Greenback across the board.
There were two focal points of interest in Asia, one being the Japanese CPI data, which came lower-than-expected, disappointing once again Economists, and adding pressure to BoJ's Kuroda to re-activates the 'QQE bazooka' further down the road, despite his endless optimism that inflation target will indeed be met. Japan's core CPI (excluding food but including energy) came at +0.5% y/y, and that is a post tax-hike print, with the Tokyo read coming slightly above expectations, a small consolation.
The second focus was an interview by Sky News Business Channel to RBA watcher McCrann, who threw a bit of cold watcher by saying that his controversial opinion on Wednesday's article at the Herald Sun about an 'almost certain' RBA rate cut next week was, his belief, but he does not know absolutely. When asked about inside links with the RBA, McCrann said: "It would be inappropriate for me to comment on that.” McCran added that "when I analyse all the factors, I come to the conclusion there will be a rate cut. You have to appreciate how dramatically the world has changed in the past 2 months."
Surprisingly, or not so much if one is aware of the important role that option-related activity is having in USD/JPY over the past few days, the Yen strengthened after setting a land in the sand along 118.50 (highs for the pair in Asia) before strong Yen demand post Tokyo-fix led the pair to gun through light stops sub 118.00, although the 117.75/90 managed to sustain the US Dollar, which ends the session around the round number.
AUD/USD traded in a tight accumulation phase, with subdued interest, registering highs of 0.7790 while the lowest was hit at 0.7762, although quickly rejected by a market which may have had enough of the sharp falls seen ahead of the RBA, with the stakes very high as the market keeps betting for a dovish RBA, with most Economist in a Bloomberg survey expecting a cut either in February or March (most consensus) this year.
It is also worth noting that based on the inflows of money making its way into Europe this month - stocks and bonds - , there seems to be a fair share of agreement expecting strong month-end US Dollar flows. As I wrote earlier: "Varies market reports by the investment bank community suggest that given the strong injection of capital into European stocks and bonds, much larger than inflows seen in the US for this month, which has resulted in traders underexposed the US dollar, the US Dollar looks poised to perform strongly on month-end flows."
Main headlines in Asia
New Zealand Building Permits s.a. (MoM) fell from previous 10% to -2.1% in December
New Zealand Visitor Arrivals (YoY) down to 5.4% in December from previous 7.7%
Month-end flows point at USD rally
Japanese inflation: Mostly unchanged but overall Tokyo improves
Japan Industrial Production (MoM) below forecasts (1.3%) in December: Actual (1%)
United Kingdom Gfk Consumer Confidence registered at 1 above expectations (-2) in January
Australia Private Sector Credit (YoY): 5.9% (December)
Australia Private Sector Credit (MoM) unchanged at 0.5% in December
Australia Producer Price Index (YoY) dipped from previous 1.2% to 1.1% in 4Q
New Zealand M3 Money Supply (YoY): 6.3% (December) vs 5.8%
RBA watcher McCrann: Rate cut his belief, doesn't know absolutely
Japan Vehicle Production (YoY) up to -2.5% in December from previous -12.2%
Japan Annualized Housing Starts: 0.883M (December) vs previous 0.888M
Japan Housing Starts (YoY) registered at -14.7% above expectations (-14.8%) in December
There were two focal points of interest in Asia, one being the Japanese CPI data, which came lower-than-expected, disappointing once again Economists, and adding pressure to BoJ's Kuroda to re-activates the 'QQE bazooka' further down the road, despite his endless optimism that inflation target will indeed be met. Japan's core CPI (excluding food but including energy) came at +0.5% y/y, and that is a post tax-hike print, with the Tokyo read coming slightly above expectations, a small consolation.
The second focus was an interview by Sky News Business Channel to RBA watcher McCrann, who threw a bit of cold watcher by saying that his controversial opinion on Wednesday's article at the Herald Sun about an 'almost certain' RBA rate cut next week was, his belief, but he does not know absolutely. When asked about inside links with the RBA, McCrann said: "It would be inappropriate for me to comment on that.” McCran added that "when I analyse all the factors, I come to the conclusion there will be a rate cut. You have to appreciate how dramatically the world has changed in the past 2 months."
Surprisingly, or not so much if one is aware of the important role that option-related activity is having in USD/JPY over the past few days, the Yen strengthened after setting a land in the sand along 118.50 (highs for the pair in Asia) before strong Yen demand post Tokyo-fix led the pair to gun through light stops sub 118.00, although the 117.75/90 managed to sustain the US Dollar, which ends the session around the round number.
AUD/USD traded in a tight accumulation phase, with subdued interest, registering highs of 0.7790 while the lowest was hit at 0.7762, although quickly rejected by a market which may have had enough of the sharp falls seen ahead of the RBA, with the stakes very high as the market keeps betting for a dovish RBA, with most Economist in a Bloomberg survey expecting a cut either in February or March (most consensus) this year.
It is also worth noting that based on the inflows of money making its way into Europe this month - stocks and bonds - , there seems to be a fair share of agreement expecting strong month-end US Dollar flows. As I wrote earlier: "Varies market reports by the investment bank community suggest that given the strong injection of capital into European stocks and bonds, much larger than inflows seen in the US for this month, which has resulted in traders underexposed the US dollar, the US Dollar looks poised to perform strongly on month-end flows."
Main headlines in Asia
New Zealand Building Permits s.a. (MoM) fell from previous 10% to -2.1% in December
New Zealand Visitor Arrivals (YoY) down to 5.4% in December from previous 7.7%
Month-end flows point at USD rally
Japanese inflation: Mostly unchanged but overall Tokyo improves
Japan Industrial Production (MoM) below forecasts (1.3%) in December: Actual (1%)
United Kingdom Gfk Consumer Confidence registered at 1 above expectations (-2) in January
Australia Private Sector Credit (YoY): 5.9% (December)
Australia Private Sector Credit (MoM) unchanged at 0.5% in December
Australia Producer Price Index (YoY) dipped from previous 1.2% to 1.1% in 4Q
New Zealand M3 Money Supply (YoY): 6.3% (December) vs 5.8%
RBA watcher McCrann: Rate cut his belief, doesn't know absolutely
Japan Vehicle Production (YoY) up to -2.5% in December from previous -12.2%
Japan Annualized Housing Starts: 0.883M (December) vs previous 0.888M
Japan Housing Starts (YoY) registered at -14.7% above expectations (-14.8%) in December