12 Aug 2015
Antipodeans crash to cycle lows on Yuan fix again, China data, UK jobs eyed
FXStreet (Mumbai) - PBOC did it again – further yuan devaluation. The People's Bank of China (PBoC) continued to devalue its currency on Wednesday – second day in a row, waging a currency war as the world's second-biggest economy tries to shore up growth by boosting exports. Antipodeans suffered the most from the lower Yuan reference rate while the USD/JPY rose to fresh 2-month highs beyond 125 handle amid risk-off moods.
Key headlines in Asia
BOJ Minutes: Inflation expectations appeared to be rising
PBOC Yuan reference rate set at 6.3306 vs prior close 6.3231
PBOC: Today's devaluation based on improved quotation mechanism
Dominating themes in Asia - centered on JPY, AUD, NZD
The Bank of Japan (BOJ) minutes release was overshadowed by PBOC price action where the central bank set lower the yuan reference rate by 1.6% against the US dollar for the second time in two days in early Asia. China's latest move is one of many measures policymakers are using to shift China towards a more market-based economy.
The yuan fix again today added to the ongoing market chaos and suppressed risk-appetite across the board with traders giving away riskier assets and flocking to safe-havens. As a result, the entire antipodean complex was hammered to fresh multi-year lows with the Aussie plummeting nearly 1% to 0.7216 while the NZD/USD pair plunged to a new six-year low at 0.6468, recording a -0.80% loss on the day. The Antipodean currencies lose the competitive edge due to lower CNY as the OZ economies are highly dependent on China for their exports.
The greenback enjoys risk-off flows versus the Japanese yen in the Asian session today as traders favor the US currency as a safe-haven amid ongoing PBOC-led risk-aversion. USD/JPY rose to fresh two-month highs at 125.28 and heads higher in a bid to take out 125.86 – June 5 top.
Asian markets are trading in the negative territory with the Japanese benchmark Nikkei 225 losing -1.94% at 20323. The benchmark Australian S&P/ASX 200 index trades -1.71% lower at 5378 points as the latest PBOC moves raise concerns over weak external Chinese demand. While Chinese stocks also followed suit and dropped sharply. Hong Kong's benchmark Hang Seng index loses -1.77% at 24065 while mainland China's benchmark Shanghai Composite loses -0.45% now and trades near 3910.
Heading into Europe - centered on EUR, GBP
Ahead of Europe open, a slew of crucial Chinese economic data are lined up for release which may further provide fresh cues on the future course of monetary policy likely to be adopted by the PBOC. Chinese industrial figures will be published along with retail sales and fixed asset investment data.
Moving on, the EUR macro calendar brings in the labour market report from the British economy. While Euro zone industrial production numbers will also be on the cards. Industrial production in the euro zone is seen as advancing 0.2% m/m in June, following a 0.4% decline reported in May, while growing 1.7% when measured annually, compared to a 1.6% gain recorded in May.
The UK will publish labor data for June. The main ILO 3-month unemployment rate is expected to remain at 5.6%, the same as in May.
Looking ahead, the New York session offers not quite relevant macro data with the only exception being the JOLTS job openings data while FOMC member Dudley is scheduled to speak later tonight.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The EUR/USD pair broke above the daily descendant trend line coming from March high of 1.1435, but gave back most of its intraday gains to end the day back below it, which should discourage longer term buyers. The short term technical picture is still positive, as the 1 hour chart shows that the price holds above its 20 SMA and the technical indicators above their mid-lines, lacking however, directional strength.”
“In the 4 hours chart the technical indicators have turned sharply lower after approaching overbought territory, although the price remains above a bullish 20 SMA. Renewed selling pressure below 1.1000 should lead to a bearish continuation this Wednesday, while gains beyond 1.1045 may see the pair approaching the 1.1120 region.”
Key headlines in Asia
BOJ Minutes: Inflation expectations appeared to be rising
PBOC Yuan reference rate set at 6.3306 vs prior close 6.3231
PBOC: Today's devaluation based on improved quotation mechanism
Dominating themes in Asia - centered on JPY, AUD, NZD
The Bank of Japan (BOJ) minutes release was overshadowed by PBOC price action where the central bank set lower the yuan reference rate by 1.6% against the US dollar for the second time in two days in early Asia. China's latest move is one of many measures policymakers are using to shift China towards a more market-based economy.
The yuan fix again today added to the ongoing market chaos and suppressed risk-appetite across the board with traders giving away riskier assets and flocking to safe-havens. As a result, the entire antipodean complex was hammered to fresh multi-year lows with the Aussie plummeting nearly 1% to 0.7216 while the NZD/USD pair plunged to a new six-year low at 0.6468, recording a -0.80% loss on the day. The Antipodean currencies lose the competitive edge due to lower CNY as the OZ economies are highly dependent on China for their exports.
The greenback enjoys risk-off flows versus the Japanese yen in the Asian session today as traders favor the US currency as a safe-haven amid ongoing PBOC-led risk-aversion. USD/JPY rose to fresh two-month highs at 125.28 and heads higher in a bid to take out 125.86 – June 5 top.
Asian markets are trading in the negative territory with the Japanese benchmark Nikkei 225 losing -1.94% at 20323. The benchmark Australian S&P/ASX 200 index trades -1.71% lower at 5378 points as the latest PBOC moves raise concerns over weak external Chinese demand. While Chinese stocks also followed suit and dropped sharply. Hong Kong's benchmark Hang Seng index loses -1.77% at 24065 while mainland China's benchmark Shanghai Composite loses -0.45% now and trades near 3910.
Heading into Europe - centered on EUR, GBP
Ahead of Europe open, a slew of crucial Chinese economic data are lined up for release which may further provide fresh cues on the future course of monetary policy likely to be adopted by the PBOC. Chinese industrial figures will be published along with retail sales and fixed asset investment data.
Moving on, the EUR macro calendar brings in the labour market report from the British economy. While Euro zone industrial production numbers will also be on the cards. Industrial production in the euro zone is seen as advancing 0.2% m/m in June, following a 0.4% decline reported in May, while growing 1.7% when measured annually, compared to a 1.6% gain recorded in May.
The UK will publish labor data for June. The main ILO 3-month unemployment rate is expected to remain at 5.6%, the same as in May.
Looking ahead, the New York session offers not quite relevant macro data with the only exception being the JOLTS job openings data while FOMC member Dudley is scheduled to speak later tonight.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The EUR/USD pair broke above the daily descendant trend line coming from March high of 1.1435, but gave back most of its intraday gains to end the day back below it, which should discourage longer term buyers. The short term technical picture is still positive, as the 1 hour chart shows that the price holds above its 20 SMA and the technical indicators above their mid-lines, lacking however, directional strength.”
“In the 4 hours chart the technical indicators have turned sharply lower after approaching overbought territory, although the price remains above a bullish 20 SMA. Renewed selling pressure below 1.1000 should lead to a bearish continuation this Wednesday, while gains beyond 1.1045 may see the pair approaching the 1.1120 region.”