25 Aug 2015
USD back in control as risk-appetite returns, a set of German data – Next up
FXStreet (Mumbai) - Markets completely ignored extended sell-off in the Chinese stocks and enjoyed some improving risk scenario with the US dollar fighting back lost footing versus its major peers. The Antipodeans rebounded from the recent hammering tracking the bounce witnessed in commodities on Tuesday.
Key headlines in Asia
Asian markets decoupled from China's chaos
PBOC to inject 150bn yuan via 7-day reverse repos
WTI rebounds from multi-yr lows, attempting $ 39
Dominating themes in Asia - centered on JPY, AUD, NZD
A calmer Asian session on Tuesday, as dust settles over yesterday’s horror day after the panic triggered by China’s stock markets crash created a havoc across the financial markets.
In Asia, risk-appetite appears to be re-emerging as the most Asian markets remain unresponsive to the ongoing slump in the Shanghai stocks and stages solid comeback from the recent sell-off.
We also witnessed a bounce-back in the US dollar across the board after traders turned bearish on the greenback on Monday, fearing that weaker growth in China would drag on the global economy, creating a fresh headwind for the US, which has already been struggling with weak export growth and hence may push back Fed rate-hike until next year. USD/JPY attempts a bounce to 120 levels after dipping to 116 handle yesterday.
The Antipodean currencies rebounded sharply this session, tracking the spring back in the commodities from their multi-year low levels with WTI gaining 1.52% at $ 38.82, copper prices advancing 1.50% at $ 2.27 and gold supported above $ 1150. The OZ economies are highly dependent on the resource sector for their exports.
The Asian equities trades mixed, with the Hong Kong's benchmark Hang Seng index gaining -1.67% at 21606 while mainland China's benchmark Shanghai Composite keeps extends losses to 3071.06, down -4.33%. Among other Asian indices, the Japanese benchmark Nikkei 225 flipped into losses and is down -1.29% at 18266 While the benchmark Australian S&P/ASX 200 index traders firmer by 2.36% at 5119. Korea's benchmark Kospi index now trades +1.18% at 1,851 points in Seoul.
Heading into Europe - centered on EUR, GBP
A data-light European session ahead, with only the German final GDP figures and Ifo surveys to remain the main market movers amid mixed global cues.
Final German GDP growth figures for Q2 are expected to show 0.4% growth, quater-on-quarter, and 1.6% on an annual basis.
A closely watched survey, the Ifo Business Climate Index in Germany, is expected to edge down to 107.5 in August, from the 108.0 booked last month. The Current Assessment sub-index is seen as remaining at 113.9 booked a month ago. The Ifo Expectations Index - indicating firms' projections for the next six months - is expected to make a slight tick down to 102.0 from 102.4 registered in July.
Besides, ECB Vice President Vitor Constancio will deliver a speech on monetary policy at the European Economic Association event "Effects of non-standard monetary policy measures: evidence and challenges" in Mannheim, Germany.
The US calendar picks up steam on Tuesday with the parallel release of new homes sales and consumer confidence data.
Robust year-to-date hiring should bolster both readings while the markets will be more interested to see whether the Conference Board gauge can rebound after last month's collapse was attributed to the situation in Greece and China's stock market troubles.
Forecasters are calling for the gauge to rebound to 93 points in August, which would be only a small band aid for the 8.9 points shed in July.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FX Street explained, “The 1 hour chart shows that pair retreated down to 1.1517 after reaching the mentioned high, struggling now to overcome the 38.2% retracement of today's run at 1.1580. In the same chart, the technical indicators have corrected extreme overbought readings and stabilized well above their mid-lines, whilst the 20 SMA heads strongly higher, converging with the 61.8% retracement of the same rally around 1.1500.”
“In the 4 hours chart, the technical indicators are slowly beginning to ease, but remain in extreme overbought territory, with the RSI indicator around 90. The wild moves are far from over, and with the Asian opening, the market could run again into panic, making of the technical indicators, worthless intraday tools.”
Key headlines in Asia
Asian markets decoupled from China's chaos
PBOC to inject 150bn yuan via 7-day reverse repos
WTI rebounds from multi-yr lows, attempting $ 39
Dominating themes in Asia - centered on JPY, AUD, NZD
A calmer Asian session on Tuesday, as dust settles over yesterday’s horror day after the panic triggered by China’s stock markets crash created a havoc across the financial markets.
In Asia, risk-appetite appears to be re-emerging as the most Asian markets remain unresponsive to the ongoing slump in the Shanghai stocks and stages solid comeback from the recent sell-off.
We also witnessed a bounce-back in the US dollar across the board after traders turned bearish on the greenback on Monday, fearing that weaker growth in China would drag on the global economy, creating a fresh headwind for the US, which has already been struggling with weak export growth and hence may push back Fed rate-hike until next year. USD/JPY attempts a bounce to 120 levels after dipping to 116 handle yesterday.
The Antipodean currencies rebounded sharply this session, tracking the spring back in the commodities from their multi-year low levels with WTI gaining 1.52% at $ 38.82, copper prices advancing 1.50% at $ 2.27 and gold supported above $ 1150. The OZ economies are highly dependent on the resource sector for their exports.
The Asian equities trades mixed, with the Hong Kong's benchmark Hang Seng index gaining -1.67% at 21606 while mainland China's benchmark Shanghai Composite keeps extends losses to 3071.06, down -4.33%. Among other Asian indices, the Japanese benchmark Nikkei 225 flipped into losses and is down -1.29% at 18266 While the benchmark Australian S&P/ASX 200 index traders firmer by 2.36% at 5119. Korea's benchmark Kospi index now trades +1.18% at 1,851 points in Seoul.
Heading into Europe - centered on EUR, GBP
A data-light European session ahead, with only the German final GDP figures and Ifo surveys to remain the main market movers amid mixed global cues.
Final German GDP growth figures for Q2 are expected to show 0.4% growth, quater-on-quarter, and 1.6% on an annual basis.
A closely watched survey, the Ifo Business Climate Index in Germany, is expected to edge down to 107.5 in August, from the 108.0 booked last month. The Current Assessment sub-index is seen as remaining at 113.9 booked a month ago. The Ifo Expectations Index - indicating firms' projections for the next six months - is expected to make a slight tick down to 102.0 from 102.4 registered in July.
Besides, ECB Vice President Vitor Constancio will deliver a speech on monetary policy at the European Economic Association event "Effects of non-standard monetary policy measures: evidence and challenges" in Mannheim, Germany.
The US calendar picks up steam on Tuesday with the parallel release of new homes sales and consumer confidence data.
Robust year-to-date hiring should bolster both readings while the markets will be more interested to see whether the Conference Board gauge can rebound after last month's collapse was attributed to the situation in Greece and China's stock market troubles.
Forecasters are calling for the gauge to rebound to 93 points in August, which would be only a small band aid for the 8.9 points shed in July.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FX Street explained, “The 1 hour chart shows that pair retreated down to 1.1517 after reaching the mentioned high, struggling now to overcome the 38.2% retracement of today's run at 1.1580. In the same chart, the technical indicators have corrected extreme overbought readings and stabilized well above their mid-lines, whilst the 20 SMA heads strongly higher, converging with the 61.8% retracement of the same rally around 1.1500.”
“In the 4 hours chart, the technical indicators are slowly beginning to ease, but remain in extreme overbought territory, with the RSI indicator around 90. The wild moves are far from over, and with the Asian opening, the market could run again into panic, making of the technical indicators, worthless intraday tools.”