Daily Market Analysis by FXNET - page 5
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Market Report 22-01-2014
Asian Session - Yen weakens after Bank of Japan keeps monetary policy on hold
The main focus in the Asian session today was the Bank of Japan policy meeting. The yen briefly jumps higher after the BoJ kept policy unchanged, which was expected.
Disappointment arose as some investors had hoped for additional easing measures sooner rather than later ahead of a scheduled sales tax hike in April. As a result, the yen fell back down.
USDJPY had a choppy session. The pair traded above 104.15 before the BoJ announcement, then dipped to 103.95 before climbing back up to 104.56. EURJPY also see-sawed, and swung from lows of 141.04 to highs of 141.75.
The Australian dollar mostly stole the spotlight today, after a surprise surge on the back of domestic inflation data. Australian CPI rose 0.9% in the fourth quarter, the biggest pace of increase in over two years. Annual inflation rose 2.6%, the highest since 2011. The data now lessens the chance of a rate cut by the Reserve bank of Australia.
AUDUSD gained about 0.7% to $0.8863 after rising as high as $0.8873 from a session low of $0.8784. The pair has moved further away from a 3-1/2-year low of $0.8756 reached on Monday.
In other currencies, the euro was relatively steady against the dollar, as is typical in the Asian time zone. EURUSD briefly broke above $1.3600 before edging down to $1.3555.
Sterling will be in focus later today as key risk events could impact the currency. The UK will be releasing data on employment. GBPUSD opened in Asia at $1.6475 and traded a 20-pip range.
Market Report 23-01-2014
Asian Session – Aussie back down after China PMI
Chinese PMI numbers were the main focus of the Asian session, which missed forecasts and dampened sentiment. The HSBC flash manufacturing PMI came in a 49.6 versus 50.3 that was expected and fell into contraction territory for the first time in 6 months.
China is the second largest economy in the world so any data released from there are closely watched by investors. Meanwhile, the Australian dollar typically tends to be impacted by Chinese data since China is a major export destination for Australia.
AUDUSD fell at a fast pace after the China PMI data, dipping to $0.8786, down from the session open of $0.8848. The pair erased all gains made yesterday when the aussie was boosted after data showed Australian inflation rose more-than-expected and lessened the likelihood of a rate cut by the RBA.
The yen strengthened on safe haven flows after the disappointing data from China today. Despite a broadly stronger US dollar, the USDJPY fell to 104.26 from an earlier session high of 104.82.
The dollar is expected to remain in demand as long as there are expectations that the Federal Reserve will continue with tapering.
Meanwhile, all eyes will be on upcoming US jobless claims data later in the US session. Expectations are for a decline from 3 million to 2.9 million in the week ending January 11.
In other currencies, the euro was showed little movement, as is typical for this Asian session. EURUSD remained stuck in its recent 1.3500-1.3600 range.
However a key risk event for the euro will be today’s PMI data from the Eurozone.
Market Report 27-01-2014
Asian Session – Yen remains buoyed on safe haven demand as emerging markets tumble
Risk - off sentiment still lingered in at the start of the new trading week, as the turmoil in emerging markets continue to dominate the mood. The Japanese currency gained after being buoyed by safe haven demand in volatile markets as emerging markets tumbled.
An indication of how much volatility existed in markets last week, the Emerging Markets ETF VIX (Volatility Index) surged 40%, which was the largest jump in over 2-1/2 years.
USDJPY fell early in the Asian session, dipping over 45 pips to a low of 101.74 but recovered quickly to rise back above 102, ending at 102.4, back to around Friday’s levels.
Yen crosses traded similarly, with EURJPY down to 139.25 before bouncing to 140.25 while GBPJPY fell to 167.86 and then 169.11. AUDJPY saw lows of 88.40 before rising to 89.50.
It should be noted that trading volumes were thinner than normal today due to the holiday in Australia.
The US dollar will be the currency of focus this week as the Federal Reserve starts a two-day policy meeting tomorrow.
Market report 28-01-2014
Asian Session - Pound rises as focus turns to UK GDP data
After much volatility in currency markets on Monday due to the emerging market turmoil, Tuesday was calmer.
While most major currency pairs were steady and range-bound, especially EURUSD, USDJPY, the most notable moves were made by the pound, as GBPUSD extended gains into the Asian session.
The pound climbed back to a near 3-year high against the dollar ahead of key UK data later today. GDP numbers will be released, with expectations for a confirmation of strong growth in the British economy in the last quarter.
GBPUSD rose to $1.6624 from $1.6582 at the open of Asian session trading. The pound’s strength may out some pressure on the dollar for now.
However the dollar could be expected to regain a firmer footing against the yen as the Federal Reserve meeting comes closer. The Fed begins its 2-day monthly monetary policy meeting today and will announce its policy decision tomorrow.
There are expectations that the Fed will scale back its stimulus further and this is helping pull the dollar off a 7-week low against the Japanese yen. USDJPY was steady in Asia and barely moved while trading sideways, ending the session at 102.61 yen.
The Australian has also proved to be resilient and was another currency that performed well in Asia today. AUDUSD rose to $0.8791, well above Friday’s low of $0.8659.
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Market report 30-01-2014
Asian Session – Yen stays firm after Fed tapers and China data disappoint
The big news overnight was the Federal Reserve’s announcement to continue tapering its economic stimulus. The Fed’s quantitative easing program was cut by $10 billion-a month, bringing the total bond buying plan down to $65 billion a-month. Rates were left unchanged at 0.25% and the Fed reiterated it will keep rates low as long as unemployment is above 6.5% and inflation below 2.5%.
While the Fed did what was widely expected, it failed to give those in yen-funded carry trades, particularly versus emerging market currencies, anything new to hope for, leading to damp market sentiment.
Risk appetite was also hit after soft China data. The HSBC final manufacturing PMI for January fell to 49.5, from the previous flash estimate of 49.6, recording the first decline since July, Dec 50.5. China is the world’s second largest economy, so the data is important to markets.
As safe-haven demand returned, the yen held firm versus the dollar. USDJPY managed to bounce a little from the post-Fed low of 101.83 to rise to the 102.10-30 window and then 102.46.
EURUSD has pretty much been trapped in a range since yesterday, trading between 1.3646-66. The pair did not show much reaction to the expected decision by the Fed to taper more.
Asian session – Dollar strong on GDP data, yen up after Japan inflation numbers
The US dollar was higher after being lifted by US GDP data yesterday and traded at a one-week high against a basket of major currencies. The US economy grew at a 3.2% rate in the last three months to December, with exports and household spending playing a large role in contributing to the increase.
The euro was one of the worst performing G10 currencies, due to German inflation data raising drawing attention of the European Central Bank. A CPI report from Germany showed soft inflation in Europe’s largest economy, which does not bode well for Eurozone CPI data due later today. This raises concerns that the ECB may have to take action to prevent deflationary pressures in the region.
EURUSD tumbled over 100 pips on Thursday, and the pair mostly consolidated in the Asian session before heading lower just before the European session, down to 1.3538.
The yen strengthened today after some optimistic data from Japan. The country’s core consumer price inflation accelerated to 1.3 percent in January, the highest level in five years. This was good news for the Bank of Japan who has pursued aggressive monetary easing for more than a year to fight deflation.
The stronger yen pushed the USDJPY down from 102.70 to 102.31. EURJPY fell from139.20 to 138.65.
Aussie was knocked lower after some disappointing Australian PPI numbers (Producer Price Index). AUDUSD fell off an early session high of $0.8822 down to a low of $0.8751.
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Asian Session – Euro slides ahead of ECB policy meeting
The euro eased lower ahead of key event risk as investors positioned for the European Central Bank's policy review due on Thursday.
EURUSD held steady for most of the Asian session just above a two-month low near $1.3477 that had been set on Monday before sliding to $1.3515.
Growing speculation recently that the ECB may be forced to ease monetary policy further to help fight off the threat of deflation has weighed on the euro recently. Even if the ECB does not act to cut rates today, then it is expected this could happen at the next meeting in March.
Against the yen, the euro was little changed and supported above the key 137.00 support level. EURJPY has managed to stay above an 11-week low of 136.25 yen reached on Tuesday.
USDJPY rose slightly during the session to a high of 101.65 yen, staying above Tuesday's 11-week trough of 100.75 yen.
This week the Japanese currency received a boost from safe haven demand in the wake of a recent selloff in emerging market equities and currencies.
The dollar weakened against the yen as mixed US data on Wednesday offered little support for the greenback. US PMI for the service sector picked up pace in January but the ADP jobs numbers disappointed as private employers added 175,000 jobs in January, the smallest gain since August. The US non-farm payrolls report on Friday will be closely watched.
The Australian dollar was the biggest mover today, surging against the US dollar after strong data added to the view the Reserve Bank of Australia (RBA) will not likely cut interest rates soon.
AUDUSD jumped as much as half a cent to $0.8981, its highest in nearly a month, from $0.8909 in early trade.
Asian Session – Dollar broadly weaker ahead of Yellen testimony
After a quiet US session, currency markets saw more movement despite the holiday in Japan today. The US dollar was weak across the board ahead of an important risk event later today. Fed Chair Janet Yellen will make her first appearance at the House of Representatives.
Yellen will be answering questions from US lawmakers, some hostile to the central bank, who will want to know how committed she is to winding back exceptional stimulus measures.
The only economic data released during the Asian session was from Australia which showed that Australian business conditions rose to its highest in nearly three years in January.
AUDUSD rose to a one-month high of $0.9016, getting a boost after the data, up 0.6 percent from late US trade on Monday. The Aussie last fetched $0.9004.
USDJPY opened the Asian session at 102.26 after a quiet US session, then jumped to a high of 102.40 yen. Volumes were thin due to the holiday in Tokyo.
EURUSD opened the Asian session around 1.3645 after a very slow US session. The pair then idled between 1.3640/50 for the first few hours before spiking to a two-week high of 1.3679.
Other major pairs mostly traded sideways as markets await Yellen’s testimony. GBPUSD traded a 1.06404-34 range in Asia and USDCHF traded a 0.89385-0.8970 range.