Daily Market Overview by FXNET

[Froso@FXNET]

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.

 

[Froso@FXNET]

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.

 

[Froso@FXNET]

Market report 3-02-2014

Asian Session - Quiet session ahead of risk-filled week

The currency markets started the new week off with a weak tone, mostly consolidating Friday’s moves and also because investors are being cautious ahead of a busy week full of risk events. There will be two major central bank policy meetings – Bank of England and European Central Bank, both on Thursday.

Meanwhile, there Reserve Bank of Australia is also having a policy meeting on Tuesday. On Friday US nonfarm payrolls are expected, which will be highly anticipated and could cause much volatility in the markets.

Chinese markets were still enjoying the Lunar Year Holiday today, keeping volumes thin during the Asian session.

The euro started the week near a ten-week low against the dollar on growing expectations of a dovish on Thursday following weak CPI data on Friday.

EURUSD did very little in Asia, trading sideways between 1.3479-96 and testing Friday’ lows.

GBPUSD extended lower in Asia to 1.6419 from Friday’s close of 1.6437.

USDCHF was up modestly from 0.9064 to 0.9082.

AUDUSD opened in Asia at 0.8766 and fell to 0.8737 after negative Australian data releases. An as expected China official manufacturing PMI out over the weekend was somewhat supportive for the aussie.

 

[Froso@FXNET]

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.

 

[Froso@FXNET]

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.

 

[Froso@FXNET]

Asian Session – Yen weakens after Bank of Japan policy announcement

The yen tumbled against major counterparts after the announcement from the Bank of Japan that it left its monetary policy and economic assessment unchanged. The Bank also extended and doubled two loan programs.

USDJPY and the JPY crosses rallied with the Nikkei following the BOJ policy announcement. From just below 102.00, USDJPY surged up to 102.73. EURJPY rallied from 139.50 to 140.50, GBPJPY from 170.17 to 171.35.

EURUSD opened in Asia at 1.3705, Trading was extremely quiet over the past 24 hours with the pair hovering around 1.3700. During the Asian session the pair traded a 1.3695-1.3717 range.

Looking ahead, the euro will be in focus as the German ZEW investor sentiment data will be released in the European session today.

GBPUSD edged higher from 1.6710 to 1.6736 in Asia following the downside retracement to 1.6694 overnight. EURGBP consolidated between 0.8193-97 in Asia after the bounce last night.

Key risk for the sterling today will be UK inflation data.

AUDUSD opened in Asia and held between 0.9030-42 ahead of the Reserve Bank of Australia minutes then rose to a fresh one-month peak of $0.9081. The minutes had nothing new to say but alt of the move in AUD was based on positioning.

 

[Froso@FXNET]

Asian Session – Dollar struggles after weak US consumer confidence data

Weak US data dampened sentiment keeping the dollar heavy against the yen. US Consumer confidence in February fell to 78.1 versus 80 forecast and 79.4 previous. Meanwhile there were comments from the Fed policy maker Tarullo who said that monetary is possible tool to deal with broad sustained systemic risk and that it is possible that interest rates will remain historically low for some time after Fed starts to raise them.

USDJPY opened the Asian session at 102.24 after trading with a heavy tone through the US session due to weak US consumer confidence and a drop in the 10-yr Treasury yield to 2.70%. The pair eased to 102.13 in early Asia.

The Australian dollar was in focus today as there was domestic data on the construction sector. Fourth-quarter total construction fell 1.0% on the quarter while engineering construction was down 0.5%. Also weighing on the aussie lately was the weaker Chinese yuan.

AUDUSD opened the Asian session at $0.9018 and traded a moderate 0.8969-0.9021 range.

EURUSD barely moved yet again in Asia and could only manage a $1.3739/1.3748 range for the entire morning session.

GBPUSD traded a 1.6669-85 range in Asia. Yesterday the pound rose above $1.6720 after comments by the BOE's McCafferty that the UK could raise interest rates in Q2 2015.

Revised GDP for the UK will be released in the European session today and US new home sales in the US session.

 

[Froso@FXNET]

Asian Session – Yen lifted by upbeat Japanese data

The yen performed well in today’s Asian session after a series of upbeat data released from Japan. Most figures came in on or better than expectations, which reduced the expectations in the market that the Bank of Japan might be taking action for further policy easing.

USDJPY opened the Asian session at 102.12 and traded to 102.20 before falling after the Japan data to 101.76. Yesterday the dollar got a bit of a boost after Fed Chair Yellen’s testimony.

EURUSD opened the Asian session at 1.3709 after a recovery in EURJPY and a broadly weaker USDJPY. EURUSD could only manage a 1.3703/15 range.

The main event during the European session will be Euro zone inflation data and the outcome will likely shape the European Central Bank expectations ahead of next week’s meeting.

GBPUSD traded a 1.6677-95 range as did USDCHF which traded a 0.8877-08889 range during the Asia n session.

AUDUSD opened today at 0.8965 and traded a moderate 0.8944-90 range in Asia with dips to 0.8955 in early trades but it wasn't long before the 0.8990 level was tested. China data this weekend will be a key risk to the aussie.

 

[Froso@FXNET]

Asian Session – Aussie gains after data shows Australian economy picks up pace

Risk trades were back after the Ukraine crisis de-escalated and this was particularly evident after the S&P 500 rallied 1.5% to a record high on Tuesday.

During Wednesday’s Asian session, the main data releases were from Australian, with fourth quarter GDP numbers coming in stronger-than-forecast.

In other news, China provided its strongest signal yet that it will shift toward balanced and clean economic growth, promising to reduce the pace of investment to the lowest in a decade and wage a "war on pollution".

Most major currencies traded a range during today’s Asian session, consolidating moves from the previous day. The unwinding safe haven trades led to a weaker yen and Swiss franc.

USDJPY opened the Asian session at 102.21 after the yen was sold across the board due to outflows from safe have currencies as the Ukraine crisis eased. The pair traded a 102.11/29 range throughout the Asian session.

EURJPY did little and traded a 140.25/57 range.

EURUSD opened the Asian session at 1.3742 but barely moved during the Asian session , edging down about 15 pips to 1.3727. Focus is on Euro zone services PMI data later today. The main key risk for the euro will be the European Central Bank meeting on Thursday. There are mixed views on whether the ECB will take action and cut rates.

GBPUSD traded sideways in Asia between 1.6656-73. UK BRC shop prices inflation data released early today had little impact. The UK services PMI data due later today will be more important while Thursday’s Bank of England policy meeting will also be a key risk for the pound.

USDCHF traded a 0.8868-08877 range, remaining calm after fears of the Ukraine crisis subsided and there was less demand for the safe haven Swissie.

AUDUSD opened on Wednesday at 0.8952 and the pair spiked up to 0.8995 after the better-than-expected Q4 GDP numbers. The pair then fell back down to 0.8935.

Looking ahead, Eurozone services PMI data will be released in the European session today.

 

[Froso@FXNET]

Asian Session – Australian dollar rallies after strong retail sales and trade data

The Australian dollar was the best performer today after Australian retail sales beat expectations by more than double the forecast, while the nation’s trade balance posted a strong surplus. The upbeat data lessened the possibility of a rate cut by the Reserve Bank of Australia and helped sentiment for the AUD.

Australian retail sales jumped by 1.2% m/m versus a consensus of 0.5% while the trade surplus widened to A$1.433 billion versus a previous A$591 million and above the A$270 million forecasted.

AUDUSD rallied to a high above 0.9030 while AUSDJPY rose to a high above 92.60 yen.
In other news overnight there was soft US data. The private payrolls processor ADP showed a tepid increase of 139,000 jobs in February, while jobs growth in January was revised down sharply to 127,000 from 175,000. The ISM non-manufacturing PMI fell to a 4-year low last month.

However the dollar remained buoyant as Fed policy maker Williams said yesterday that he expects the first rate hike to be in mid 2015. This gave a boost to the dollar.

USDJPY rose to a high above 102.75 in Asia today, up from the session open of 102.30 and up 1.2% since Monday.

EURUSD traded at $1.3728, little-changed in Asia but off 2-month high of $1.38255 hit on Friday. A key risk for the euro will be today’s European Central Bank meeting. Interest rates are expected to remain the same at 0.25% but many expect the central bank to end its SMP sterilization program, which means an end to bond buying that was draining liquidity. By ending this program, the increase in liquidity in the financial system of the Euro zone will weaken the euro.

GBPUSD was flat trading a 20-pip range above $1.6706. The Bank of England policy announcement will be in focus today.It is expected to be a non-event as the rate is predicted to remain at 0.50%.

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