26 Aug 2015
Yen biggest loser in Asia as risk sentiment returns, US durable goods, Fed Dudley eyed
FXStreet (Mumbai) - With risk sentiment ripening in Asia, most risk currencies are enjoying some gains. While safe-haven assets take a hit including the yen as most Asian equities trade higher with the China stocks reversing losses and turning in the green zone, responding to the PBOC rate cut on Tuesday.
Key headlines in Asia
RBA's Stevens spoke at the National ¬Reform Summit
Asian markets in a topsy-turvy ride, Shanghai back in the green
Dominating themes in Asia - centered on JPY, AUD, NZD
Markets manage to regain composure amid volatile trades on Wednesday as the overall sentiment improves following Chinese rate cut on Monday in a bid to boost the country’s dwindling economic growth.
The Antipodeans seem to benefit the most from the PBOC-led risk-on trades as the Aussie trades firmer near 0.7150 levels, shrugging off downbeat comments by RBA Governor Stevens delivered in early moves. While its OZ sister emerged the top gainer this session, bolstered by the PBOC booster shot along with improving appetite for risk assets.
The dollar-yen pair jumped to 119.50 levels, nearly 100 pips from its intraday low reached at 118.58, as the yen was hammered as investors' nerves somewhat more settled after two days of extreme market volatility after China stocks kept the green. While the greenback continues to benefit from the recent upbeat US home sales and consumer confidence data released on Tuesday.
The Asian equities trades on a firmer note, with the Hong Kong's benchmark Hang Seng index gaining -0.28% at 21464 while mainland China's benchmark Shanghai Composite reversed losses and extends the recovery to 2988, up 0.80%. Among other Asian indices, the Japanese benchmark Nikkei 225 advances 2.29% at 18214 on weaker yen. While the benchmark Australian S&P/ASX 200 index turned in to the green, now up 0.10% at 5141. Korea's benchmark Kospi index now trades +2.07% at 1,885 points in Seoul.
Heading into Europe - centered on EUR, GBP
There is nothing much to report in terms of macro data in the European session ahead with couple of 2nd tier releases from the UK on the cards – CBI realized sales and BBA mortgage approvals.
While, ECB Executive Board member Peter Praet will speak on the euro crisis at the European Economic Association in Mannheim.
Looking towards the New York session, Wednesday sees the release of durable goods orders figures for July with total bookings expected to dip 0.4% owing in part to weakness in the transportation component (ex-transportation orders are projected to edge 0.2% higher).
As usual, focus will be on the capital goods component – core capital orders rebounded solidly in June but were later revised down to a more measured gain. On the other hand, core shipments, which were initially reported to have declined were later revise to a small gain.
Analysts at Deutsch Bank noted, "Core orders have declined in the first month of the quarter in seven out of the last eight quarters."
New York Fed chief William Dudley has a speech scheduled later tonight. His prepared remarks should focus on the regional economy of the district but he will answer questions afterwards. As a permanent member of the Federal Open Market Committee, Dudley's comments are always closely scrutinized.
EUR/USD Technicals
AceTrader Research team noted, “Despite euro's rally to as high as a fresh 7-month peak at 1.1715 on Monday on dollar's broad-based selloff due to the near 600 points fall in Dow Jones Index, subsequent strong retreat suggests a temporary top has been made and consolidation with downside bias would be seen for a stronger retracement towards 1.1348, then 1.1307 later this week.
However, near term loss of momentum would keep price above 1.1377 and yield a much-needed rebound.”
“On the upside, only above 1.1622 would indicate aforesaid pullback has ended and turn outlook bullish for a re-test of said top, break would extend gain towards 1.1750/54.”
Key headlines in Asia
RBA's Stevens spoke at the National ¬Reform Summit
Asian markets in a topsy-turvy ride, Shanghai back in the green
Dominating themes in Asia - centered on JPY, AUD, NZD
Markets manage to regain composure amid volatile trades on Wednesday as the overall sentiment improves following Chinese rate cut on Monday in a bid to boost the country’s dwindling economic growth.
The Antipodeans seem to benefit the most from the PBOC-led risk-on trades as the Aussie trades firmer near 0.7150 levels, shrugging off downbeat comments by RBA Governor Stevens delivered in early moves. While its OZ sister emerged the top gainer this session, bolstered by the PBOC booster shot along with improving appetite for risk assets.
The dollar-yen pair jumped to 119.50 levels, nearly 100 pips from its intraday low reached at 118.58, as the yen was hammered as investors' nerves somewhat more settled after two days of extreme market volatility after China stocks kept the green. While the greenback continues to benefit from the recent upbeat US home sales and consumer confidence data released on Tuesday.
The Asian equities trades on a firmer note, with the Hong Kong's benchmark Hang Seng index gaining -0.28% at 21464 while mainland China's benchmark Shanghai Composite reversed losses and extends the recovery to 2988, up 0.80%. Among other Asian indices, the Japanese benchmark Nikkei 225 advances 2.29% at 18214 on weaker yen. While the benchmark Australian S&P/ASX 200 index turned in to the green, now up 0.10% at 5141. Korea's benchmark Kospi index now trades +2.07% at 1,885 points in Seoul.
Heading into Europe - centered on EUR, GBP
There is nothing much to report in terms of macro data in the European session ahead with couple of 2nd tier releases from the UK on the cards – CBI realized sales and BBA mortgage approvals.
While, ECB Executive Board member Peter Praet will speak on the euro crisis at the European Economic Association in Mannheim.
Looking towards the New York session, Wednesday sees the release of durable goods orders figures for July with total bookings expected to dip 0.4% owing in part to weakness in the transportation component (ex-transportation orders are projected to edge 0.2% higher).
As usual, focus will be on the capital goods component – core capital orders rebounded solidly in June but were later revised down to a more measured gain. On the other hand, core shipments, which were initially reported to have declined were later revise to a small gain.
Analysts at Deutsch Bank noted, "Core orders have declined in the first month of the quarter in seven out of the last eight quarters."
New York Fed chief William Dudley has a speech scheduled later tonight. His prepared remarks should focus on the regional economy of the district but he will answer questions afterwards. As a permanent member of the Federal Open Market Committee, Dudley's comments are always closely scrutinized.
EUR/USD Technicals
AceTrader Research team noted, “Despite euro's rally to as high as a fresh 7-month peak at 1.1715 on Monday on dollar's broad-based selloff due to the near 600 points fall in Dow Jones Index, subsequent strong retreat suggests a temporary top has been made and consolidation with downside bias would be seen for a stronger retracement towards 1.1348, then 1.1307 later this week.
However, near term loss of momentum would keep price above 1.1377 and yield a much-needed rebound.”
“On the upside, only above 1.1622 would indicate aforesaid pullback has ended and turn outlook bullish for a re-test of said top, break would extend gain towards 1.1750/54.”