8 Jan 2016
No Yuan devaluation today, China stocks recover
FXStreet (Bali) - Another volatile Asian session, with the Chinese Yuan fix and equity markets driving the FX arena.
No Yuan devaluation today
At the end, a more risk-friendly environment prevailed, following a stable USD/CNY fix, which saw today's setting at 6.5636 vs 6.5646 last. The fix was against Nomura's estimates, which they projected to be much higher as 6.5902 from 6.5646.
The decision was perceived, initially, as risk friendly, as the PBOC refrained from devaluing the Yuan another day; this spurred a relief risk rally, which saw the Aussie and Kiwi well bet, equities spiking higher, while the Japanese Yen was sold. AUD/USD traded as high as 0.7080 which was then followed by a consolidation around the 7050 line. USD/JPY saw heavy suppy at 118.60 after the initial PBOC-led buying, only to consolidate just below a technical line at 118.30.
Shanghai seesaws, eventually keeps green
Afterwards, with the Shanghai equity cash open underway, and following a promising open above 2%, it returned back down to trade -2% at one stage, before returning back to positive. Judging by the ferocious 5m candle reversal on that fall, it suggests state-owned institutions may have been on the bid supporting aka 'intervening' prices back up. We also had a headline, via Reuters, noting that PBOC was intervening to support yuan via state-owned banks.
Circuit breakers scrapped
As a reminder, Chinese stocks suspended the controversial 'circuit-breakers' after only 3 day being active. During Thursday, the Chinese securities regulators said the suspension came in an attempt to let market trade more freely. In other words, rather than letting the market fall 7% and call it a day, they will probably now tasked state-owned banks to intervene in the market if moves are too disruptive.
Aus retail sales, Japanese earnings uneventful
In other fundamental news, Australia Nov retail sales came in line with expectations at +0.4% MoM vs. +0.4% expected and a 0.5% prior. Meanwhile, in Japan, labour cash earnings (YoY) for Nov came at 0.0% (exp 0.7% prev 0.7%), with the BoJ consumer sentiment index (Q4) came at -17.3 vs -15.2 last, while the consumer sentiment outlook index (Q4) was -19.9 vs -17.8 last. Note, Japanese markets will be closed on Monday.
US Non-Farm Payrolls to take center stage
Heading into the European and US session, the key focus will be on the US NFP, due at 13.30 GMT. According to Nomura: "The November jobs report was solid, with total nonfarm payrolls growth exceeding 200k, and the unemployment rate remaining low at 5.0%. Incoming data on labor markets point to a steady pace of job gains again in December. We forecast that private payrolls added a net new 210k workers (Consensus: 200k), with a 10k increase in government workers, implying that total nonfarm payrolls will gain 220k jobs (Consensus: 200k)."
No Yuan devaluation today
At the end, a more risk-friendly environment prevailed, following a stable USD/CNY fix, which saw today's setting at 6.5636 vs 6.5646 last. The fix was against Nomura's estimates, which they projected to be much higher as 6.5902 from 6.5646.
The decision was perceived, initially, as risk friendly, as the PBOC refrained from devaluing the Yuan another day; this spurred a relief risk rally, which saw the Aussie and Kiwi well bet, equities spiking higher, while the Japanese Yen was sold. AUD/USD traded as high as 0.7080 which was then followed by a consolidation around the 7050 line. USD/JPY saw heavy suppy at 118.60 after the initial PBOC-led buying, only to consolidate just below a technical line at 118.30.
Shanghai seesaws, eventually keeps green
Afterwards, with the Shanghai equity cash open underway, and following a promising open above 2%, it returned back down to trade -2% at one stage, before returning back to positive. Judging by the ferocious 5m candle reversal on that fall, it suggests state-owned institutions may have been on the bid supporting aka 'intervening' prices back up. We also had a headline, via Reuters, noting that PBOC was intervening to support yuan via state-owned banks.
Circuit breakers scrapped
As a reminder, Chinese stocks suspended the controversial 'circuit-breakers' after only 3 day being active. During Thursday, the Chinese securities regulators said the suspension came in an attempt to let market trade more freely. In other words, rather than letting the market fall 7% and call it a day, they will probably now tasked state-owned banks to intervene in the market if moves are too disruptive.
Aus retail sales, Japanese earnings uneventful
In other fundamental news, Australia Nov retail sales came in line with expectations at +0.4% MoM vs. +0.4% expected and a 0.5% prior. Meanwhile, in Japan, labour cash earnings (YoY) for Nov came at 0.0% (exp 0.7% prev 0.7%), with the BoJ consumer sentiment index (Q4) came at -17.3 vs -15.2 last, while the consumer sentiment outlook index (Q4) was -19.9 vs -17.8 last. Note, Japanese markets will be closed on Monday.
US Non-Farm Payrolls to take center stage
Heading into the European and US session, the key focus will be on the US NFP, due at 13.30 GMT. According to Nomura: "The November jobs report was solid, with total nonfarm payrolls growth exceeding 200k, and the unemployment rate remaining low at 5.0%. Incoming data on labor markets point to a steady pace of job gains again in December. We forecast that private payrolls added a net new 210k workers (Consensus: 200k), with a 10k increase in government workers, implying that total nonfarm payrolls will gain 220k jobs (Consensus: 200k)."