Asia risk-off at full steam, Yen clocks new yearly highs

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 9, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    A renewed bout of risk-aversion gripped Asia this Tuesday, shaking financial markets across the globe, as global growth concerns came to the fore in wake of the recent market turmoil. As usual, the yen emerged the clear winner amid risk-off market profile, while the Antipodeans were heavily dumped.

    Key headlines in Asia

    10 yr Japanese government bond yields go negative!

    Japanese Econ Minister: External factors main reason for recent yen move

    Australia: NAB business survey suggests some easing in conditions

    Dominating themes in Asia – centered on JPY, AUD and NZD

    Amid quiet, holiday-thinned markets, risk-off moods continued to dominate as traders ignored moderate gains in the oil prices and remained wary over global growth prospects. Fading Fed rate hike bets and a regime of negative interest rates globally also dampened sentiment and crushed risk appetite across the financial markets.

    As a result, the Antipodeans suffered the most, with the Aussie facing double whammy from deteriorating Australia’s business outlook on one hand, while falling Australian stocks dragged the Aussie lower on the other side. The AUD/USD pair sinks -0.77% to 0.7035, moving slightly away from 0.7019 session lows. While the Kiwi also fell sharply, breaching the key 200-DMA support and now trades -0.61% at 0.6588. Contrarily, the yen benefited the most from the persisting risk-off, knocking-off USD/JPY to the lowest levels since Nov 2014 at 114.23, before recovering losses to now trade at 114.60 levels, recording a -1.05% loss on the day.

    Among the Asian equities, Japan’s Nikkei led the sell-off in the Asian stocks, with the index sinking -5.30% to fresh multi-month lows. While ASX 200 index also followed suit and drops -2.75% towards closing hours.
    Rest of Asia remains closed for the Lunar New Year. China and Taiwan are shut for the week, while markets in Hong Kong, Singapore, South Korea, Malaysia and Vietnam are closed on Tuesday.

    Heading into Europe and North America

    Another data-light European session ahead, with a set of German economic news, including industrial production and trade figures, lined up for release. While from the UK docket, we have the trade balance data. Besides, BOE MPC member Cunliffe is due to speak about at the British Property Federation Residential Conference, in London.

    Germany’s industrial production data for December is expected to see 0.5% growth m/m, compared to the 0.3% drop registered in November, and a 0.5% decline y/y, after 0.1% growth seen a month ago.

    While from the UK trade figures, markets are expecting the total trade deficit to have narrowed further to £3 billion in December from an estimated £3.2 billion a month before.

    Looking ahead, the North American session also remains data-scarce, with only the JOLTS jobs opening data from the US to fill in the calendar. Jobs opening s are expected to see a moderate decline to 5.350 million anticipated in January, following 5.431 booked in December.
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