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Asia wrap up: USD broadly weaker - TD Securities

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 11, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Bali) - The TD Securities Research Team provides a wrap-up article on the latest action in Asia, in which we saw USD liquidation ahead of public holidays in both US and Canada, with the celebration of Veterans Day and Remembrance Day respectively.

    Key Quotes

    "The USD hit a 7 month high overnight with the EUR mirroring the move in the other direction touching a 7 month low - EU short end rates dropping further on expectations the ECB will announce aggressive QE measures at its Dec meeting the main driver. Ahead of the US and Canadian holiday today, most FX crosses were stable in overnight trade, US fixed income registered at most a 2bps fall in yield, US equities were up a touch, but commodities again ground lower, weighing on the AUD and CAD while the BRL had its best close in 2 months."

    "In Asia we saw USD liquidation on stalling momentum and lack of follow through buying with the EUR rejecting the 1.07 level, the AUD bouncing of post NFP lows and the JPY back below 123. The NZD is the best G10 performer today, +0.8%. There was no UST trading in Asia with US markets closed for business today, so the moves in ACGB and NZGB yields were fairly small, down 1-2bps in yield. There was no clear directional leads for equities, with indices once again mixed while Bloomberg’s Commodity index is firmly unchanged."

    Asia

    "AUD Westpac’s Consumer Sentiment for Nov rose 3.9%, the index back above 100 after being in negative territory for 6 months with recent political events appearing to have boosted confidence. The survey covered the period that the majors lifted mortgage rates out of cycle with the RBA and surprisingly confidence amongst those holding mortgages actually rose a little over 4%. The sub index measuring economic conditions in the next 12 months jumped to its highest reading in 2 years, but still remains below 100. Also the Christmas spending outlook hit a 7yr high. No signs of the RBA needing to cut rates from this report."

    "NZD The RBNZ’s Semi Annual Financial Stability Report canvassed issues we expected it to address—soaring Auckland property prices and low milk prices as risks to the financial system. Gov Wheeler skirted around Monetary policy in question time, but the key takeaways were 1) that it was too early to judge the effectiveness of new macro policy rules on Auckland and 2) recent NZD levels are a significant buffer for the economy. On balance, the comments suggest a Dec cut is a close call."

    "CNY Retail Sales for Oct beat expectations, but only just (+11%/yr vs +10.9% f/c) while Oct IP came in below the +5.8% f/c to +5.6%/yr. Overall these numbers confirm the divergence between the more positive service sectors and ongoing weakness in manufacturing. In summary, net neutral for growth but nothing to alleviate the weakness in commodities."

    "JPY BoJ board member Harada made his first speech in which he said that while his view of the economy is slightly weaker than the BoJ’s view he nonetheless sees no need of additional easing now."
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