AUD bulls in control on upbeat data, UK Services PMI – Up next

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 4, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Mumbai) - Renewed optimism hit Asia, with markets cheering positive sentiment on the Asian equities while the Australian dollar was the biggest gainer amongst the risk-on currencies, backed by upbeat fundamentals. USD/JPY hovers around post-FOMC highs above 121 handle ahead of the key US jobs data and Yellen’ speech due later today.

    Key headlines in Asia

    Australian Sept retail sales bang on consensus

    Japan Post Bank Co to step up shift from JGBs to equities - Reuters

    China Oct Services PMI at 3-month high

    Australia Trade Balance came in at -2317M, above forecasts (-2800M) in September

    Dominating themes in Asia - centered on JPY, AUD, NZD

    Risk-on sentiment was in full swing in the Asian sentiment as impressive economic news from Australia and China injected renewed wave of optimism in markets. While rallying Japanese stocks on the back of Japan Post Bank Co’s debut, drove other Asian indices higher.

    The improved appetite for risker assets benefited AUD/USD the most. The positive sentiment around the Aussie was further boosted by upbeat Aus trade balance and retail sales data. Australia's shrank by more than markets expected in September. The deficit narrowed from $2.71 billion in August to $2.32 billion in September. While retail sales figures rose 0.4% m/m in September, matching estimates. AUD/USD gains 0.30% to 0.7205.

    While the Kiwi remained pressured, despite rising demand for higher yielding currencies and upbeat China services PMI data. Poor NZ jobs data released overnight weighed heavily on the NZD/USD pair, although the bird managed to recover from lows and now trades around 0.6660 levels, down -0.11% on the day. NZ employment growth fell 0.4% in the last quarter, the first decline in three years, against expectations of a 0.4% rise in employment.

    While the dollar-yen pair remained firmly on the bids as the US dollar enjoyed double booster shot – from risk-on trades on one hand and increased Dec Fed rate hike bets on the other. The major trades 0.11% higher at 121.20, recording daily highs at 121.38, falling few pips short of Friday’s high.

    The Asian stocks flew through the roof led boosted by soaring Japanese stocks following the successful debut of Japan Bank Post Co on Tokyo Stock Exchange today. Japan’s benchmark, the Nikkei rallies +2.21% to 19,095, while Australia’s S&P ASX index pared gains and now trades marginally higher at 5,244. China’s A50 index jumps over 2% to 10,116. While Hong Kong’s Hang Seng shots 3.23% higher to 23,303.

    Heading into Europe & the US

    A data-busy EUR calendar ahead, with a raft of final services PMI from across the Euro area economies to be reported. While ECB Draghi’s speech and the UK Services PMI will remain the main focus in the upcoming session. The UK services PMI in October is seen ticking up to 54.5 from the 53.3 booked in the previously.

    Looking ahead, we have an eventful North American session, as the crucial US ADP employment report and Fed Chair Yellen’s testimony on banking regulation will take center stage. While trade data from Canada and the US will be published along with the ISM non-manufacturing PMI report due from the latter.
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