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Aussie keeps 0.7000 amid risk-aversion, UK services PMI - key

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 3, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Mumbai) - Risk-off sentiment remained the main theme in Asia this Wednesday, extending from the last NY session as oil rout returned to markets. As usual, yen emerged the best performer among the safe-havens, while the Kiwi outperformed entire G10 currencies complex on the back of upbeat NZ jobs report.

    Key headlines in Asia

    BOJ Kuroda: Negative rate policy doesn't mean JGB buying limit reached

    China Caixin Jan services PMI at 6-month high


    Australia: Dec trade numbers disappoint, decline in exports weigh

    RBNZ Wheeler: Some further exchange rate depreciation desirable

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

    Nothing changes for Asia this Wednesday as oil price action continues to drive the sentiment across the financial markets. As a result risk-off intensified in the Asian trades, tracking almost 7% slump in the oil prices overnight and also as investors’ hopes over the oil price bottom were squashed completely. Besides, we had an eventful Asian session today, with the fundamental news also affecting the Asia-pac currencies.

    The Aussie was heavily offered today after the Australian trade figures surprised markets on the downside. The trade gap grew from $2.73 billion in November to $3.54 billion in December, coming in much worse than the market forecast of a $2.45 billion deficit, mainly on slump in minerals exports. However, the bulls were rescued by stronger than expected Chinese services PMI report and hence, the AUD/USD held onto 0.7000 support, now floating around 0.7020. The Chinese services sector activity for Jan grew at the fastest pace in 6 months, coming in at 52.4 versus 50.5 expected, and compared to 50.2 last.

    While the Kiwi remained unperturbed by the risk-off trades as well as by the comments from RBNZ Governor Wheeler, as the unexpectedly positive NZ employment data continued to keep the sentiment lifted around the NZD/USD pair. New Zealand's unemployment rate dropped from 6.0% in Q3 to 5.3% in Q4, the lowest in more than six years. The sharp drop in joblessness came after 16,000 fewer people became unemployed and the participation rate slipped 0.3 percentage points to 68.4%.

    Amidst widespread risk-aversion, the yen extended its bullish momentum into the third day today, pushing USD/JPY to near 119.50 levels. Moreover, the yen ignored the dovish comments from the BOJ Chief Kuroda and remained well bid amid global sell-off.

    Among the Asian equities, the Nikkei drops -3.40%, while ASX 200 index drops -2.33%. The Chinese equities also followed suit, with the benchmark Shanghai Composite index falling -1.17%.

    Heading into Europe and North America

    We have a series of final services PMI reports from across the Euro are economies along with the same from the UK. While Euro zone retail sales will be also reported later in the European session.

    The Euro zone services sector reported 53.6 last time, with the same number expected as a final result. While the German flash PMI booked 55.4 and is expected to hold in the final reading. The UK services PMI in January is seen ticking down to 55.3 from the 55.5 booked in Dec.

    Apart from the data, non-monetary policy meeting of the Governing Council of the ECB will be held in Frankfurt.

    Looking towards the North American session, the US ADP report, the precursor to the highly influential non-farm payrolls data, will be reported, followed by ISM non-manufacturing PMI and the EIA weekly crude stockpiles report.
    For more information, read our latest forex news.
     

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