Risk-off returns in Asia, Yen – top performer, BOE events - Key

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 14, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Mumbai) - The rout returned on the global stock markets, with the Asian equities mirroring the sharp declines seen on the Wall Street overnight. While oil prices continue to fall, crushing risk-appetite across the financial markets.

    Key headlines in Asia

    Explosion heard in central Jakarta, near United Nations office

    Police operation underway in Sydney Opera House

    Will do whatever it takes to achieve 2% inflation target – BOJ’s Kuroda

    Australian Dec employment report: Decent data, full time jobs on the rise

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

    A classic risk-off sentiment prevailed in Asia this Thursday amid falling equities and oil prices, despite another neutral Chinese yuan fix today failing to calm markets. Safe-havens benefited the most, with the Japanese yen emerging the top performer, while the CHF, EUR and gold posted modest gains. The dollar-yen pair now attempts recovery around 117.50 levels, having found strong support near 117.30 region. While the upside in EUR/USD remains capped by 1.09 handle, and gold prices gains for the second day in a row and trades around $ 1093, unable to extend beyond 1095 levels.

    The riskier/ higher yielding currencies such as the AUD, NZD, and GBP were sold-off into the stock markets turmoil on oil and China woes, with the Aussie shrugging-off stronger Aus jobs report. The Australian unemployment rate held steady at 5.8% in December, the equal lowest in a year-and-a-half, with net job growth sliding by 1,000. Markets expected a net 10,000 jobs lost and the unemployment rate to climb back up to 5.9%. Meanwhile, the AUD/USD pair trades -0.27% lower at 0.6937, retreating slightly from session lows struck at 0.6921. NZD/USD tries hard to recover lost ground and attempts recovery towards 0.6500 levels, having test Nov-end lows near 0.6365 area.

    On the equities space, the Japanese stocks led the sell-off in their Asian counterparts. The Nikkei index plunges -4.32% to 16,950, lowest since Sept 2015. Australia’s S&P/ASX index drops to 4,901, recording a -1.72% loss into the closing hours. The Chinese equities extend losses, with the Shanghai Composite losing -1.09% to 2,917 while Shenzhen’s CSI300 index trades -0.61% lower. Hong Kong’s Hang Seng reversed previous rally and collapses -1.85% to 19,566.

    Heading into Europe and North America

    Amid a data-quiet the EUR calendar ahead, the BOE’s ‘Super Thursday’ is likely grab a lot of attention. The BOE will publish its minutes and the asset purchase target, although no major surprises are expected from the British central bank. The policy makers are expected to vote 8-1 in favour of keeping rate unadjusted at record low of 0.50% as also the asset purchases program unchanged. While the ECB monetary policy account of the Dec 3 meeting will be also published.

    Analysts at Westpac note key events ahead, “(BOE) Bank Rate should remain at 0.5%. Domestic data has been mixed, though inflation has remained persistently low and external headwinds remain. The ECB’s account of the monetary policy meeting is also due. The December ECB easing underwhelmed market expectations making today's account more interesting.”

    Moving on towards NA session, Canada’s housing prices index will be on tap while from the US, unemployment claims and import prices index will be published. Initial jobless claims are expected to remain largely unchanged at 275,000 during the week ending January 9, following a figure of 277,000 booked previously.

    Besides, FOMC member Bullard is scheduled to speak at the Economic Club of Memphis.
    For more information, read our latest forex news.

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