FXStreet (Mumbai) - After a horrid start to 2016, markets in Asia are seen settling down this Tuesday, with risk-on trades back in vogue amid a robust recovery in the Chinese stocks. On the FX space, the Aussie outperformed its other Asian counterparts, despite persisting broad based US dollar strength. Key headlines in Asia Talk of further China RRR cuts PBOC sets USD/CNY at 6.5169, huge injection of liquidiy PBoC intervening to support CNY via state-owned banks - Reuters Dominating themes in Asia – centered on JPY, AUD and NZD Risk-on markets profile emerged in the Asian session today following China’s stock market rout-sparked risk aversion wave seen across the financial markets in the previous session. The slid recovery staged by the Chinese indices lifted the sentiment globally and boosted the demand for higher yielding/ risk currencies such as the USD, AUD and the GBP. The AUD/USD pair was the top performer in Asia, taking on the recovery from near 0.7150 levels to well beyond 0.72 barrier. While the dollar-yen pair extended recovery to 119.70 levels, before trimming gains and reverting to 119.50 levels mirroring the moves on the Nikkei. However, the Kiwi failed to take the yield advantage and remained lower on the 0.67 handle as the traders turn on the side-lines ahead of the GDT dairy price auction results scheduled later today. Meanwhile, the Canadian dollar emerged the biggest gainer among the commodity-currencies, with USD/CAD dropping -0.30% to 1.3905 levels on the back of rebounding oil prices. On the equities space, Asian indices trade mixed, with Japan’s benchmark, the Nikkei now paring gains to trade muted around 18,454. Australia’s S&P/ASX extends the drop to 5,186, recording a 1.55% loss so far. While the mainland China’s benchmark, the Shanghai Composite reversed the initial 3% slump and trades 0.41% higher at 3,310, while Hong Kong’s Hang Seng drops -0.19% to 21,286. China’s A50 index rallies nearly 1% to 10,201. Heading into Europe and North America The European economic calendar remains data heavy for the second day in a row, marking an eventful start to the New Year – 2016. Today’s European session is expected to kick-off with the German jobs data, followed by construction PMI report from the UK and Euro zone’s CPI figures. The German unemployment rate expected to remain at 6.3%, after the same rate recorded in November. While the UK construction PMI is expected to stay well in expansion at 56.0, and better than the previous 55.3 result. The euro zone inflation expected to register a 0.4% gain y/y, as compared to a 0.1% annual level booked in Nov. Looking towards the NA session, a set of Canadian macro data is on the cards followed by the crucial New Zealand’s GDT price index, while the US economic calendar remains almost data-empty. EUR/USD Technicals Valeria Bednarik, Chief Analyst at FXStreet explained, “In the 1 hour chart, the pair is well below its moving averages, while the technical indicators present bearish slopes near oversold readings, supporting some additional declines for the upcoming sessions. In the 4 hours chart, the technical indicators have stalled their declines near oversold levels, but are far from suggesting a stronger upward corrective move. The daily low is also the 50% retracement of the December rally, which means that a break below it, should lead to further declines towards the 1.0700 figure.” For more information, read our latest forex news.