Asian forex market wrap

• Shanghai stockmarket opened 0.7% lower but has since rallied into positive territory
• Andy Xie sees Shanghai market falling another 25%
• JPY crosses have benefitted from this, EUR/JPY up about 60 pips on the session
• China’s August PMI 54.0 Vs 53.3 in July
• Australian building approvals +7.7% MoM
• Australian Q2 balance of payments -AUD$13.3 bln, worse than expected
• Russian manufacturing PMI at 11-month high
• Regional stock markets gain on average 0.5%

It has been a fairly quiet day in the Asian forex market but the JPY crosses have benefitted from a recovery in regional equity markets. EUR/JPY has gradually moved higher from 133.10 to 133.70 but momentum has been missing. Dealers say that there has been little interest in any of the major pairs and the AUD market has been sidelined awaiting the RBA decision.

On the order front, heavy stops are tipped in the AUD/USD above a suspected option barrier at .8500. EUR/GBP sees solid offers at .8820 and solid bids at .8770.

Markets: Nikkei =0.5%; Kospi +0.9%; Shanghai +0.5%; HK +0.6%; Oil, brent crude steady just below $70/bbl. Gold steady at $953.50/oz.

Ranges: EUR/USD 1.4321/57; USD/JPY 92.85/93.19; cable 1.6255/1.6302; AUD/USD .8418/48; EUR/JPY 133.10/72.

JPY crosses maintain gains as stock markets rally

It’s been a relatively quiet day so far and looks like it will remain that way into the European open. JPY crosses are maintaining their bid tone with all the major pairs sitting close to their highs. Most regional bourses are higher which is encouraging the risk trade.

NZD/USD heading back towards highs

The NZD/USD is killing me by the thousand cuts method, gradually drifting higher. Stops are to be expected if the market breaks above the recent .6895 high. Technical resistance in the form of the major 61.8% retracement is at .6945.

EURJPY ratchets higher

EURJPY has quietly moved higher over the last few hours testing the overnight high just above 133.60. It has found support via Asian equities, with the Shanghai Composite turning slightly positive. However traders remain cautious with the Composite’s ability to turn on a dime. There is bidding interest on dips down towards 133.00.

Technically, EURJPY is just above the top of its Ichimoku cloud and its100 day MA at 133.28. Resistance is found up at the flat lining tenkan line at 134.10.

AUDUSD unchanged after data

The AUDUSD is virtually unchanged after the economic data to where it was going into the data. The worse than expected Current account deficit was offset by a strong buildings approval number. However, it is finding some support from Asian equities, with the Shanghai Index and the Nikkei, both into positive territory after opening down.

Resistance still up at 8470-80 as we await the RBA decision at 0430 GMT.

Australia July Building approvals +7.7% mth/mth

Seansonally adjusted, Australia July building approvals is up 7.7% mth/mth.

Private sector house approvals is up 1.5% mth/mth s/adj.

In other data, government spending rose 0.8% in Q2, adding modestly to growth.

Australia Q2 Balance of Payments $A-13.35 Bln s/adj

The Australian Q2 current account deficit of $A13.36Bln is worse than the forecast of -10.6 Bln.

Net Exports impact on Q2 GDP -0.2%. Well below forecast of +0.3%.

No change in AUDUSD

Shanghai Index opens down 0.7%

China August PMI 54.0 vs 53.3 in July

China August PMI has come in at 54.0, slightly higher than the July reading of 53.3. It is the sixth straight month that the official PMI has stood above 50.

USDJPY has jumped 10 pips, EURJPY up 20 pips.

AUDUSD up 10 pips as well.

All quiet before the Shanghai Index opens

Very quiet so far with all the majors trading within a tight range. That may all change come the open of the Shanghai index, which fell nearly 7% yesterday.

Also out is China PMI at 0100GMT and the China CSLA PMI out at 0230GMT.

USDJPY sees buyers in the 92.50-70 zone with some large stops below 92.50. Topside should be limited to 93.50-80, with talk of exporters on top. Technically USDJPY is well below the Ichikomu cloud and the descending 200day MA at 94.80. A break above the tenkan line at 93.80 is needed to change the sentiment.