Session Wraps - Major Forex Headlines wrapped up by trading session

Forex news for Asia trading on Wednesday 28 July 2021

Ahead of the local opening on Chinese stock markets there were a series of supportive media pieces, urging people not be pessimistic on equities and assuring there was further government spending support for the economy on the way this quarter. Stocks, nevertheless, dropped from the get-go. As I update they have stabilised but are still negative for the session so far.

BTC/USD has had a better session here than it had yesterday. The crypto has risen to highs just above $US40K and is a little under there as I post.

Now to forex ... and its been another lacklustre morning in Asia with not a lot of change. USD/JPY retraced some of its overnight loss, hitting to above 109.90 briefly and is currently circa 109.80. AUD/USD swung within a small range ahead of and over the release of inflation figures; Q2 CPI came in hot for the headline (3.8% y/y) but the core reading, trimmed mean at 1.6% y/y, printed well under the lower bound of the Reserve Bank of Australia target band (of 2-3%). 

Prior to the data release some Australian banks had issued revised (lower) forecasts for Q3 GDP due to the ongoing lockdown in Australia's largest city and key economic powerhouse of Sydney. Alongside the lower forecasts for growth were implications for RBA policy; ANZ see the 'taper' being delayed to November this year, while CBA don't see it until February 2022 and also pushed out their rate hike call from late 2022 to May of 2023. The inflation data today does not stand in the way of any 'lower for longer' from the RBA.

Gold added on a few dollars and is testing its overnight high as I post. 

Hong Kong's Hang Seng is a better performer than the mainland Shanghai Comp:

Forex news for Asia trading onWednesday28July 2021

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Forex news for North American trade on July 27, 2021:

Markets:

  • Gold up $3 to $1800
  • US 10-year yields down 3.8 bps to 1.2378%
  • WTI crude oil down 14 cents to $71.20
  • S&P 500 down 20 points to 4401
  • JPY leads, NZD lags
The pain in Chinese equity markets (and increasingly the yuan) are grabbing more attention and weighed on sentiment early. US equities tumbled at midday but regained more than half the declines into the close.

The dollar was sold throughout the day and particularly into the London fix, where it fell +50 pips, including a particularly hard fall against the pound.

Economic data wasn't a driving factor as the mixed bag of data offered little direction.

The driving factor is tomorrow's Fed decision and a growing belief we will get some dovish hints, or at least a few nods to delta risks. In addition, the market continues to come around to the idea that inflation will be transitory, though that debate is certainly live.

The commodity currencies bounced around as the combination of risk aversion and USD weakness fought it out. There were few winners in that dynamic and some heavy chop. Ultimately, the kiwi and CAD lost some decent ground but the vast majority of the damage was done in Asian trade.

Forex news for North American trade on July 27, 2021:

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Author: Justin Low

Forex news from the European trading session - 27 July 2021

Headlines:

Markets:

  • JPY leads, NZD lags on the day
  • European equities lower; S&P 500 futures down 0.1%
  • US 10-year yields down 1.3 bps to 1.263%
  • Gold up 0.1% to $1,798.31
  • WTI up 0.4% to $72.20
  • Bitcoin up 0.7% to $37,995

The session began with a more tepid mood with light changes among major currencies and risk trades in general but things picked up towards the tail-end of Asia Pacific trading, with the sharp selloff in Chinese markets pulsating across broader markets in general.

The sour mood in China extends from yesterday on fears of regulatory measures against the technology and property sectors, causing a big drop in tech stocks.

The Hang Seng fell by over 5% at the lows today, before closing down a little over 4% - basically a repeat of yesterday's performance more or less.

Mainland Chinese stocks were also dragged lower, with the CSI 300 index closing down over 3% to its lowest levels since November. The selloff saw the Chinese yuan tumble, with the offshore currency falling past 6.50 against the dollar to three-month lows.

That set off some risk aversion and flight to safety, as equities elsewhere fell and bonds were bid to start European trading. 10-year Treasury yields dropped by over 3 bps to 1.241% before bouncing back a little now as the jitters abate.

In FX, the yen held gains throughout with USD/JPY testing 110.00 on the session while commodity currencies were offered with the kiwi leading losses.

NZD/USD was brought down from 0.6980 to 0.6950 before the drop was kept in-check while AUD/USD declined from 0.7370 to 0.7340 before finding some footing.

With Chinese markets closed for the day, Wall Street can switch its focus and attention away from the bloodbath and to where the market left off yesterday.

The Fed meeting is due tomorrow and remains a key risk event that the market is waiting on before really moving more significantly. There's also big tech earnings today with Apple, Microsoft, and Alphabet set to report.

For now, the jitters are abating but we'll see if North American traders see any more reason to be cautious going into the Fed meeting tomorrow. My thoughts from earlier:

All that being said, Treasury yields were pulled lower yesterday too before rebounding in US trading. As such, be wary that the jitters from China may not reverberate for longer parts of the day once local markets are closed - more so with focus on the Fed tomorrow.

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Forex news for Asia trading on Tuesday 27 July 2021

Major forex rates were subdued today, trading in very small ranges and there is little net change from late US levels. Watching the Olympics seems to be on many agendas, especially while awaiting the Federal Reserve's Federal Open Market Committee statement and Powell's press conference on Wednesday afternoon (US time).

Across the board the yen was the winner, with USD/JPY dropping 20 or so points to lows circa 110.20.

Meanwhile crypto was much more active. Bloomberg reported on an Amazon denial the firm would be accepting Bitcoin payment this year or next, and not developing their own currency either. BTC/USD had hit highs circa US$40,500 (just above) but the Amazon headlines saw it slump to under $38K and subsequently to under $37K. It managed to stumble sideways around that level but as I post new session lows are being made towards $36,700 (I am struggling to keep up ... its under $36,500).

Stocks in HK and China are heavy. Chinese real estate stocks were particularly hit.

On the geo-political front North and South Korea have re-established communication. Otherwise news flow has been light, with only minor-league data flow also. 

Forex news for Asia trading onTuesday27July 2021

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