ForexLive Asia Wrap: Reserve Bank of Australia’s Stevens stomps on the AUD

Forex trading headlines for Asia Thursday 3 July 2014

• Australia – AIG Performance of Services index for June: 47.6 (vs. prior was 49.9)
• Japan Buying Foreign Bonds, Y -1051.1B (plus, the rest of this data)
• China Non-Manufacturing Purchasing Managers Index (PMI) for June: 55.0 (vs. prior 55.5)
• RBA’s Stevens stomps on the AUD : Repeats AUD high by historical standards and more here and here and here
• Australia – Retail Sales for May: -0.5% m/m (vs. expected was flat at 0.0% change)
• Australia- Building approvals for May: +9.9% m/m (vs. expected 3.2%)
• Japan economy minister Amari: Lowering corporate tax rate could take place over about 5 years – Reuters
• Japan Markit/JMMA Services & Composite PMIs
• China HSBC HSBC/Markit Services PMI for June: 53.1 (prior was 50.7)
• Australian Treasurer Hockey: Says Australia in on the edge of more prosperity
• Non-farm payrolls preview: By the numbers
• and don’t forget to enter US non farm payrolls contest Independence Day special

I wrote this prior to Steven’s speech:

Given the AUD has weakened after the trade data, it wouldn’t surprise me if Stevens took the opportunity to give it another kick while it was down. As a central banker concerned about how high the currency is, it would seem the responsible thing to do … not doing so would seem irresponsible even.

And, that’s exactly how it played out.

RBA Governor Stevens took a leaf from the book of Graeme Wheeler, governor of the Reserve Bank of New Zealand, and gave the currency a kick when it was vulnerable. Who knows how long it will last, but it was enough to knock 60 points off the AUD/USD (and therefore AUD crosses too by various amounts).

Data flow in the AUD today was otherwise mixed, retail sales data was very week but the building approvals data rebounded (see bullets, above). but it was Stevens who was the star of the show. The AUD/USD still hasn’t managed to bounce (and it appears very much like more downside is the weak side in London).

Meanwhile …

NZD/USD lost ground as the AUD fell, dropping about 20+ points but rebounding to be mid-range as of writing.

USD/JPY ticked out a small gain in the morning but has given much of it back (we’re talking up 13 or so points, that’s all). EUR/JPY followed a similar sort of pattern, finding sellers above 139.10.

EUR/USD had a slow drift a little lower, off about 10 or so points. Cable, too dropped, off just a little more than 10 points and then bounced back. It too finishes (as of writing) in about the middle of its range.

Oil and gold both drifted lower.