Forex news for Asia trading Tuesday 15 March 2016

Japan

  • Japan - January final Industrial Production: 3.7% m/m (preliminary 3.7%)
  • BOJ announcement: Keeps policy steady
  • Watching the yen swing wildly? Do not adjust your set. Pre-BOJ rumours, b/s etc.
  • Japan economy minister Ishihara comments on FX market moves

China

  • China said to be drafting rules for a Tobin Tax on FX trading
  • China housing minister says sales have stabilized, recovering
  • PBOC sets yuan reference rate for today at 6.5079
  • China press reports downpayment loans for homes have halted
  • China press: China should increase gold reserves to match GDP

Australia, New Zealand

  • RBA focus on China risks
  • RBA Minutes - Westpac comments
  • Slow burn Australia story ... voting reforms should lead to more stable government
  • AUD and NZD hit lower
  • NZD traders - heads up for the dairy auction during London time
  • RBA March meeting Minutes: Low inflation provides scope for further easing
  • CBA says top is in for the AUD this week (& watch RBA Minutes today)
  • Australia - ANZ Roy Morgan Weekly Consumer Sentiment: 116.4 (prior 114.8)
  • Here's a sort of 'Guest Trader' post - old school technical analysis
  • Yonhap report North Korea plans nuclear capable ballistic missile tests
  • Press: Barclays says commodities rally overdone
  • Trade Ideas Corner - Tuesday 15 March 2016
  • EUR: 'structural bearishness': 3 reasons to sell - Morgan Stanley

The focus today was on the Bank of Japan monetary policy meeting. While we waited there was a paucity of news and flows nearly across the board.

What we did get though was RBA March meeting minutes. There was not much to surprise in them, though there was an extended discussion on the risks posed by China (and the positives too, the RBA is inclined to be objective, to not simply (and lazily) focus on the negatives). AUD remained under pressure, managing a pop to just above 0.7520 before hitting new lows (from overnight trade).

Next up we got the yuan fix (a weaker yuan today after a run of strengthening from the PBOC mid-points). Note that there is commentary about that the AUD selling was prompted by the weaker yuan fix. This mixes up the timeline of developments today; AUD/USD was weaker prior to the yuan fix, it maybe lost another handful of pips, but that was it before it based for the session.

NZD lost ground also today.

The BOJ kept us waiting for its announcement, with USD/JPY and yen crosses trading in wide, gappy ranges leading up to it in the face of poor liquidity. When the announcement came it was one of no further easing but of detail changes to the implementation of negative rates (see bullets, above).

In brief (the policy is unchanged from):

  • Monetary base will increase at an annual pace of about 80 tln yen
  • BOJ to purchase JGBs so that their amount outstanding will increase at an annual pace of about 80 tln yen
  • The average remaining maturity of the Bank's JOB purchases will be about 7-12 years
  • BOJ will purchase exchange-traded funds so that their amount outstanding will increase at an annual pace of about 3 tln yen until the end of March 2016, and from April at an annual pace of about 3.3 tln yen
  • BOJ will purchase Japan real estate investment trusts so that their amount outstanding will increase at an annual pace of about 90 bn yen
  • BOJ will maitain amounts outstanding of CP and corporate bonds at about 2.2 tln yen and about 3.2 tln yen, respectively
  • Of about 3.3 tln yen, 300 bn yen will be used in line with the implementation of a new program for purchasing ETFs composed of stocks issued by firms that are proactively investing in physical and human capital

While it was 'no change' expected today the market bought yen after the announcement (not a huge move) perhaps on the basis of some exemptions for the applicability of negative rates. The Nikkei was sold.

Elsewhere today, EUR has net gained a few points within just a small range, USD/CHF is down a little and a very small range. Cable lost ground in early Tokyo, dropping a quick 20 odd points seemingly triggering some stops on longs and has not managed to recover much at all - its near session lows as I update.

Gold is lower on the session, not a big mover. Oil has dripped lower also.

China hinted again, quite strongly, that it wants a Tobin Tax on currency transactions (see bullets, above).

Regional equities are looking better today:

  • Nikkei -1.08%
  • Shanghai -1.13%
  • HK -0.72%
  • ASX -1.42%

Still to come: NZD traders - heads up for the dairy auction during London time