Forex news for Asia trading Wednesday 18 January 2017

  • The chatter on Venezuelan oil spill is based on an 8 hour old report (at least)
  • China capital outflows - regulator to tighten rules on outbound investment
  • Done and dusted - Australian government's largest bond sale deal: AUD9.3bn
  • Plenty on the data agenda in the US on Wednesday - CPI, Beige Book, Yellen speaking
  • USD picks itself up off the canvas
  • San Fran Fed head Williams spoke today - recap
  • China's new debt tool to ease burden on local government financing
  • All China new home prices +12.4% y/y in December
  • China said to intervene in stock market this week as Xi attends Davos
  • PBOC sets USD/CNY mid-point today at 6.8525 (vs. yesterday at 6.8892)
  • More from Fed's Williams (& more of the same) - good case for 3 hikes in 2017
  • China press: PBOC adviser Fan sees stronger yuan vs. dollar
  • More Fed Williams: More fiscal stimulus could cause higher growth
  • ANZ on GBP: "mkts need something fresh to trade off if GBP is to go lower in near term"
  • Australia - Westpac Consumer Confidence Index (January): +0.1% m/m
  • Where to target GBP squeeze In GBP/USD & EUR/GBP? - NAB
  • Fed's Williams: We've reached Fed's goal of full employment
  • Australian politics: PM to hold presser (2315GMT). Cabinet reshuffle coming.
  • NZD: ASB says recent dairy price weakness introduces downside risk to milk price forecast
  • Deutsche Bank says USDJPY to stay 'firmly' in 110-115 range for some time
  • Trump UN ambassador nominee Haley will question US contribution of 22% of UN budget
  • Trade ideas thread - Wednesday 18 January 2017
  • President Obama shortens Chelsea Manning's sentence - to be released May 17
  • OIL - No inventory data today due to Monday US holiday, here's some oil news anyway

The USD gained some ground in Asia today after being trump-punched in the Wall Street Journal interview. GBP/USD was the biggest loser, hardly surprising given its enormous gain on Tuesday. Cable drifted off from its highs 60+ points today, which would be a decent swing for an Asian session except its peanuts compared to its surge following the May news (out during Asia on Tuesday).

USD/JPY had carried on its slide into the very early Tokyo time, but soon bounced back above 113 and settled above there (as of updating). EUR/USD dripped back from its early circa 1.0710 high to around 1.0690 before settling just under 1.07.

AUD and NZD tried higher early also, but both have come back a little.

Apart from GBP/USD, ranges were overall quite small.

China today - huge cash injection (again) from the PBOC:

Another huge injection of cash into money markets today from the People's Bank of China (following two big days already this week). OMOs from the PBOC so far this week:

  • Monday, January 16: injection of CNY 230 bn for a net injection (i.e. after maturing loans) of 165bn)
  • Tuesday January 17: injection of CNY 330 bn (net injection 270bn)
  • Wednesday January 18: injection of CNY 460 bn (the net injection was 410bn). This is the biggest daily addition since at least 2004.

This is a factor: China said to intervene in stock market this week as Xi attends Davos

Also of influence are rising money-market rates, likely in response to the rising demand for cash ahead of the Lunar New Year holidays (January 27 - February 2). 28-day RRs will cover the New Year holiday period while the 7-dayers are for immediate liquidity..

Regional equities:

  • Nikkei +0.11%
  • Shanghai +0.29%
  • HK +1.14%
  • ASX +0.52%

Still to come:

  • Plenty on the data agenda in the US on Wednesday - CPI, Beige Book, Yellen speaking