ForexLive Asia FX news wrap: USD slide continued

Author: Eamonn Sheridan | Category: News

Forex news for Asia trading Thursday 18 July 2019

The USD is lower pretty much across the FX board on the session here in Asia.

The move from South Korea today, where the central bank cut its benchmark interest rate by 25 bps seemed to trigger a renewal of speculation that the FOMC just might execute a 50bp cut. That seems unlikely, but it was enough for the market to trigger some USD selling, driving EUR, yen, CAD, CHF all higher for the day (I'll come back to the AUD and NZD) and even offering some small gain for GBP.

Forex news for Asia trading Thursday 18 July 2019

I should mention that the BoK move was not wholly unexpected. 10 of the 25 analysts in the Bloomberg survey, for example, had tipped a rate cut in the face of:

  • Worsening data from SK
  • Low inflation
  • signs easing will continue globally
  • Japan curbs on tech products bound for Sth Korea
  • Continuing trade tensions more widely.

In Australia, it was the monthly employment report day. The focus for the RBA is on unemployment. If its a focus for the RBA its a focus for traders. The Reserve Bank of Australia want the unemployment rate heading towards 4.5%. In May it came in at 5.2% and moves higher from there would likely drag forward further expected rate cuts from the central bank. The reported headline remained at 5.2% in June, which eases some of the pressure on the AUD.

I will note that the rate to two decimal points moved from 5.19% in May to 5.24% in June - so while analyst responses centred on no case for an August cut from the Bank there is also a recognition that the risk of a cut prior to November did increase today, even if only marginally.

The Australian dollar was marked higher on the data to pop to a new high (compared with US trade Wednesday). It consolidated under 0.7020 for an hour or so before moving to a fresh high and its not far from 0.7030 as I update. NZD has broadly followed along but AUD/NZD buyers have kept NZD/USD a little less exuberant on the session. 

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