Forex news for Asia trading Friday 19th February 2016

Overnight moves lower in stocks and stronger for the yen continued in Asia today. USD/JPY dropped under 113 and remains there as I update, while EUR/JPY was cushioned somewhat by EUR/USD putting on a few added points toward 1.1130.

We saw the Reuters Tankan report from Japan today, painting a subdued picture of confidence and little seen in the way of much improvement in coming months. Perceptions were that if the Reuters result translates to the BOJ Tankan survey it increases the likelihood of further Bank of Japan stimulus, but this didn't translate into a weaker yen today.

CHF and GBP are little changed against the USD. We did hear some commentary from BoE MPC member Weale today, to little GBP impact.

NZD and AUD were more active. AUD in particular weakened and then took a harder tumble with some jaw boning from Reserve Bank of Australia policy board member Edwards. It dipped 30-odd points in a quick sort of move on the headlines. His comments in full were not quite so dramatic as the headlines (often the case), but the damage was done and the AUD/USD has settled just above 0.7100 as I update. AUD/JPY was a big loser today.

PBOC didn't move the USD/CNY a great amount (a small yuan weakening), but they did confirm they had drained the most funds from the money market this week in 3 years (a drain after the lunar new year holiday is not an usual occurrence, but it was a biggie). Hong Kong CNH HIBOR rates were higher today also, which may indicate the PBOC is putting the squeeze on yuan shorts to a greater extent. Or, it may be simply part of the post-holiday liquidity drain. Or perhaps a bit of both. The yuan has had a good week.

There was verbal intervention in the South Korean won today after it hit a 5-year low.

Gold lost a couple of dollars, not a lot in it after the overnight surge higher. Oil was fairly flat on the session after its overnight price fall.

Regional equities didn't have a good day, but the week wasn't so bad.

  • Nikkei -2.15%
  • Shanghai -0.47%
  • HK -0.55%
  • ASX -0.95%