Forex news for Asia trading Wednesday 20 January 2016

News was thin on the ground it was more of the same that took the drivers seat. Oil slid yet again (under $28/bbl) and with it regional equities

  • Hamburgers and China credit - getting less & less bang for the credit buck
  • Video: Three scenarios for the Bank of Canada decision
  • ANZ's Murphy: We expect AUD to $US64¢ by the middle of 2016, then gentle appreciation
  • China Commerce Ministry: China trade faces relatively severe situation in 2016
  • Financial sector fuels China’s economic growth: +12.9% y/y in Q4
  • China December FDI down 5.8% y/y
  • PBOC sets USD/CNY mid-point today at 6.5578
  • PBOC economist says other measures may make an RRR cut unnecessary
  • China Securities Times reports on PBOC calls to control capital outflows
  • RBC say RBNZ will cut rates to 2% by mid 2016. ASB say risks of earlier cuts.
  • Japan - Reuters Tankan manufacturers index +6 in January vs. +9 in December
  • Australia - Westpac Consumer Confidence Index (January): -3.5% m/m (prior -0.8%)
  • Westpac 'high conviction' FX trades, sell GBP, buy USD/CHF
  • NZ traders - ASB cut milk price forecast, and expect further RBNZ rate cuts
  • Goldman Sachs expect an oil price rally by March
  • NZ traders - Westpac forecast Fonterra 2015/16 milk payout at $NZ4.20kg
  • Lost your head trading? Help is on the way
  • New Zealand REINZ house sales data for December: Up 3.5% y/y
  • Trade ideas thread for Wednesday 20 January 2016
  • New Zealand Q4 CPI: -0.5% q/q (-0.2% expected)
  • China Securities Journal says China should cut RRR, raise deficit. But when?

Taking it from the top the day began with NZD Q4 CPI coming in way under expectations to its lowest (y/y) since 2009. NZD/USD was marked down 75-odd points immediately and found very little bounce at all over the balance of the session. Such low inflation should see heightened pressure on the RBNZ to cut rates further. Its not a fait accompli, but it weighed on the currency.

From Japan we got a softer Reuters Tankan survey, as well as the news that the parliament had passed the 3.5tln yen supplementary budget.

The PBOC yuan fix was uneventful, a slight CNY strengthening again. Further details from the NBS on Q4 GDP showed financial services growth surging, while industrial and services GDP growth lagged well behind. The market questions if strong growth in financial services is such a positive for China.

Comments followed on China trade performance from the Commerce Ministry and these too were not confidence inspiring: "China trade faces relatively severe situation in 2016".

Further stimulus expectations were fuelled through the session; maybe the falls we saw would have been greater in their absence.

The Nikkei slipped heavily today, its down 20% from its high as I update. If it closes like this it'll enter into ---- (fill in the blank!) market territory according the commonly accepted convention.

Currencies behaved as expected on such a session.

USD/JPY plunged, its under 117 as I write. AUD back under 0.6900 (well under). AUd/JPY a big, big loser today.

EUR/USD ticked to (and slightly above) 1.0950, EUR/JPY was down toward 128.00. USD/CHF is a little lower after some early strength in the Tokyo morning. Cable is near its session low as I update, barely recovering after its overnight fall.

Gold is up a few dollars.

Regional equities with Shanghai closed for the lunch break:

  • Nikkei -2.90%
  • Shanghai -1.37%
  • HK -3.77%
  • ASX -1.23%

Still to come:

  • Video: Three scenarios for the Bank of Canada decision