Forex news for Asia trading Thursday 21 February 2019
- Reuters poll on BOJ - most expect bank to 'normalise' but growing band say more easing
- Offshore yuan surges to strongest since July 2018. USD/CNH drops under 6.7
- The US and China are drafting multiple alternative MOUs on trade talks
- More from Fed's Daly: wants patience on rates until she sees faster inflation
- AUD up, back down again - wide swings - the story so far (jobs, Westpac, and the RBA)
- Fed's Daly sees more economic headwinds - slower global growth, tighter financial conditions
- China ForMin says will not use yuan exchange rate as a bargaining chip in trade talks
- PBOC sets USD/ CNY reference rate for today at 6.7220 (vs. yesterday at 6.7558)
- Westpac update their RBA forecast - expect a cash rate cut
- Responses to very strong Australian jobs report coming in
- Japan Nikkei / Markit preliminary manufacturing PMI for February: 48.5 (prior 50.3)
- Australia Jan. jobs report: Employment +39.1K (exp 15K) Unemployment 5.0% (exp 5.0%)
- MOAR Brexit …. Scottish govt chief economist says no deal sees Scottish GDP fall 7%
- UK official says risk of no deal Brexit has risen
- Ahead of the Australian jobs report - TD on why the RBA is on the sidelines
- The 'other BOJ' (Bank of Jamaica) has cut its benchmark interest rate
- FOMC responses: Hurdle for Fed rate hikes quite high
- FOMC responses: Goldman Sachs expect Fed balance sheet unwind before end 2019
- New Zealand tax report recommends capital gains tax
- Australian preliminary February PMIs: Manufacturing 53.1 (prior 53.9) Services 49.3 (51.0)
- Trade ideas thread - Thursday 21 February 2019
- Private oil data shows smaller than expected build in crude oil inventory
- UK AA rating may be cut by Fitch
- FOMC Fed Minutes underscore that bar to restarting hikes is high
The Australian dollar had large swings today. Moves kicked off with a marking higher on very strong employment report results, with a huge beat on jobs added on the month (January). AUD/USD popped above 0.7200 and dipped just below the figure in following minutes.
Westpac then dropped a changed forecast for its Reserve Bank of Australia policy outlook. Westpac has been spot on with their call for the past two years+ for the RBA to remain on hold but today dropped that in favour of expecting two rate cuts from the Bank, the first in August 2019 to be followed with another in November 2019. The Australian dollar took a hit, trading down in following minutes toward 0.7140. Its since retraced a little of the drop and is around 0.7160 as I post.
5 min candle AUD/USD chart
NZD/USD followed a similar pattern to the AUD, up to circa 0.6875 as the AUD jumped, then down to just under 0.6835 on the AUD fall. Currently around 0.6850.
News followed soon after that there are six drafts being prepared for memoranda of understanding between the US and China on trade. This is adding to the positive sentiment on trade.
The yuan was a big mover today again also. Yesterday it strengthened on the news the US wants China to stabilise the currency, today USD/CNH lost further ground to under 6.7 and the lowest its been since the middle of last year. Curiously, there was a report the Chinese foreign ministry says the country will not be using the yuan as a bargaining chip in negotiations (see bullets above). Something to keep an eye on.
Hourly candles USD/CNH chart
EUR/USD is net up a few points on the session, as is cable. USD/CAD is down just a touch. Since I'm looking at net changes .... AUD/USD is nearly flat for the session despite its gyrations!
USD/JPY tracked down briefly to just under 110.60, then back up to 110.85. The only Japan-specific news of note was the 'flash' manufacturing PMI reading for February dropping into contraction for the first time since 2016.
What a week this has been so far, and it ain't over - plenty still to come (see below).
Still to come:
