Forex news for Asia trading for Wednesday 3 February 2021
- More on the New Zealand provisional approval for the Pfizer coronavirus vaccine
- NZD - BNZ has hiked its Fonterra milk price forecast
- OPEC JTT meeting forecasts lower demand
- RBA's Lowe says need to keep loose monetary policy until people get jobs, higher wages
- US Treas Sec Yellen calling a meeting of regulators to discuss market volatility driven by retail trading
- China Caixin/Markit PMIs Services 52.0 and Composite 52.2 for January
- BOJ Deputy Gov Wakatabe: no need to overhaul BOJ's 2% inflation target, YCC framework
- RBA Gov Lowe says there was a risk of upward pressure on AUD if did not extend QE
- Silver update - has edged higher on US overnight futures trade
- The Bank of Japan cuts its buy of 1-5 year JGBs today
- PBOC sets USD/ CNY reference rate for today at 6.4669 (vs. yesterday at 6.4736)
- FX option expiries for Wednesday February 03 at the 10am NY cut
- New Zealand’s first Covid-19 vaccine gets provisional approval
- US to deploy B1 bombers to Norway for the first time - "near Russia's sprawling Naval bases"
- Japan - Jibun Bank/Markit Services 46.1 and Composite 47.1 PMI (final) for January
- Australia Building Approvals for December 2020: +10.9% m/m (expected 3.0%)
- Brexit - UK / EU 'crisis talks' on trade rules
- New Zealand - ANZ Commodity Price index for January: +3.6% m/m (prior +1.8%)
- 15 US Senators have written to Biden urging him to address the semiconductor shortage
- China financial press says the PBOC injections show its aim is to stabilise liquidity
- US Treas Sec Yellen says US economic aid package is desperately needed
- ANZ expects no further rate cuts from the Reserve Bank of New Zealand
- New Zealand rate markets are no longer pricing further RBNZ rate cuts in 2021
- Australia - Markit Services 55.6 and Composite 55.9 PMI for January (final)
- Trade ideas thread - Wednesday 03 February 2021
- New Zealand Q4 2020 Unemployment rate 4.9% (vs. expected 5.6%)
- Private oil survey data shows a draw in headline crude inventory
- Australian Industry Group Performance of Construction Index 57.6 (Construction PMI)
- US Senate has voted in favour of moving Biden's $1.9 tln COVID relief package forward
It was a good news day for the New Zealand dollar and it responded with an upmove. Q4 employment data (official NZ job data is only once a quarter) showed a much, much lower unemployment rate than was expected, which prompted an immediate mark up in the currency by just over 30 points. There was barely any pullback in the rate and NZD/USD marched higher for the balance of the session. A later announcement that the Pfizer vaccine had received preliminary approval for use in the country saw the kiwi $ add to its gains.
The spectacular employment report prompted NZ rate markets to move to no longer price a cash rate cut from the RBNZ this year.
The Australian dollar tagged along behind, held in check somewhat by some NZD/AUD buying. Reserve Bank of Australia Governor Lowe spoke today, not straying from his policy statement the previous day. On Tuesday the RBA announced it would be extending its bond-buying QE program, Lowe explaining again today that:
- its keeping rates and the Australian dollar lower than otherwise
- central banks elsewhere have extended their own bond biying and so for the RBA to stop would be likely to prompt a higher AUD
- the RBA's economic outlook is for inflation and employment falling short of the Bank's goals for a good few years to come
USD/CAD dipped towards (but not hitting) 1.2760 with oil getting an added boost early in the session from the private survey of oil stocks (see bullets above).
FX movement elsewhere was more subdued. EUR/USD has barely registered movement since NY close. Cable made highs above 1.3680 and is off a few points since.
USD/JPY did a lap of a 10 point range. BOJ Deputy Governor Wakatabe spoke today, watering down expectations of much change from the bank's monetary policy review due next month.
