Forex news for Asia trading Tuesday 3 January 2017

The Australian dollar squeezed higher today, through 0.7200 and then running above 0.7220 before finding some sort of resistance. There was some perceived positive news for it from China, with the decent official manufacturing PMI (which was out on new Year's Day, result here) being confirmed by a big beat for the private-survey (Caixin) manufacturing PMI:

Caixin Manufacturing PMI for December: 51.9 (expected 50.9, prior 50.9)

  • That is a big beat
  • And is its highest since January of 2013
  • The 'output' component came in at its highest since January of 2011

Whether it was the Chinese data or not, the AUD squeezed higher. NZD/USD went along for some of the ride, its higher on the session also. While Australia, Singapore and HK markets were back from holidays today, New Zealand and Japan were still out. Thinner than normal liquidity was a factor in the moves today.

Other currencies were not nearly so active. USD/JPY is barely changed on the session. Japanese markets were closed again today for a holiday (they reopen on Wednesday, local time) so that may be the excuse.

EUR/USD and GBP/USD edged slightly higher with USd/CHF edged down a fraction. A net weaker greenback across the board.

Note, though, a real weakling loday on the session was the Malaysian Ringgit, down to its lowest against the big dollar since 1998. Elsewhere also, Singapore Q4 GDP surprised strongly to the upside, surging q/q after the contraction in Q3.

The PBOC weakened the CNY against the USD today, but more notably the bank drained a net 150bn+ yuan of liquidity today. This resulted in yuan borrowing rates surging in HK:

Tight liquidity in money markets may well be driven by the PBOC's desire to support the yuan against expectations of a devaluation (refuelled again today by comments from China: More on China's economy could grow 6.5% in 2017; devaluation could stabilise yuan )

Regional equities:

  • Nikkei (Japan closed today)
  • Shanghai +0.71%
  • HK +0.49%
  • ASX +1.21%