Forex news for Asia trading Monday 4 January 2016

Monday 4 January 2016

  • China state-owned ship builder bankruptcy
  • Barclays: "Many themes from last year remain firmly in place"
  • Bank of Japan (BOJ) Governor Kuroda Will take further bold steps if necessary
  • Fed's MESTER More again from Fed's Mester: More than 4 hikes in 2016 likely appropriate
  • ANZ on the 2 China manufacturing PMI's: GDP growth in Q4 unlikely to have improved from Q3
  • Asian stockmarkets today (insert picture of dog vomiting here)
  • China - Caixin Manufacturing PMI for December: 48.2 (expected 48.9)
  • Japan - Nikkei Manufacturing PMI for December (final): 52.6 (vs. 52.5 flash)
  • Japan air bag maker Takata share price starts to inflate
  • People’s Bank of China (PBOC) sets yuan reference rate at 6.5032
  • Japanese PM Abe on the wires: Japan economy firmly on recovery path
  • Magnitude 5.1 earthquake strikes New Zealand
  • Breaking: Crystal ball gazers got it all wrong in 2015 (And here are my 2016 predictions)
  • Fed's MESTER More: US fiscal policy to modestly support growth
  • Singapore GDP +5.7% (annualized) for Q4
  • Goldman Sachs on RBA 2016 rate cut speculation - most likely scenario for AUD is weaker
  • Barclays on EUR/USD for this week, and also their "Trade for the week ahead"
  • Earthquake M6.8 strikes India - USGS
  • Gold and oil both higher in early Asian trade - Middle East tension resurgent
  • China press: Economy won't rebound immediately
  • Australia - CoreLogic house prices for December: 0.0% (prior -1.5%)
  • Federal Reserve - who are the FOMC voters in 2016?
  • Fed's MESTER: Dec. rate hike reflects expectation economy will improve
  • Australia - AIG Manufacturing PMI for December: 51.9 (prior was 52.5)
  • 10 geopolitical risks in 2016 - Putin more dangerous, China growth slows more
  • Trade ideas thread to start the new week - Monday January 4, 2016
  • 2015 a losing year for currency funds. Here's a list of their excuses!
  • Forecasts for 2016, from the price of oil to the US election via footy results
  • Société Générale on the top 3 FX trades for 2016
  • Saudi Foreign Minister says cuts relations with Iran
  • Saudi Arabia expels Iranian diplomats

Friday, Saturday, Sunday (aka 'the long weekend')

  • Fed's Fischer: Hikes could be used to fight excessively high asset prices
  • SNB likely to post a record loss for 2015
  • Saudi Arabia vs. Iran: Why this picture may be the omen for 2016
  • January 2016 forex seasonal trade #1: I need a dollar
  • January 2016 forex seasonal trade #2: A glittering start to the year
  • January 2016 forex seasonal trade #3: Euro winter blues
  • Munich terror plot foiled
  • China official manufacturing PMI for December: 49.7 (vs. 49.8 expected)

While liquidity is only slowing returning to markets after the Christmas/New Year hiatus financial markets in Asia wasted no time in getting a move on.

Regional equites were trashed to start the new year, the latest levels:

  • Nikkei -2.87%
  • Shanghai -3.94% !!!
  • HK -2.31%
  • ASX -0.59%

FX markets were not quite so active, but there were some decent moves (for an Asian time zone).

Early USD strength pretty much across the board, with EUR/USD down toward 1.0825 and USD/JPY tickling above 120.40 while AUD/USD and NZD/USD were driven lower by fund-based sellers. AUD fell under 0.7220 and the Kiwi under 0.6720.

The broad USD strength, though, soon shifted to more specific strength, perhaps a 'carry trade reversal' with the EUR and yen both bouncing back well while the Antipodeans languished near their lows.

EUR/USD regained all of its earlier losses and is near session highs as i update. USD/JPY, though, slid hard, dropping below 120.00 (which had held it for days over the quiet period) and quickly down to 119.70 and surrounds before some stability. As I update, though, its hitting a fresh session low under 119.50

USD/CNY was set by the PBOC stronger again (i.e a weaker yuan), while the CNY - CNH spread blew out further (CNH (the offshore yuan) traded at a 5-year low today), indicative of more yuan weakness still on the horizon. The China manufacturing PMIs released Friday and Monday were both disappointing, showing further contraction.

Oil was an early gainer in Asia (as was gold) with Middle East tensions rising; Saudi Arabia and Iran both spat the dummy with each other (see bullets, above).