Forex news for Asia trading Tuesday 4 October 2016

  • RBA announce no change in rates - as expected
  • BoA / ML say watch out for stop losses in gold under $1300 (levels, targets)
  • China official: China's foreign trade still faces big downward pressure
  • USD/JPY on session highs
  • Idea of BOJ foreign-debt buying, "Viable if not taken as FX intervention"
  • Reminder - China on holiday, no USD/CNY setting from PBOC today
  • BOJ Gov. Kuroda says he will consider bank profits in guiding policy
  • Australia - ANZ Job Advertisements data for September: -0.3% m/m (prior +1.8%)
  • Australia data - Building Approvals (August): -1.8% m/m (vs. expected -6% m/m)
  • More from the BOJ's Tankan: Firms expect inflation to edge higher
  • Yen crosses higher as Tokyo gets active
  • ANZ on Brexit GBP: "unlikely that it can rally in a sustainable fashion"
  • New Zealand September house prices: +14.3% y/y (prior +14.6% y/y)
  • Goldman Sachs on EUR/USD - still going down; factors at play; targets
  • Australia - ANZ-Roy Morgan Consumer Confidence: 117.9 (prior 120.6)
  • Quick review of overnight Fed comments from The Dud and The Mess
  • Japan Center for Economic Research says GDP fell for 2nd straight month in August
  • One for the NZD traders' diary - dairy auction today
  • NZ data - NZIER Q3 business survey: Business confidence 26 (prior 19)
  • Cable closes at worst level since 1985
  • Trade ideas thread - Tuesday 4 October 2016

USD/JPY started its rise in early Tokyo, pre-open, accelerating as that market became more active. The buying was fairly steady, and has driven it up through a gain of more than 70 points (at its peak) on the session. There was no obvious single catalyst, with citations of:

  • Better risk appetite diminishing appetite for the yen
  • More talk on the Bank of Japan buying foreign bonds (for example)
  • Governor Kuroda appearing in the Diet, though what he has been reported as saying seems neither here nor there to me ... on the dovish side though I suppose. He did add he thought negative rates were overall a positive for the economy, so there's that.
  • Stop loss buyers kicking in above 102.10

But, like I said, the buying was relentless; exporter USD sell orders were gobbled up. A cluster of such orders ahead of 101.80 and again around 102 provided some respite, for a few minutes each time only, though.

The yen weakness translated to higher yen crosses, AUD and NZD outperformers early. AUD/USD yet again ran into a wall ahead of 0.7700, but NZD/USD kept higher until it topped out circa 0.7310. Data from NZ today was again strong.

Cable lost some ground on the day, but it wasn't one-way traffic. Nevertheless its lower for the session as I update, if not by much.

It was Reserve Bank of Australia October meeting day, with expectations unanimously in favour of a 'no change' announcement. Which was indeed the result - a nice gold star for the markets today! The accompanying statement seemed quite subdued to me (leaning dovish). Though opinions do vary, some see a stronger degree of optimism in the statement and thus slightly more hawkish. AUD had a wiggle on the announcement and as I update it's a net 10 or so points down from the pre-announcement level and near its session lows as I write. All a bit of a snoozer really.

Gold is little changed on the day.

Regional equities:

  • Nikkei +0.66%
  • Shanghai +0.21%
  • HK +0.02%
  • ASX -0.13%

Still to come:

  • One for the NZD traders' diary - dairy auction today