- HSBC China PMI falls below 50 to 49.4 indicating a slowdown in manufacturing activity
- Japanese FinMin reiterates that excessive Yen moves undesirable
- Japanese PM and BOJ governor commit to fighting deflation
- Japan’s average wage earnings continues to rise
- UK’s small-to-medium sized manufacturing sector grows at fastest rate in 15 years
- Private gauge of Australian inflation shows increase of 0.1% MoM
- Alan Greenspan still sees danger of US double-dip recession
- South Korean inflation stable at 2.6%
- Regional stockmarkets rise by 1.25% on average
Worries that the change in margin requirements for Japanese retail traders may have some effect on the FX market proved unfounded and the market was caught short in risk pairings like AUD/JPY. The subsequent short-covering was the only real action seen today.
USD/JPY opened at 86.40 but a combination of FinMin jaw-boning, short-covering in the crosses and sizeable bids between 86.10/20 ensured that it didn’t fall much further. Range: USD/JPY 86.34/71, EUR/JPY 112.74/113.39
AUD/USD moved around briskly with changes in risk sentiment and AUD/JPY was again the most volatile pair during the session. Despite the data showing a marked slowdown in China, the AUD has rallied steadily throughout the session against all other majors. Ranges: AUD/USD .9045/.9106; AUD/JPY 78.01/89.
EUR/USD has been relatively quiet inside a 30 pip range with cross flows the main influence. Range: EUR/USD 1.3055/87.
Cable moved early in the day as the market targeted stops below .8300 in EUR/GBP but this attempt failed. Nevertheless, cable managed to break above the Friday highs around 1.5720. The strong CBI survey will also help strengthen already improving GBP sentiment. Ranges: Cable 1.5698/1.5733; EUR/GBP .8306/25.
Markets: Nikkei, HK, Kospi, Shanghai were all up by between 1.2%/1.3%. Oil $79/bbl. Gold $1184/oz.
