Thin markets + lots of economic data = volatility in Asia

1 April, 2015

It has been a very interesting session in Asia as thin conditions and lots of economic data played havoc with the FX market. NZDUSD was hit early on by the thin conditions and some rumours that the RBNZ may have played in the market in March, with the pair plummeting to 0.7740 before widespread USD weakness helped it to regain its lost ground. Meanwhile, the yen was able to largely brush aside a weaker than expected Tankan Large Manufacturing Index for Q1 (actual 12, expected 14).

Australia’s not-so-disappointing numbers
There was some important data out of Australia today, including manufacturing and housing data. Australia’s manufacturing sector has shrunk for the fourth straight month in March, but it improved slightly from the prior month at 46.3 (50 is the level that separates expansion and contraction). Building approvals in Australia fell 3.2% in February, but this was better than an expected 4.0% fall. Also, year-on-year building approvals rose at their fastest pace since August at 14.3%. While building approvals numbers can sometimes be brushed aside by the market, housing data takes on extra significance in Australia these days as policy makers debate the pros and cons of looser monetary policy to support an ailing economy. The stronger the housing market, the less room the RBA has to cut interest rates as it risks further inflating prices in Sydney and Melbourne.

China’s encouraging manufacturing data
In China, official and private sector manufacturing PMIs were released, with both indexes beating expectations. HSBC’s private survey of manufacturing sentiment jumped to 49.6 in March (expected 49.3), from 49.2 in the prior month. As we explained earlier, China’s official Manufacturing PMI jumped to 50.1 in March, braking back over the important 50 level which separates expansion and contraction, from 49.9 in February. This was a stronger reading than the market was expecting (expected 49.7).

AUDUSD’s wild ride
This combination of stronger than expected Australian and Chinese economic data bolstered confidence in the Australian dollar, with AUDUSD breaking 0.7650, albeit only for a short time. However, the commodity currency is still being hit by falling commodity prices - iron ore hit its lowest level in over a decade yesterday. These retreating commodity prices only increase the chance that the RBA will lower interest rates next Tuesday to a record low 2.00%.


Source link  
Markets turn focus towards Trump address to Congress

On the evening of Tuesday, February 28th, US President Trump is slated to give a major address to a joint session of Congress in lieu of the usual State of the Union address...

FOMC meeting minutes signal rate hike fairly soon – dollar unimpressed

The minutes from the most recent FOMC meeting three weeks ago – the first such meeting since Donald Trump’s presidential inauguration – were released on Wednesday afternoon...

Crude oil look set to resume bullish trend

Oil prices have been coiling for several weeks now with both contracts spending most of their time in a tight four dollar range...


US stocks could rise 6-7% further before potential crash

The US stock markets hit repeated new record highs last week. The positive sentiment has continued at the start of this week, with Asian and European markets drifting higher in an otherwise quiet day. US index futures point to further gains at the open later on...

Fed gives little indication of interest rate trajectory

The Federal Open Market Committee (FOMC) meeting has come and gone, and little has changed in the financial markets as a direct consequence. In unanimously deciding to keep interest rates unchanged, as widely expected...

Surging equities at risk ahead of earnings season

While earnings season has started on a very positive footing, however, banks and other financial companies were already expected to shine more than others due to rising interest rate expectations. As non-financial companies begin to report in the coming weeks...


Gold rebound heading for major resistance

For more than two weeks, the price of gold has been in a strong rebound from its late-December bottom around the $1125 level. This rebound follows a sustained drop in price that began from the July highs around $1375 and followed-through to the December lows...

Crude oil at higher plateau ahead of US inventory data

Crude oil prices have recently been lifted to year-to-date highs on a successful agreement to cut oil production and control supply among major OPEC and non-OPEC oil producers...

Gold rebounds off key level ahead of busy week

As we reported the possibility on Friday of last week, gold did indeed fall further lower this week. The rising dollar, yields and US equity prices all weighed on the appeal of the buck-denominated, noninterest-bearing and perceived safe-haven precious metal...

  


Share: