Back

Risk-sentiment seeps back in Asia, UK construction PMI – Next in focus

FXStreet (Mumbai) - The USD bulls jumped back into the bids after steep losses witnessed during the first two trading sessions this week as appetite for risk seems to return in the markets. The risk currencies such as AUD, NZD and the newly crowned USD are the major beneficiaries amid risk-on moods while oil and most Asian stocks also flipped to gains.

Key headlines in Asia

Australia's Q2 GDP misses expectations

SHCOMP drags Asia lower, Nikkei bucks the trend

Dominating themes in Asia - centered on JPY, AUD, NZD

A calmer Asian session, dominated by re-emergence of risk-on environment on rebounding Asian equities as well commodity prices, which helps to lift the overall market sentiment.

The US dollar enjoyed heavy gains as the buck staged a solid comeback against its major rivals as traders preferred to hold the US currency ahead of the key US employment report due to be reported today and on Friday. USD/JPY was the biggest gainer amongst the majors, up 0.70% to trade at 120.17, while the EUR/USD pair loses -0.31% and trades around 1.1280 levels.

As noted earlier, the Antipodeans also rebounded sharply as stabilizing commodity prices supports the resource-linked AUD and NZD. The Aussie dipped to 0.6982 the lowest since early 2009 on the Aus GDP data release which missed market expectations. However, the AUD bulls fought back control shortly and drove the price back above 0.70 barrier, where it now wavers.

Economic growth in Australia slowed to 0.2% in the June quarter from 0.9% in the March quarter, as lackluster mining and construction activity weighed on production. Markets expected to see a 0.4% GDP growth outcome last quarter.

The New Zealand dollar stages a modest rebound against its American rival as the Fonterra's dairy auction results continue to lift the sentiment around the Kiwi. The Global Dairy Trade (GDT) Price index posted a sharp 10.9% gain early on Wednesday in New Zealand when compared with the previous price at Fonterra's auction early on August 18.

Asian indices are trading mostly mixed on Wednesday, paring losses and attempting tepid recovery after the recent slump. The Hong Kong's benchmark Hang Seng index trades muted at 21771 while mainland China's benchmark Shanghai Composite turned positive, up 0.31% at 3176.
Among other Asian indices, the Japanese benchmark Nikkei 225 gains the most, up 1.10% at 18365 on weaker yen. While the benchmark Australian S&P/ASX 200 struggling to fight back losses around 5080.

Heading into Europe - centered on EUR, GBP

After a data-busy Wednesday for the EUR, GBP traders, Thursday appears fairly quiet with only the UK construction PMI to be published at 8.30GMT.

The UK will report on its construction sector with the figure expected to stay well in expansion at 57.5, better than the previous 57.1 result.

Looking towards the New York session, it’s all about the US economic news with ADP employment change the main highlight tonight. As usual, the ADP will provide an early look at hiring trends that will shape expectations going into the official release (204k exp vs. 185k prev).

The factory orders data, which has done a solid job in predicting the economic trends over the past couple of decades, will add more color to the economic picture (0.8% exp vs. 1.8% prev).

EUR/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet explained, “the EUR/USD pair traded higher in range, having reached 1.1331 with the European opening, and finding intraday buying interest on a dip to 1.1232, the US session low. The pair remains quite choppy ahead of the ECB meeting and the US Payrolls release later on this week, with little room for strong directional moves.”

“Short term, a mild positive tone prevails as the 20 SMA heads lower below the current price, whilst the pair holds above 1.1280, the 61.8% retracement of its latest bullish run. In the 4 hours chart, the upside is also favored, with the indicators heading north around their mid-lines, and the 20 SMA providing support around the mentioned session low.”

NZD/USD: Bulls tighten grip, in another run towards 0.7400?

NZD/USD keeps its upbeat momentum intact during the mid-Asian session, although extends its overnight side-trend as markets continue to digest the recent the Fonterra’s GDT price index released on Tuesday.
Đọc thêm Previous

Japanese inflation expectations falling further - Nomura

Fxstreet (Delhi) – Yujiro Goto – Niplc, Research Analyst at Nomura notes that the Japanese inflation expectation amongst the bond investors is declining continuously and the decline shows the continued difficulty of BOJ in lifting inflation expectations to 2%.
Đọc thêm Next