Friday, October 23, 2015

Asia risk-on at full steam on ECB hints, EZ final PMIs eyed

FXStreet (Mumbai) - Risk-on sentiment was the main theme in the Asian session after ECB Draghi’s strong indications of QE reassessment in Dec spurred risk-on rally in global equities. Markets witnessed erratic moves in the majors in early Asia while the Antipodeans were strongly bids on the back of rising demand for risker currencies.

Key headlines in Asia

Flash Japan Manufacturing PMI: Highest since March 2014

Changes to NAB’s variable home loan interest rates - media release

ANZ lifts standard variable mortgage rate by 0.18%

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

The USD bulls took a breather in its upsurge and retreated across the board in Asia, following the dovish ECB Chief Draghi’s comments spurred massive sell-off in the EUR/USD. Despite, a broadly weaker US dollar, the dollar-yen pair witnessed a spike to 121 handle in early trades and now trades near lows around 120.60 region. The yen jumped back into the bids versus the greenback after Japan’s flash manufacturing PMI gauge hit a 1.5 year high. While traders resorted to profit-taking after the major failed to surpass 121 barrier.

The Antipodean currencies benefited the most from the risk-on rally in equities and also amid rising appetite for higher yielding currencies. The Aussie shrugged-off RBA rate cut chatter amid mortgage rate hikes by top Australian banks, including the CBA, NAB and ANZ. AUD/USD advances 0.62% to 0.7252. While the Kiwi keeps the red near 0.6750. While markets are almost pricing-out a RBNZ rate cut next week, which bolstered the NZD bulls, driving NZD/USD towards 0.6850.

Meanwhile the Asian indices tracked the Wall Street sharply higher and extend further, with the Nikkei leading its Asian counterparts higher. The Japanese benchmark rallies 2.20% to 18,844. Australia’s S&P ASX index jumps 1.60% to 5,350. While the Shanghai Composite index trades marginally higher at 3,369. Hong Kong’s Hang Seng rallies -0.37% to 23,156.

Heading into Europe & the North America

After the ECB-led storm on Thursday, markets look forwards to a series of final manufacturing PMIs from the Euro area economies, with the German and Euro zone closely eyed.

Germany’s flash manufacturing PMI in September is expected to decline to 51.9 points compared to 52.3 recorded in September, while the index for the services sector is projected to show a small downtick to 54.0 from 54.1 recorded in August.

While the EU flash manufacturing PMI is expected to drop to 51.8 for September, lower than the 52.0 booked in Agust. The EU's services sector is expected to show a decrease to 53.5 from 53.7 reported previously.

Looking ahead, nothing relevant is lined up for release from the US calendar except for the US flash manufacturing PMI. While Canadian CPI and core CPI figures will fill in an otherwise data-deficient North American session.

EUR/USD Technicals

The research team at AceTrader, “The single currency's selloff yesterday to 1.1114 on dovish comments from ECB President Mario Draghi, then lower to 1.1071 ahead of Asian open today signals the erratic decline from August's high at 1.1715 has once again resumed and consolidation with downside bias would be seen for further weakness towards 1.1040/50. However, oversold condition would keep price above daily support at 1.1018 and yield a much-needed recovery early next week. On the upside, only above 1.1296 would be the 1st signal that a temporary low has been made and yield stronger retracement towards 1.1319/20.”
For more information, read our latest forex news.

No comments:

Post a Comment