Friday, October 16, 2015

Aussie smashed on RBA rate cut chatter, EZ final CPI – Up next

FXStreet (Mumbai) - The USD/JPY pair staged a solid recovery in Asia, with the risk-on trades offering further support to the USD bulls. While the Antipodes were unperturbed by improving risk-appetite as the Aussie fell sharply lower on increased RBA rate cut bets next month and the Kiwi also keeps losses weighed by poor CPI figures.

Key headlines in Asia

RBA Financial Stability Report: Lending standards tighter

Fed's Mester: Time to move off zero rates

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

Broad based US dollar strength, backed by the recent impressive set of US macro releases and increased demand for risk assets, was the main factor driving Asia-pac currencies this session. While the persisting risk-on sentiment also triggered renewed rally in the Asian equities, tracking the strong performance on the US markets overnight.

As a result, the USD/JPY pair found renewed strength and recovered over 1 big figure from previous lows. The US CPI dropped 0.2% m/m in Sept, matching forecasts while the core CPI accelerated to 1.9% in September, outpacing the 1.8% gain expected. The upbeat price pressures print along with solid jobless claims (lowest since 1973) brought a halt to the recent series of poor US fundamentals and refuelled 2015 Fed rate hike talks.

However, the OZ currencies failed to benefit from the improving risk-on moods and traded with sizeable losses, with the Aussie emerging the biggest loser. Markets dumped the Australian dollar after the recent poor jobs report increased speculations of a rate cut by RBA as early as next month. While the Kiwi also followed suit and remain unperturbed by above estimates NZ CPI figures. The NZ CPI was up 0.3% in the September quarter, coming in slightly higher than the 0.2% rise forecast by markets.

Meanwhile the Asian indices extend the risk-on rally, with the Nikkei rallying nearly 1% to 18,287. Australia’s S&P ASX index gains 0.81% to 5,272. While the Shanghai Composite index gains 0.31% to 3,348. Hong Kong’s Hang Seng gains 0.58% to 23,021.

Heading into Europe & the US

Nothing relevant in terms of economic news is due on the cards in the upcoming European session, except for the final CPI data from the Euro zone.

The euro zone inflation is expected to show a 0.1% decrease y/y. In August, consumer price growth in the euro zone reached a 0.1% annually. Prices in the 19-nations bloc are projected to add 0.2% on a monthly basis, following a flat result in August.

Besides, ECB Executive board member Benoit Cœuré will speak at an interparliamentary conference entitled Towards a Progressive Europe" organized by German social democratic MPs in Berlin.

While BOE MPC Member Forbes is due to speak at the Brighton Summit.

Moving on, the North American session has plenty of risk events to be reported from the US as well from Canada. The crucial manufacturing sales figures from Canada will be published followed by a series of US data flow, including the key – prelim consumer sentiment and industrial figures.

EUR/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet explained, “Technically, the 1 hour chart shows that the price is now below the 20 and 100 SMAs, whilst the technical indicators are barely bouncing from oversold levels, maintaining the risk towards the downside. In the 4 hours chart, however, and despite the price is below its 20 SMA, the pair presents a limited downward potential, given that the technical indicators have turned flat around their mid-lines after correcting extreme overbought readings.”
For more information, read our latest forex news.

No comments:

Post a Comment