Asia Recap: AUD hammered on Aus jobs, Greek-EU debt talks inconclusive
12 February 2015, 05:58
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The Australian Dollar was the main laggard in Asian hours, in response to a dismal Australian jobs report, with the Euro also the protagonist, seesawing to both sides of the chart on inconclusive Greek-EU debt talks, only to finish almost unchanged for the session.
AUD/USD suffered yet another impulsive selling stampede after a much-worse-than-expected Aus employment report, with full time job creation collapsing in January, which was partly offset by part-time hiring. The jobless rate also increased to 6.4% in January vs 6.2% in December, with participation rate unchanged at 64.8%. The pair printed its lowest at 0.7640, just short of its bear trend low. The OIS market is now pricing 32% chance of at least 2 more RBA rate cuts by May. The Australian Bureau of Statistics released a statement noting that statistical volatility may have contributed to the increase in unemployment today, not providing any comfort.
NZD/USD was also weaker, with a combo of negative headlines weighing on the Kiwi's allure. First, the BNZ-BusinessNZ PMI declined by 6.2 points in January to 50.9 vs 57.7 the prior month, a reading that represented the lowest level since December 2012. Second, a drought crisis was declared in large parts of NZ, Minister for Primary Industries Nathan Guy announced. It is thought that the drought could affect quite negatively this year's NZ GDP data. Macro, smart money would probably have a rethink towards NZD near term. Despite RBNZ is neutral, with inflation running low, economic evidence to keep that line of thinking might no longer be as supportive.
USD/JPY found a barrier too hard to crack at 120.50, with the pair retreating back towards 120.00 before a 35/40 pips bounce, settling the rate comfortably above 120.00 ahead of today's US retail sales, which should create further volatility in the pair. For now, the bulls are in full control, having recently regained the topside of its daily ichimoku cloud, while rising 10yr US bond yields acts as another driver supporting the upward tendencies in the pair this week. The Nikkei 225 rose by 1.8% ahead of the close, tracking the improved risk sentiment as the European Union and Greece appear to be making progress on a new funding agreement.
EUR/USD managed to trip stops above 1.1340 in early Asia, as market priced in a satisfactory resolution from Tuesday's night Greek-Eurogroup debt negotiations, with CNBC being the first to break the news that Greece had reached deal on "principle", with discussions set to continue into Monday. Eurogroup's Dijsselbloem, briefed the press later on, noting that while they made progress with Greece, this was not enough to come to joint conclusions, adding that "I have no real conclusions to share, we will continue talks on Monday. Dijsselbloem also said that "its not about wording but about the amount of progress, not enough."
GBP/USD was weak throughout Asia, with the market likely to stabilize ahead of the key support at 1.52 ahead of the BoE inflation report. The Investec Team notes, ahead of the risk event: "Although subject to varied interpretation, interest rate markets point to the first interest rate hike in the UK being priced in for Q2 2016, with a second priced in Q4 2016. Part of this expectation has likely been skewed by ‘safe haven’ flows, with many countries charging negative yields on deposits and investors looking for safe places to invest, particularly in light of recent Greek events. Therefore, if the MPC continue to hold the line that medium term inflation goals remain on target, the market could find itself scrambling to adjust expectations more in-line with the Investec Economics team, that are currently looking for a November 2015 first rate rise."
Main headlines in Asia
BNZ-BusinessNZ PMI prints lowest since Dec 2012
RBA Debelle: Speech on FX benchmarks, no market moving
NZ GDP likely to take a hit due to drought crisis
Eurogroup's Dijsselbloem: No real conclusions to share, talks to continue
Greece's Varoufakis: Hope negotiations can end on Monday
Japan Domestic Corporate Goods Price Index (MoM) below expectations (-0.6%) in January: Actual (-1.3%)
Japan Machinery Orders (YoY) came in at 11.4%, above forecasts (5.9%) in December
Japan Machinery Orders (MoM) came in at 8.3%, above forecasts (2.4%) in December
Japan Domestic Corporate Goods Price Index (YoY) came in at 0.3% below forecasts (1.1%) in January
Australia Consumer Inflation Expectation rose from previous 3.2% to 4% in February
United Kingdom RICS Housing Price Balance registered at 7%, below expectations (12%) in January
US army to train Ukrainian troops from March
Australian labour market worsens significantly in January
ABS: Statistical volatility may have contributed to increase in unemployment
AUD/USD suffered yet another impulsive selling stampede after a much-worse-than-expected Aus employment report, with full time job creation collapsing in January, which was partly offset by part-time hiring. The jobless rate also increased to 6.4% in January vs 6.2% in December, with participation rate unchanged at 64.8%. The pair printed its lowest at 0.7640, just short of its bear trend low. The OIS market is now pricing 32% chance of at least 2 more RBA rate cuts by May. The Australian Bureau of Statistics released a statement noting that statistical volatility may have contributed to the increase in unemployment today, not providing any comfort.
NZD/USD was also weaker, with a combo of negative headlines weighing on the Kiwi's allure. First, the BNZ-BusinessNZ PMI declined by 6.2 points in January to 50.9 vs 57.7 the prior month, a reading that represented the lowest level since December 2012. Second, a drought crisis was declared in large parts of NZ, Minister for Primary Industries Nathan Guy announced. It is thought that the drought could affect quite negatively this year's NZ GDP data. Macro, smart money would probably have a rethink towards NZD near term. Despite RBNZ is neutral, with inflation running low, economic evidence to keep that line of thinking might no longer be as supportive.
USD/JPY found a barrier too hard to crack at 120.50, with the pair retreating back towards 120.00 before a 35/40 pips bounce, settling the rate comfortably above 120.00 ahead of today's US retail sales, which should create further volatility in the pair. For now, the bulls are in full control, having recently regained the topside of its daily ichimoku cloud, while rising 10yr US bond yields acts as another driver supporting the upward tendencies in the pair this week. The Nikkei 225 rose by 1.8% ahead of the close, tracking the improved risk sentiment as the European Union and Greece appear to be making progress on a new funding agreement.
EUR/USD managed to trip stops above 1.1340 in early Asia, as market priced in a satisfactory resolution from Tuesday's night Greek-Eurogroup debt negotiations, with CNBC being the first to break the news that Greece had reached deal on "principle", with discussions set to continue into Monday. Eurogroup's Dijsselbloem, briefed the press later on, noting that while they made progress with Greece, this was not enough to come to joint conclusions, adding that "I have no real conclusions to share, we will continue talks on Monday. Dijsselbloem also said that "its not about wording but about the amount of progress, not enough."
GBP/USD was weak throughout Asia, with the market likely to stabilize ahead of the key support at 1.52 ahead of the BoE inflation report. The Investec Team notes, ahead of the risk event: "Although subject to varied interpretation, interest rate markets point to the first interest rate hike in the UK being priced in for Q2 2016, with a second priced in Q4 2016. Part of this expectation has likely been skewed by ‘safe haven’ flows, with many countries charging negative yields on deposits and investors looking for safe places to invest, particularly in light of recent Greek events. Therefore, if the MPC continue to hold the line that medium term inflation goals remain on target, the market could find itself scrambling to adjust expectations more in-line with the Investec Economics team, that are currently looking for a November 2015 first rate rise."
Main headlines in Asia
BNZ-BusinessNZ PMI prints lowest since Dec 2012
RBA Debelle: Speech on FX benchmarks, no market moving
NZ GDP likely to take a hit due to drought crisis
Eurogroup's Dijsselbloem: No real conclusions to share, talks to continue
Greece's Varoufakis: Hope negotiations can end on Monday
Japan Domestic Corporate Goods Price Index (MoM) below expectations (-0.6%) in January: Actual (-1.3%)
Japan Machinery Orders (YoY) came in at 11.4%, above forecasts (5.9%) in December
Japan Machinery Orders (MoM) came in at 8.3%, above forecasts (2.4%) in December
Japan Domestic Corporate Goods Price Index (YoY) came in at 0.3% below forecasts (1.1%) in January
Australia Consumer Inflation Expectation rose from previous 3.2% to 4% in February
United Kingdom RICS Housing Price Balance registered at 7%, below expectations (12%) in January
US army to train Ukrainian troops from March
Australian labour market worsens significantly in January
ABS: Statistical volatility may have contributed to increase in unemployment
