Daily Market Analysis by FXNET - page 4
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Risk Aversion and Profit-Taking LIFT the Japanese Yen - FxNet Market Overview
The currency markets have been gripped by risk aversion into the New Year, and we are seeing a big reversal in especially in dollar/yen and euro/dollar pairs.
Investors favored covering yen shorts, giving the Japanese currency a 0.5% gains versus the greenback today.
Profit-taking saw the USDJPY pair being unwound after being taken to fresh five-year highs of 104.43 at the open of the first trading day of 2014. The pair took a sharp tumble since yesterday to as low as 104.06, which is currently holding as a key support area.
The yen also made gains against the euro. EURJPY retreated 0.66% to 142.31, moving further away from a 5-year peak.
Negative market sentiment is also being weighed down by soft Chinese data against today. The non-manufacturing (services sector) PMI slipped to a 4-month low in December to 54.6 from 56.0 in November.
The euro bears gained traction and kept EURUSD weak after yesterday’s tumble. The pair opened the Asian session today at $1.3670 after selling off during the US session. Euro is poised for a 0.7% decline on the week.
The pound fell steadily to lows near $1.6410 today. Yesterday, the pound was trading at $1.6565 when weaker than expected UK manufacturing PMI data was released and hurt the currency.
AUDUSD traded down to 0.8886 after China services PMI came in lower than last month but aussie managed to bounce back.
USD/JPY slips as Nikkei falls in risk-off market after disappointing China PMI data
The first full trading week of 2014 began today, with Japan opening for the first time after a two-week holiday.The Nikkei traded down in a risk-off environment as yen was lifted by safe-haven demand. Disappointing China services PMI data weighed on investor sentiment. The world’s second largest economy showed signs of sluggishness after the HSBC/ Markit PMI for the service sector recorded the weakest level in over two years.While still in the expansionary zone (above 50 points), the services PMI slipped to 50.9 in December, the weakest since August 2011, compared to a previous 52.5.As a result, the USDJPY pair was heavy, plunging from a high of 104.95 to lows of 104.15 yen, losing half a percent in the Asian session. The main driver for the dollar this week will be Friday’s US jobs data (nonfarm payrolls).The euro was also affected, with EURJPY being sold off to 142.65 from 141.50 yen.Meanwhile, the EURUSD was pinned down against the US dollar, although little changed in the session, edging slightly lower to $1.3570. Key data for the euro later today will be services PMI data from the Euro zone.Aussie was weak on the back of the soft China PMI data, since China is a major export destination for Australia. AUDUSD traded between $0.8942 and $0.8982.
Aussie declines despite shrinking Australian trade deficit - Market Overview by FXNET
The Asian session was calm as the economic calendar was light and most investors were positioning ahead of key risk events later this week, primarily the US nonfarm payrolls report on Friday.
Meanwhile, there was some recovery in the US dollar today following disappointing US data from late on Monday. The Institute for Supply Management said its services index dropped to 53% in December from 53.9% in November.
USDJPY opened in Asia at 104.22 after a volatile US session that brought the pair down to 103.90. The pair ended up at 104.42 with a 0.20% gain.
EURUSD opened Asia at 1.3628 and ended at 1.3617. Yesterday the euro was lifted by better - than -expected Eurozone sentiment data which contrasted with soft US ISM non-manufacturing data. A key driver today for the euro will be Eurozone CPI data.
The euro edged up against the yen, with EURJPY finishing at 142.18, rebounding from Monday’s low of 141.48 but far below a 5-year high of 145.65 set in December.
The aussie dollar fell despite news showing the Australian trade deficit was smaller- than-expected deficit in November. The Australian dollar eased down almost half a percent to 0.8919.
In other news, the US Senate confirmed Janet Yellen to be the next Chairperson of the Federal Reserve during a vote on Monday and will be replacing outgoing Ben Bernanke in February.
Asian Session - Dollar regains some losses against yen
The US dollar rebounded against the yen to recover some losses made after a huge tumble following disappointing US nonfarm payrolls data on Friday.
The data raised concern about the health of the US economy and led to speculation that a Fed rate hike may be further delayed.
The weaker jobs number caused a sell-off in the dollar and investors were forced to unwind stretched short positions on the yen. This gave the Japanese currency a bit of a breather from recent weakening.
UDJPY climbed up to 103.48 yen in the Asian session, up 0.5 percent to recover some losses after its big drop on Monday, when the pair fell over 1 percent to a one-month low.
A trade report from Japan today showed that country’s current account recorded a larger deficit in November, weighing further on Japan’s balance of payments. This will dent sentiment on the yen.
In other currencies, the euro remained steady against the dollar, close to Friday’s highs when it rallied on the back of the US jobs report. EURUSD traded at $1.3666, off a one-month low of $1.3548 hit on Thursday.
The pound remains weak after falling on Monday against the dollar. Key risk for the sterling will be UK inflation data due later today. GBPUSD ended in Asia at $1.6387, rebounding slightly from yesterday’s low of $1.6346.
The Australian dollar, which has benefited from weakness in its US counterpart and hit a one-month high on Monday, has since retreated, down to $0.9034. AUDUSD is down 0.2percent from Monday’s high of $0.9087.
Key data to watch for in the European session will be UK CPI and Euro zone industrial production data. During the US session, US retail sales data are scheduled for release.
Market report By Fxnet 15 Jan
Asian Session – Dollar broadly stronger after US retail sales
The dollar resumed strength after solid US retail sales data from Tuesday and managed to regain ground against the majors. Also buoying the greenback were hawkish comments from two Federal Reserve policymakers (Richard Fisher and Charles Plosser ) who signaled they are in favour of tapering and ending the Fed’s current bond buying program.
Plosser even downplayed the weak December US jobs report released on Friday.
As a result of investors’ expectations of a rate hike now being brought forward, this helped lift the dollar higher against most of its major counterparts.
December US retail sales edged up in December with a core spending index posting a big increase, a sign the US economy gathered steam at the end of last year and was poised for stronger growth in 2014.
The dollar built on Tuesday’s recovery against the yen, with USDJPY rising to highs of 104.46 in the Asian session. Yesterday the dollar rallied more than 1% against the yen to pull away from a near one-month low of 102.85 yen.
The Australian dollar was a currency that stood out as it slid nearly 1% to $0.8910, reversing a move towards $0.9100 cents early in the week.
The euro lost gains made from a rally yesterday against the dollar that was inspired by ECB Nowotny’s upbeat comments about the Eurozone growth outlook.
The EURUSD retreated from a two-week high just shy of $1.3700 hit on Tuesday to trade at $1.3626, down 0.3% from late US session levels.
The euro stayed close to yesterday’s high when EURJPY rose to 142.61 yen, slipping slightly to 142.37.
Sterling fell back moderately in line with broad dollar strength, with GBPUSD slipping from $1.6443 to $1.6412.
Market Report 16 Jan
Asian Session - Aussie suffers big losses jobs data
The Australian dollar suffered heavy losses in the wake of the release of the December employment report. Jobs in Australia decreased by 22,600 last month, following November’s revised 15,400 gain, according to the country’s statistics bureau. This was a huge miss compared with a 10,000 increase predicted by economists. The unemployment rate remained at 5.8 percent.
AUDUSD tumbled over 100 pips after the data, falling to a low of $0.8794 from a pre-data level of $0.8903. On Monday the aussie hit a one-month high of $0.9085.
The US dollar continued to be the best performer as growing consensus in markets is that the Federal Reserve will continue with tapering on speculation the US economic recovery is strong enough.
Lending support to the dollar is stronger than expected manufacturing and PPI data and an upbeat Empire State manufacturing index from Tuesday.
The dollar rose for a third day against the yen, its longest advance this month, reaching a high of 104.91.
Initial jobless claims data in the US will be released today and will be the next risk event for the dollar. The figure for claims the previous week (period ending January 11) is forecast to fall by 328,000, which would be the fewest since November. The prior number was 330,000.
EURUSD opened in Asia at $1.3602 after trading as low as $1.3581 yesterday. The pair rose to $1.3627.
EURJPY rose in tandem with USDJPY, up from 142.23 early to highs of 142.90 yen.
GBPUSD trading was more muted however, as the pair traded a range between $1.6345 and $1.6373.
In the upcoming European session, a key risk event for the euro will be Eurozone inflation data (CPI).
Market Report 17-01-2014
Asian Session - Tight ranges as mixed data keep markets subdued
There was limited movement during the Asian session as markets took on a risk-off tone, and major currency pairs merely consolidated prior moves. Mixed US data has resulted in a mixed dollar.
Soft US inflation data and disappointing US corporate results dampened investor sentiment, although an upbeat Philly Fed Manufacturing Index released on Thursday helped keep the US dollar steady. Also initial jobless claims beat economists’ forecasts, and this kept the Fed taper expectations alive.
USDJPY saw consolidation in Asia after a big reversal yesterday to lows of 104.15 yen. The pair was capped below 104.40 in Asia, trading a tight 20-pip range.
Other yen crosses were mostly range-bound too as risk aversion led to some yen strength due to safe haven flows into the Japanese currency.
EURJPY traded a tight 141.85-142.15 range around 142.00. AUDJPY consolidated losses following the plunge to 91.62 yesterday and traded between 91.75-92.10. GBPJPY traded between 170.11-69.
The euro is under pressure on deflation fears after not so spectacular Euro Zone inflation data yesterday. CPI came in at 0.8% m/m as expected while the core figure actually came in lower than expected at 0.7% versus 0.9% forecast.
EURUSD opened in Asia at $1.3618 and could only manage a $1.3610-20 range.
Sterling remains weak, with GBPUSD trading within a range all week, with support at $1.6313 and resistance at $1.6382. Key risk for the pound will be UK retail sales data due later today.
AUDUSD opened in Asia at $0.8820 and consolidated losses after a huge plunge to a 3-1/2 year low yesterday on the back of dismal Australian jobs data. Speculation is now growing that the Reserve Bank of Australia could cut interest rates.
Market Report 20-01-2014
Asian Session - Yen bounces against US dollar
The yen recovered some losses against the US dollar during Asian trading hours. The Bank of Japan policy meeting will be a key risk event for the yen. Speculation that the central bank may hold off more easing is helping the currency rise against all its major peers today, while a decline in Asian stocks boosted its allure as a haven.
USDJPY saw weakness early in the session, dipping down to just below the key 104.00 yen level before moving back up to 104.15. EURJPY fell from 141.11 to 140.33 before bouncing to around 140.60.
The dollar however made gains versus the euro, reaching its strongest level since November. Lending support to the dollar is the fact that many expect the Federal Reserve to continue with tapering.
EURUSD drifted off early in Tokyo, but then there were small moves, as is often the case in this timezone. After a brief drop to 1.3506, the pair steadied above 1.3525.
The pound edged slightly lower against the dollar but remained buoyed following a good UK retail sales report on Friday. GBPUSD opened in Asia at 1.6416 and headed higher at the end of the session towards 1.6430.
AUDUSD opened in Asia at 0.8780 and traded heavy but sideways between 0.8756-80 initially. The relatively good China GDP data for the fourth quarter managed to give a leg up for the aussie, which rose to 0.8805. China is a major trading partner for Australia so any Chinese data are important for the AUD.
Today is a public holiday in the United States, so trading in USD especially in the US session will be quiet.
Market Report 21-01-2014
Asian Session – USDJPY bounces on broad yen weakness
The US holiday on Monday and limited data releases kept volumes thin even in the Asian session. Most major currency pairs lacked clear direction although the yen pairs made some recovery in Asia this morning.
USDJPY rebounded to 104.68 in Asia from the US session low of 103.90. The US dollar is expected to improve as expectations grow for more Fed tapering and a more solid US economic recovery. Meanwhile a rising Tokyo Nikkei led to less flows into the yen.
Other yen crosses were bid, with EURJPY up from 141.07 to 141.823 and GBPJPY from 170.97 to 171.95.
EURUSD opened in Asia at 1.3550 after a very quiet North American session due to the US public holiday. The pair moved further off 2-month lows to a session high of 1.3560. This level proved to be strong resistance and due to the broadly stronger dollar, the euro was pressured down to the lower 1.3540s.
GBPUSD did not take any clear direction in Asia, continuing to trade sideways since it surged on strong UK retail sales data on Friday. Cable traded a range of 1.6410 and 1.6434.
AUDUSD edged slightly higher 0.8836, making a recovery from Monday’s more than 3-year low of 0.8755.
Looking ahead to the European session, German data will be in focus and could impact the euro. January’s ZEW economic sentiment index will be released, with a forecast of 64.0, compared to a previous 62.0.