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Australian dollar skids as rate speculations escalate
The Australian dollar tumbled Monday as expectations of a US interest rate hike strengthened. Bets for a September and October rate hike soared after remarks from Federal Open Market Committee members last week. The Aussie stood at 64.12 euro cents from Friday's 63.61 euro cents, and 71.64 US cents from 71.67 US cents. On Tuesday, the Reserve Bank of Australia will unveil its decision on rate and its remarks about China's outlook.
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Fxwirepro: Buy Usd/jpy at Dips Around 120.95-121 With Sl Around 120.50 for the Tp of 121.75/122
USD/JPY has made a low of 120.64 and recovered till 121.72. It is currently trading at 121.07. Overall trend is weak as long as support 120.50 holds. On the downside any break below 120.50 confirms further weakness , a decline till 120/119.70 cannot be ruled out . The pair's minor resistance is around 121.20 and any break above targets 121.75/122.35. It is good to buy at dips around 120.95-121 with SL around 120.50 for the TP of 121.75/122
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Australian dollar tumbles despite higher crude prices
The Australian dollar dropped Monday although US crude oil ended almost 9% higher on lower domestic production estimate. US crude oil futures settled at $49.20 a barrel. The Aussie stood at 63.48 euro cents from Friday's 63.62 euro cents, and 71.17 US cents from 71.42 US cents.
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Canadian dollar wipes out advances as oil prices slide
The Canadian dollar erased earlier gains Tuesday as crude prices slumped on worries about how the degenerating growth in China can affect the global economy. That made the oil price lose 8%. Prices had surged almost 25% over three sessions. The loonie stood at 75.63 US cents from Monday's 76.01 US cents. No one places much confidence on oil prices. It remains noisy “and ther's still a lot of volatility,” said Amo Sahota, Director at Klarity FX. The currency jumped earlier as the Canadian economy constricted by 0.5% in the second quarter
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US dollar leaps on volatile stock markets
The US dollar bounced Thursday as global investors scaled back on riskier equities, aggravated by China's devitalizing economy and its volatile stock markets. China's degenerating economy and woes about global growth pressed investors to cut bets in the euro and the Japanese yen. The greenback finished at $1.1210 per euro. Versus the Japanese yen, the dollar closed at ¥120.655. We believe additional easing is possible before the year ends. Such message should uphold sentiment, “which so far has been a drag on risky assets,” said strategists at Barclays. With Chi's markets shut for a national holiday, investors will now focus on the European Central Bank policy meeting today.
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Euro declines following ECB dovish stance
The euro held losses Friday after the European Central Bank retained its asset purchase program and implied the likelihood of prolonging the program. ECB President Mario Draghi said the central bank's bond-buying program may run beyond September 2016, and its extent and composition may be changed. Against the US dollar and the Japanese yen, the common currency closed at $1.1122 and ¥133.13. The stipulation the ECB's asset purchase program may be extended beyond September next year is escalating, “which should continue to weigh on euro and eurozone short-term swap rates,” said Elias Haddad, Senior Currency Strategist at Commonwealth Bank. The central bank cautioned growth would suffer from devitalizing momentum in emerging markets, specifically China and slumping oil prices could pull eurozone back into deflation in the next month
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Moody's: Taiwanese Banks Resilient to Economic Slowdown
Moody's Investors Service says its stable outlook for Taiwan's banking system reflects its expectation that rated banks in Taiwan will maintain their steady credit profiles, despite an economic slowdown, and that they will continue to benefit from strong government support. "Although weak external conditions are leading to slower growth in industrial production and exports, the impact on Taiwanese banks' asset quality should be buffered by low interest rates and healthy corporate balance sheets," says Sonny Hsu, a Moody's Vice President and Senior Analyst. "We expect Taiwanese banks to report stable profitability over our outlook horizon, as higher margins from overseas lending will be partially offset by higher credit charges due to tightening regulatory provisioning requirements and slower economic growth," adds Hsu. Moody's analysis is contained in its just-published report "Banking System Outlook: Taiwan," which provides an overview of credit trends affecting the banking system in the next 12-18 months. Moody's baseline scenario assumes a material slowdown in Taiwan's real GDP growth to 1.5% in 2015 and 2.0% in 2016, from 3.8% in 2014, with weak exports being a key driver. This slowdown, coupled with low expected inflationary pressure, will argue for the central bank's monetary policy to stay accommodative for an extended period, even when the US Federal Reserve begins hiking interest rates. "While the more challenging operating environment will pressure banks' asset quality metrics, we expect the resultant impact to be mitigated by sound corporate financials, continued low interest rates, and a resilient labor market," says Hsu. Moody's report highlights that Taiwan's economic and financial linkages with China (Aa3 stable) are growing, with banks' total Mainland China exposures rising to 62% of total shareholder equity as of end-June 2015, from 50% as of end-September 2013. The banks' rising Mainland China lending will expose them to risks associated with the Chinese economy, including the current economic slowdown and the country's ongoing economic rebalancing. Nevertheless, regulatory caps on banks' Mainland China exposures to 100% of banks' common shareholders' equity limit the extent of such exposures. Meanwhile, Taiwanese banks will likely strengthen their capitalization as they raise fresh equity and maintain modest overall asset growth, although capitalization remains weak relative to regional peers. Some banks will face increasing capital pressure if their expansion, mostly overseas, continues to outpace that of their local peers. Moody's also expects the government's willingness and capacity to provide support in a stress situation to remain strong. The government has made no effort to introduce a statutory bank resolution regime that entails imposition of losses on creditors on a going-concern basis if a bank becomes non-viability. The stable outlook on Taiwan's banking system is consistent with the stable outlooks for seven out of 10 Moody's-rated banks in Taiwan. The system's asset-weighted average long-term bank deposit rating is A1, while the asset-weighted average standalone baseline credit assessment is baa2. The stable outlook is also consistent with Moody's outlook on Taiwan's Aa3 government bond rating.
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Moody's Lowers Asia Growth Forecasts on Slowing Exports, subdued Domestic Demand
Moody's Investors Service has adjusted downwards its GDP growth forecasts for many Asia Pacific (APAC) sovereigns, noting that subdued global growth, exacerbated by weaker demand from China, leads APAC growth lower. Nevertheless, APAC sovereign credit profiles are resilient to lower growth, because most other APAC sovereign credit indicators, such as government debt and balance of payments ratios, remain in line with Moody's assumptions, and within the range for each sovereign's peer group. Moody's conclusions are contained in its just-released report titled "Asia Pacific Sovereigns: Credit Profiles Resilient to Slowing Exports, Subdued Domestic Demand". The report describes the adjustments to each rated Asian sovereign's growth forecast, as well as the reasons behind Moody's lower growth expectations. It highlights that weak demand from China (Aa3 stable) has dampened the overall export outlook for the region, while softer commodity prices weigh on some sovereigns' export revenues, growth and fiscal balances. Moody's report says that domestic demand in most APAC countries is unlikely to offset the effect of slower global growth, partly because an anticipated investment boost from government infrastructure spending has not materialized in some cases. In addition, households are saving more of their income gains from lower energy costs than previously expected, despite monetary easing by central banks in the region. Market volatility and political risk are also weighing on confidence. Nonetheless, Moody's sees most APAC sovereign credit profiles as resilient to the ongoing slowdown in global growth. The report points out that growth in Asia is slowing from high levels, and is on average still stronger than most other regions. The risk of deflation at this point is minimal, while lower oil prices have supported current account and fiscal positions in many Asian countries; offsetting the risks from slower growth and external financial volatility. In addition, government debt-to-GDP levels are largely moderate in much of Asia -- except in India (Baa3 positive), Japan (A1 stable), Pakistan (B3 stable) and Sri Lanka (B1 stable) -- offering some space for fiscal stimulus. On capital account volatility, Moody's expects that the pressures on exchange rates and reserves in many Asian countries will continue, as international markets respond to slower emerging market growth, and potential US Federal Reserve action. Nevertheless, the negative sovereign credit implications of such pressures are limited by currency flexibility, and reserve levels that are significantly higher in Asia than during the late nineties.
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US dollar dives as Asian equities falter
The US dollar declined Tuesday as Asian equities waddled, favoring safe-haven assets including the Japanese yen. The Nikkei slid 1.7%, as Shanghai stocks dropped on weak Chinese import data. Trading was also subdued as US markets are shut for Labor Day holiday. The greenback stood at $1.1190 per euro and $1.5298 per British pound. Against the Japanese yen, the currency closed at ¥119.00. Looking at the USD/JPY, the pair has been affected by equities, specifically “the impact of Chinese shares on Japanese stocks" said Koji Fukaya, President at FPG Securities.
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Yen Little Changed After Japan Consumer Confidence Indexl
The Cabinet office released the Japan consumer confidence index for August at 1:00 am ET Wednesday. After the data, the yen changed little against its major rivals. As of 1:01 am ET, the yen was trading at 134.28 against the euro, 185.00 against the pound, 122.67 against the Swiss franc and 120.25 against the U.S. dollar.
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