Back
26 Feb 2015
What's next: German jobs in focus, Aud suffers capex outlook
FXStreet (Bali) - Find below a comprehensive wrap-up of the latest headlines from Thursday in Asia, the main themes dominating FX trading during the Far-East session, and what to expect for the next European session.
Main headlines in Asia
NZ trade figures stronger than expectations - ANZ
Australia: Gloomy capex outlook going forward
Dominating themes from Thursday Asia - centered on JPY, AUD, NZD
The Australian Dollar was the weakest of the pack in Asia, after Australia's capex estimates came weak across the board, both past data and updated forecasts. AUD/USD traded down through 0.7840, an area of value for the market as per Feb 23 highs, with prices rotating afterwards, currently dealing at 0.7850/55.
According to ANZ: "The ongoing weakness in the capex outlook will provide further confirmation to the Bank that the economy needs further stimulus. We continue to expect another near term RBA rate cut, most probably at the March meeting."
NZD/USD has been trading on a very solid note, with a better-than-expected NZ trade balance, mainly on imports reduction, allowing the Kiwi to make a new 5-week high at 0.7570 amid broad-based USD weakness following Yellen's noncomittal policy stance this week. Note, the unchanged Fonterra forecast on milk payouts for 2015 saw no downside reaction on the Kiwi on Thursday NZ morning, yet another sign that sentiment in the market remains bullish, with buying dips the profitable strategies for the time being.
With regards to the Japanese Yen, the currency traded weaker after offers entered the market via the Tokyo fix at 00.50 GMT, although no follow through was seen, with the pair marginally breaking above yesterday's high at 119.06 - today's high at 119.08 - before a dry up in liquidity, resulting in a tight consolidation phase just under 119.00. A fresh 15-year highs in the Nikkei underpinned the pair. Besides, reports that another reflationist, read pro 'QQE', may soon be appointed to the BoJ’s Policy Board in June to replace 'QQE' dissenter Morimoto. should be seen as Yen negative.
Heading into Thursday Europe - centered on EUR, GBP
In today's European session, a very busy calendar awaits, with German Feb unemployment rate - market calling for unchanged 6.5% - and unemployment - expected to fall by around 10k - topping trader's interest. It will also be interesting to learn the new consumer/business confidence readings out of the Eurozone - due at 10 GMT - , especially after ECB's President Draghi said on Wednesday that he sees the first signs of confidence in the real economy.
Euro is presently trading within familiar levels, with bids still emerging below 1.13, while on the topside, 1.1450/1.15 remains the line in the sand drawn by the market. At present, there are two main lines of thinking; on one hand, the absence of Greek risk headlines could be interpreted as EUR/risk positive short term, while on the other hand, there is a perception that with Greece out of the spotlight near term, EUR could once again trade in line with its negative fundamental dynamics, hence bearish pressure building up. On this latter assumption though, an environment of USD strength would be necessary to see renewed downside potential one would suspect, not the case at present given Yellen's less hawkish-than-expected outcome this week.
In the UK, the second estimate of UK Q4 GDP will be released. According to Sean Callow, FX Strategist at Westpac, "a revision to the 0.5% headline is unlikely, but the breakdown will be watched." Looking at the Sterling, it continues to print new highs against the US Dollar, not seen since Jan 2 2015, with a text book ongoing bullish stepping formation exhibited ont he daily chart, which suggests that dip buying interest should remain quite strong. However, as a cautious note, one should be aware that the area GBP/USD is facing at present - 1.5550 up to 1.56 - is a major resistance, which could be seen as a value proposition to reinstate shorts by the mid term bears.
Main headlines in Asia
NZ trade figures stronger than expectations - ANZ
Australia: Gloomy capex outlook going forward
Dominating themes from Thursday Asia - centered on JPY, AUD, NZD
The Australian Dollar was the weakest of the pack in Asia, after Australia's capex estimates came weak across the board, both past data and updated forecasts. AUD/USD traded down through 0.7840, an area of value for the market as per Feb 23 highs, with prices rotating afterwards, currently dealing at 0.7850/55.
According to ANZ: "The ongoing weakness in the capex outlook will provide further confirmation to the Bank that the economy needs further stimulus. We continue to expect another near term RBA rate cut, most probably at the March meeting."
NZD/USD has been trading on a very solid note, with a better-than-expected NZ trade balance, mainly on imports reduction, allowing the Kiwi to make a new 5-week high at 0.7570 amid broad-based USD weakness following Yellen's noncomittal policy stance this week. Note, the unchanged Fonterra forecast on milk payouts for 2015 saw no downside reaction on the Kiwi on Thursday NZ morning, yet another sign that sentiment in the market remains bullish, with buying dips the profitable strategies for the time being.
With regards to the Japanese Yen, the currency traded weaker after offers entered the market via the Tokyo fix at 00.50 GMT, although no follow through was seen, with the pair marginally breaking above yesterday's high at 119.06 - today's high at 119.08 - before a dry up in liquidity, resulting in a tight consolidation phase just under 119.00. A fresh 15-year highs in the Nikkei underpinned the pair. Besides, reports that another reflationist, read pro 'QQE', may soon be appointed to the BoJ’s Policy Board in June to replace 'QQE' dissenter Morimoto. should be seen as Yen negative.
Heading into Thursday Europe - centered on EUR, GBP
In today's European session, a very busy calendar awaits, with German Feb unemployment rate - market calling for unchanged 6.5% - and unemployment - expected to fall by around 10k - topping trader's interest. It will also be interesting to learn the new consumer/business confidence readings out of the Eurozone - due at 10 GMT - , especially after ECB's President Draghi said on Wednesday that he sees the first signs of confidence in the real economy.
Euro is presently trading within familiar levels, with bids still emerging below 1.13, while on the topside, 1.1450/1.15 remains the line in the sand drawn by the market. At present, there are two main lines of thinking; on one hand, the absence of Greek risk headlines could be interpreted as EUR/risk positive short term, while on the other hand, there is a perception that with Greece out of the spotlight near term, EUR could once again trade in line with its negative fundamental dynamics, hence bearish pressure building up. On this latter assumption though, an environment of USD strength would be necessary to see renewed downside potential one would suspect, not the case at present given Yellen's less hawkish-than-expected outcome this week.
In the UK, the second estimate of UK Q4 GDP will be released. According to Sean Callow, FX Strategist at Westpac, "a revision to the 0.5% headline is unlikely, but the breakdown will be watched." Looking at the Sterling, it continues to print new highs against the US Dollar, not seen since Jan 2 2015, with a text book ongoing bullish stepping formation exhibited ont he daily chart, which suggests that dip buying interest should remain quite strong. However, as a cautious note, one should be aware that the area GBP/USD is facing at present - 1.5550 up to 1.56 - is a major resistance, which could be seen as a value proposition to reinstate shorts by the mid term bears.