22 Jul 2015
Aussie offered on RBA Stevens, BOE Minutes – Next up
FXStreet (Mumbai) - Rising Aus price pressures along with Reserve Bank of Australia’s (RBA) Governor Stevens positive comments on Wednesday failed to boost the sentiment around the Aussie. While NZD/USD erased previous gains and tracked its OZ counterpart lower. The yen kept its upbeat momentum versus the US dollar supported by Bank of Japan’s (BOJ) Kuroda’s pro-JPY comments delivered on Tuesday.
Key headlines in Asia
RBA Stevens: AUD adjustment occuring, labour market in better shape
Australia Q2 inflation within RBA's comfort zone
EUR/USD: Why China adds to the bearish case?
Dominating themes in Asia - centered on JPY, AUD, NZD
Economic news and events from Australia dominated an otherwise quiet Asian session, with the Aussie struggling above 0.74 barrier, digesting latest RBA Stevens comments and upbeat CPI data. While the NZD/USD pair remained vulnerable above 0.66 handle ahead of Thursday’s RBNZ rate decision with wide expectations of rate cut likely to be announced.
Meanwhile, Stevens said in his speech that the weaker Australian dollar was having an "expansionary effect" on the economy. "That is why we have felt that, on balance, a somewhat lower exchange rate was likely to be a part of the necessary adjustment. That adjustment seems to be occurring, with relatively little disruption, and is having an expansionary effect."
Australia’s CPI data showed that last quarter the CPI rose 0.7% versus a mere 0.2% rise in the two preceding quarters when the drop in fuel prices hit hardest on inflation.
The dollar-yen pair moved away from fresh monthly highs and wavers around 123.70 levels largely weighed by broad JPY strength after Tuesday’s hawkish comments from BOJ Kuroda underpinned the Japanese currency.
Kuroda told reporters as quoted by Reuters on Tuesday, "Right now, the inflation rate is close to zero." “The inflation rate should start to accelerate considerably in coming months." He further stressed that he didn't see a reason to expand the bank's QQE, as the inflation will gradually rise in the coming months.
Asian markets are breaking lower, with Australian stocks leading the pack as the countries miners are getting hammered on falling gold prices. The Australian benchmark the ASX 200 trades 1.11% lower around 5640. The Shanghai composite index now trades nearly -0.42% at 4000. The Nikkei 225 in Tokyo fell -1% on stronger yen, while. South Korea’s Kospi trades nearly -1% near 2060.
Heading into Europe - centered on EUR, GBP
The European session ahead extends its data-dry macro calendar for the third straight session on Wednesday, with the only major event to be in focus is Bank of England’s (BOE) Monetary Policy Committee (MPC) minutes which will be published at 08.30 GMT.
Even though it is highly likely that all nine rate-setters on the Bank of England's (BoE) Monetary Policy Committee (MPC) voted unanimously on the policy stance for July, comments that those rate-setters have made recently, especially BOE Governor Carney’s suggests that ultra-loose monetary policy might eventually come to an end this year.
Later in the day, the New York session holds little to offer except the existing home sales data from the US as focus now turns to RBNZ cash rate decision due on Thursday with rate cut likely on card as widely anticipated.
EUR/USD Technicals
Research Team at AceTrader notes, " Yesterday's intra-day rally after holding above Monday's fresh near 2-month trough at 1.0808 to as high as 1.0969 in New York signals erratic decline from 1.1467 (May top) has made a temporary low there and several days of choppy consolidation would be seen.However, reckon price would falter well below resistance at 1.1083 and yield another sell-off later.”
“On the downside, a daily close below 1.0900/10 would indicate recovery over and bring re-test of 1.0808; break would extend weakness to daily chart objective at 1.0785 next."
Key headlines in Asia
RBA Stevens: AUD adjustment occuring, labour market in better shape
Australia Q2 inflation within RBA's comfort zone
EUR/USD: Why China adds to the bearish case?
Dominating themes in Asia - centered on JPY, AUD, NZD
Economic news and events from Australia dominated an otherwise quiet Asian session, with the Aussie struggling above 0.74 barrier, digesting latest RBA Stevens comments and upbeat CPI data. While the NZD/USD pair remained vulnerable above 0.66 handle ahead of Thursday’s RBNZ rate decision with wide expectations of rate cut likely to be announced.
Meanwhile, Stevens said in his speech that the weaker Australian dollar was having an "expansionary effect" on the economy. "That is why we have felt that, on balance, a somewhat lower exchange rate was likely to be a part of the necessary adjustment. That adjustment seems to be occurring, with relatively little disruption, and is having an expansionary effect."
Australia’s CPI data showed that last quarter the CPI rose 0.7% versus a mere 0.2% rise in the two preceding quarters when the drop in fuel prices hit hardest on inflation.
The dollar-yen pair moved away from fresh monthly highs and wavers around 123.70 levels largely weighed by broad JPY strength after Tuesday’s hawkish comments from BOJ Kuroda underpinned the Japanese currency.
Kuroda told reporters as quoted by Reuters on Tuesday, "Right now, the inflation rate is close to zero." “The inflation rate should start to accelerate considerably in coming months." He further stressed that he didn't see a reason to expand the bank's QQE, as the inflation will gradually rise in the coming months.
Asian markets are breaking lower, with Australian stocks leading the pack as the countries miners are getting hammered on falling gold prices. The Australian benchmark the ASX 200 trades 1.11% lower around 5640. The Shanghai composite index now trades nearly -0.42% at 4000. The Nikkei 225 in Tokyo fell -1% on stronger yen, while. South Korea’s Kospi trades nearly -1% near 2060.
Heading into Europe - centered on EUR, GBP
The European session ahead extends its data-dry macro calendar for the third straight session on Wednesday, with the only major event to be in focus is Bank of England’s (BOE) Monetary Policy Committee (MPC) minutes which will be published at 08.30 GMT.
Even though it is highly likely that all nine rate-setters on the Bank of England's (BoE) Monetary Policy Committee (MPC) voted unanimously on the policy stance for July, comments that those rate-setters have made recently, especially BOE Governor Carney’s suggests that ultra-loose monetary policy might eventually come to an end this year.
Later in the day, the New York session holds little to offer except the existing home sales data from the US as focus now turns to RBNZ cash rate decision due on Thursday with rate cut likely on card as widely anticipated.
EUR/USD Technicals
Research Team at AceTrader notes, " Yesterday's intra-day rally after holding above Monday's fresh near 2-month trough at 1.0808 to as high as 1.0969 in New York signals erratic decline from 1.1467 (May top) has made a temporary low there and several days of choppy consolidation would be seen.However, reckon price would falter well below resistance at 1.1083 and yield another sell-off later.”
“On the downside, a daily close below 1.0900/10 would indicate recovery over and bring re-test of 1.0808; break would extend weakness to daily chart objective at 1.0785 next."