Forex news for Asia trading Monday 23 May 2016
- Japan all industry activity index March mm +0.1% vs +0.5% exp
- Bank of Italy Rossi: Without negative rates, Europe would have faced deflationary spiral
- More Nakaso: Monetary policy aimed at domestic price stability
- A snapshot of the forex winners and loser at the lunch break
- BOJ Nakaso: Must remove deflationary mindset once and for all
- Japan PMI manufacturing 47.6 vs 48.2
- PBOC sets USD/CNY mid-point today at 6.5455 (vs. yesterday at 6.5510)
- BOJ Kuroda: Will not hesitate to east further if we judge needed: CNBC
- Japan Trade Balance 823.5B vs. 540.0B estimate
- Fed's Rosengren sounds like he is ready to pull the trigger: According to comments in FT
- Not much going on, so let's look ahead...
- Japan summer bonuses increase about 2% YoY
- Weekend Fed Interview: Feds Williams says June rate decision is a balancing act
- Japan Trade Balance, Flash Manfacturing PMI and All industries activity due out
- I spent my Saturday, working on how I was going to say...
The forex market opened little changed in most of the currency pairs. Weekend news revolved around the Japan's Aso discussing the speculative moves in the JPY, but apart from the typical comments on exchange rate competitive devaluation being bad, the global ministers were not lining up to help the JPY weaken.
In the US, Feds Williams seemed to tone down some of the 2-3 hikes in 2016 and 3-4 in 2017 from last week on a Fox interview (June still in play), but Fed's Rosengren was a bit more hawkish in an FT article where he basically said all systems are go for June. The main reason is that the bar is really low for the Fed. Beat 0.5% 1Q growth (check), continued job growth (I don't know how many months in a row the US has had job growth but it is a lot) and higher inflation (oil prices moving higher should help that one). If Chair Yellen concurs, then barring the Brexit vote turning back to more of a Yes, stocks getting hammered, and global concerns increasing, June is done. That is how I read his comment. He may be talking his book though.
In the trading session, the focus turned to the trade report from Japan. The report showed a higher than expected surplus from an adjusted and unadjusted basis. Of course, the mix was not the best - lower than expected exports and even lower than expected imports. So stocks in Japan moved down with the Nikkei well over 1% on the day. That sent the USDJPY lower as well. The pair broke below 100 hour MA (currently at 109.75) but rebounded with stock prices and the pair is going out above that key MA level.
WHile the USDJPY went lower, the EURUSD went higher. I outlined the 1.1214-18 in my weekend video, as a level to eye in the new week. Move above more bullish. Move below more bearish. Well the pair opened below, and traded down to 1.1203 in the first few minutes of trading. However, by the end of the 1st hour the price had recovered to above that 1.1214 level (closed at 1.1216) and from there the price marched to a session high at 1.1242. In the London session the 100 hour MA will be eyed at 1.1249 if this pair has more upside potential.
NZDUSD and the AUDUSD also moved higher in the new trading day. The NZDUSD moved above the 100 hour MA (at 0.6771) and the 200 hour MA (at 0.67858). Can those levels hold on a correction now? The high extended to 0.6804. As for the AUDUSD, the 100 hour MA and the 200 day MA came together (almost as one) at the 0.7258 and 0.7256 level respectively. Sellers put a lid on it and the pair is trading back down to 0.7241 currently
GBPUSD trades between the 200 hour and 100 hour MA at the 1.4476 (for the 200 hour MA) and 1.4535 (for the 100 hour MA). The low for trading today was 1.4487. The high reached 1.4524. With the current price at 1.4508, we are trading about midway between the two MA extremes. So flip the coin as London traders enter for the day. Can we have a trading range great than 60 pips today (i.e., the difference between the 100 and 200 hour MA). Maybe...
It was a pleasure working the shift today. You are lucky to have Eamonn! He is the best.
Wishing you all good fortune in your trading.
