Forex news for Asia trading Tuesday 25 October 2016
- Currency volatility falls to the lowest level this year
- China - NDRC spokesman says will cut coal, steel capacity ahead of schedule
- Bundesbank says HFT market makers typically pull out during periods of high volatility
- AUD extends its gain, iron ore not a weight today
- WSJ's message to the FOMC meeting next week: You have one job
- More on the politics of rage - outlook for currencies
- PBOC sets USD/CNY central rate at 6.7744 (vs. yesterday at 6.7690)
- USD/CNY daily mid point coming up soon. Citi looking for it higher in coming weeks
- More on PBOC's Yi and his 'no basis for a persistent yuan devaluation' comment
- ANZ on the RBNZ - expecting a rate cut in November than on hold
- More on the RBNZ's new OCR projection
- PBOC's Yi says there is no basis for a persistent yuan devaluation
- AUD & Q3 CPI: Sell Any Strength If No Significant Upside Surprise - ANZ
- Australia - Weekly consumer confidence: 113.6 (prior 117.8)
- BOC's Poloz again - the '18 month' comment was not about monetary policy
- Japan press: "Yen seen calmly marching lower against dollar"
- More on BOC's Poloz (recap)
- More from BOC's Poloz: Willing to use policy room if needed
- RBNZ will be publishing interest rate projections from November
- Trade ideas thread - Tuesday 25 October 2016
- BOC Poloz comments sending the CAD higher
CAD was an early mover. Or late if you're trading the NY time zone. Poloz delivered a speech from a prepared text and also answered questions in an appearance before parliament.
Poloz was reported as saying
- "Our best plan right now, we think, is to wait for the next 18 months or so."
Which was taken to mean rates on hold for 18mths or so. This sent USD/CAD on a ride lower, from circa 1.3880 down a big figure to around 1.3280 odd.
Within under an hour, though, Governor Poloz had issued a statement meant to clarify what he meant, that is:
- "My statement concerning the need to wait 18 months was in reference to the time frame over which the output gap is expected to close, as noted in the Bank's October Monetary Policy Report. It was not intended as a reference to the Bank's monetary policy."
Uh-oh. The clarifying statement came at the lowest liquidity trough of the 24-hour Forex cycle, just before 6pm ET and prior to 7am in Tokyo. If moves occur around this time they are often exacerbated by the lack of liquidity. USD/CAD reversed, jumping 80 or so points for a very wild ride indeed. Its since calmed.
USD/JPY had a small move higher through the session, from lows under 104.20 its approached 104.50, in a day without fresh news no data for it.
In fact is was a near non-existent fresh news and data day overall.
Currency moves were subdued, EUR and CHF are little changed. GBP/USD ticked a few points higher post--4pm NY time but has since given them all back to print a circa-30 point range.
AUD and NZD lost some ground early but recovered, AUD/USD helped along (or at least not hindered) by a limit up move in Dalian iron ore futures (these to their highest since early August). A procedural change from the RBNZ was announced early in the session, which was followed by the dip in the NZD (since recovered). Correlation or causation, I'll let others judge.
Gold and oil are little changed on the day.
The People's Bank of China weakened the onshore yuan against the USD again today.
Regional equities:
- Nikkei +0.64%
- Shanghai -0.11%
- HK -0.18%
- ASX +0.63%
