Forex news for Asia trading Friday 3 February 2017
- BOJ's Kuroda: Easing is to hit CPI target as soon as possible
- Japan PM Abe: Govmt not considering using GPIF for helping US infrastructure
- Think the yen is volatile? Check out this chart of 10 yr JGBs
- BOJ is offering to buy 5-10yr JGB's in unlimited amounts
- Here's an RBA preview (February 7 meeting) - All economists say rates on hold
- Preview of the NFP from 7 banks, all in one place
- UK Government Brexit plan wants to give Brits 14 weeks of vacation a year
- RBNZ investigating potential leak of information
- PBOC raises rates for Open Market Operations (7, 14 & 28 day reverse repos)
- China Caixin manufacturing PMI (January): 51.0 (expected at 51.8)
- People’s Bank of China sets yuan reference rate at 6.8556
- US Defense Sec. warns of overwhelming response of Nth Korea use nuclear weapons
- Goldman Sachs preview of the Nonfarm Payroll report
- Japan: Nikkei Markit Services PMI 51.9 (prior 52.3) & Composite 52.3 (prior 52.8)
- Kuroda to appear in Diet today (from 0400GMT)
- NZ data - ANZ Commodity Price Index (January): -0.1% m/m (prior +0.7%)
- BOJ Dec. meeting minutes published now - main points
- Japan economy minister Ishihara: Won't comment on Trump's criticism on currencies
- Goldman Sachs asks: Why is the USD falling? Is this the end of its bull run?
- US January employment report - NFP preview
- Australia - Services PMI (January): 54.5 (prior 57.7)
- Japan press: "BOJ on edge after Trump claims devaluation"
- (TGIF) Trade ideas thread - 3 February 2017
I'll get to the headline in just a moment, but to take things from the start.
It was a fairly quiet beginning to the Asia session, even as Tokyo markets opened moves were quite subdued within small ranges. There was little in the way of data nor news to impact.
China reopened today after the week-long holiday and as it did the People's Bank of China embarked on a tightening program in its Open Market Operations:
- 14 day reverse repo rate to 2.5% (from 2.4%)
- 7 day rate to 2.35% (from 2.25%)
- 28 day to 2.65% (from 2.55%)
Alongside this the Standing Lending Facility (where the PBOC will lend to banks and commercial lenders funds with maturities ranging from one to three months) also saw rate hikes (this unconfirmed via 2 sources unnamed by Reuters):
- Overnight SLF rate 3.1% (from 2.75%)
- 7 day rate to 3.35% (from 3.25%)
- 1 month to 3.7% (from 3.6%)
It does appear now that the People's Bank of China is doing a bit of a flip from policy over past months. Back then we saw them with targeted liquidity injection/easing whereas today's limited moves indicate they are now switching to targeted tightening policies.
The PBOC bumping up funding costs like this impacted on commodity futures markets in China, they were off on the session. AUD and NZD dribbled a wee bit lower.
OK, to USD/JPY. The yen gained after the PBOC but it wasn't to last. Mid-morning (Tokyo time) the Bank of Japan offered to buy 5 to 10 year Japanese Government Bonds in unlimited quantities at a fixed rate. Yields had been trading higher, contrary to stated BOJ policy to keep 10yr yields trading around zero %. Yields were smashed lower (10yr JGB index chart via Bloomberg)
And USD/JPY surged from circa 112.60 to above 113, and then above 113.20 (briefly) before stabilising around the figure (its under there as I update).
Elsewhere, EUR/USD has been confined to a small range, as has USD/CHF & GBP. NZD softer alongside the AUD.
(ps. There was a M4.5 earthquake in central Italy)
Regional equities:
- Nikkei -0.01%
- Shanghai -0.60%
- HK -0.53%
- ASX -0.47%
Still to come: NFP day in the US
- Preview of the NFP from 7 banks, all in one place
- Goldman Sachs preview of the Nonfarm Payroll report
- US January employment report - NFP preview
And here is an early one for next week's RBA meeting
- Here's an RBA preview (February 7 meeting) - All economists say rates on hold
