Forex news for Asia trading Monday 30 May 2016
- Japan's LDP policy chief outlined a sales tax hike at the scheduled time
- Japan LDP 2IC: PM Abe said he will delay tax hike by 2.5 years
- Australian Q1 data: Inventories +0.4% (expected flat), Company profits -4.7% (+0.4%)
- Fed's Bullard: Prefers to reserve judgement on June until the meeting
- People’s Bank of China sets yuan reference rate at 6.5784 (vs. Friday at 6.5490)
- Australia - HIA New Home Sales for April: -4.7% m/m (prior +8.9%)
- Fed's Bullard doesn't comment directly on economy outlook nor mon pol
- Goldman Sachs Gao Hua says yuan 'sweet spot' over - look for accelerated capital outflows
- Japan Retail Trade data for April: -0.8% y/y (vs. expected -1.2%)
- USD/JPY making new session highs
- AUD and NZD orderboards
- Japan sales tax hike delay - until October 2019 now mooted
- Trade ideas thread to kick off the new FX week - Monday 30 May 2016
- Australian bonds - best forecaster sees more gains ahead as RBA cuts deeper
- HSBC forecast RBNZ will remain on hold at their June meeting
- Monday morning 30 May 2016 - early FX rate indications
Weekend
- France won't be the last to crack down on tax avoidance
- 28 economic events to watch in the week ahead
- Last two days to fill out the 2016 ForexLive Survey
- Saudi foreign assets fall for 15th straight month
- Reminder: UK and US markets are closed on Monday
- Abe will delay consumption tax increase until Oct 2019 - Nikkei
- A paradigm shift is under way on deficits
- This feels like a vote against a Brexit
There were local factors contributing to lower currencies here today to open the forex week in Asia, but against a backdrop of continued USD buying too.
Yen was a notable underperformer, kicking off the week pre-Tokyo with USD/JPY (and yen crosses generally) higher. The 'local' factor was the weekend news that a sales-tax hike Japan was nearly a done deal. We are yet to hear the definitive decision from PM Abe, it is expected some time today ... but like I say, still not confirmed as I write.
USD/JPY traded pre-Tokyo to a high around 110.80 before stabilising (for less than an hour) and then to a new high as even more Japanese trading got underway. After settling somewhat longer around 110.80 it gathered fresh legs for a run to just over 111.00. Its barely off there as I update.
A sales tax delay is raising questions of the likelihood of a ratings downgrade; Abe and his administration will have their work cut out explaining how they'll cut the deficit.
Fresh news for the AUD today also contributed to its own local factors. Initially it was 'new home sales' data for April coming in well below last month's strong bounce. To note is that today's data does not include the May rate cut, that may help next month's figures but does not alter what does appear to be a cycle peak for the number of new home sales. While not official data, some anecdotal evidence today came through in the form of the sale of nearly 400 apartments in a Sydney development on Saturday. All sold within one four-hour time window at prices ranging from A$630,000 to A$3.5 million.
Next from Australia we got inventory, company profits and wages data for Q1. Company profits came in well below expectations; mining profits continue to weigh against the background of weak commodity prices, but at a fall of 9.6% for profits for the quarter shows there is more going on than just commodity prices softness. A profit decline was also seen in the manufacturing sector, which had been showing gains prior.
Inventory data, on the other hand, came in above expected. For the national accounts due Wednesday this week in Australia (i.e. Q1 GDP) an inventory build will be a positive contribution. Aussie economy bears wishing for a recession may protest, but there you are.
Through all this (along with US dollar buoyancy) the AUD/USD slipped away a little, testing down to around 0.7150 before bouncing toward 0.7170 and being just off there as I update. As a note, iron ore futures dipped in China today to 3-month lows.
EUR/USD dipped to 1.1100, EUR/JPY (well, yen crosses generally, see above) gained ground. USD/CHF is little changed, as is cable.
Gold fell to its lowest since February of this year, down to $1200. Oil traded higher (bad typo number ... I've lost count :-D) lower.
The talk of the sales tax delay ignited the Nikkei today:
Regional equities:
- Nikkei +1.31%
- Shanghai +0.18%
- HK +0.74%
- ASX +0.10%
