Forex news for Asia trading Friday 7 October 2016
An even closer look:
GBP today (the bottom post is the first)
- Commentary from around the place on why GBP was crushed lower
- GBP plunge. Tin hat time ... Will the NFP be HUGE!!! ?
- Where's the next 100 points in cable?
- There might be a 'retirement trade' in the cable move (and it's probably not where you think)
- Brexit. Best currency war weapon. Ever.
- What was the low cable print at your broker?
- Here is exactly why the pound crashed
- GBP plunge - Hollande gets the narrative prize
- Here is the tick chart of the flash crash in the pound
- The cable flash crash has the potential to be a mini-SNB moment for forex brokers
- The cable move could be some kind of fat finger
- Cable implodes - flash crash in the pound
- GBP hugely lower
Other:
- EUR and CHF edging lower on the session
- Japan MoF official Asakawa: Mmust look at Brexit impact in medium, long-term perspective
- Abe advisor Honda wants more BOJ easing next month, and fiscal support
- China September forex reserves $3.17tln (expected $3.18tln)
- NZD gets the 'mini-me' award
- Australia data - Construction PMI (September): 51.4 (prior 46.6)
- NZ Median weekly earning data (Q2): Largest annual increase since June 2007 quarter
- ForexLive traders - are you ready? Get your entries in to the NFP competiton!
- BOJ's Kuroda: Don't think monetary policy has hit its limit
- Nonfarm payroll preview - here's a "what to watch"
- Trade ideas thread for TGI NFP F! (Friday 7 October 2016)
- ECB's Praet: Domestic demand should counteract Brexit
- Welcome to pre-NFP day in Asia! Here's what Goldman Sachs expect for the number
GBP was slammed lower in the early Tokyo morning, from above 1.26 to around lows of 1.1840 (lower lows were reported too, which is the nature of the OTC forex market) before bouncing back quickly to 1.2300 and then gaining more slowly to above 1.2400. Moves since have been less frenzied but spreads have blown out and the range after this would have been a huge one for Asia without the prior enormous drop.
Various theories as to why the drop did the rounds, and continue to do so - see these:
- Here is exactly why the pound crashed
- GBP plunge - Hollande gets the narrative prize
- Here is the tick chart of the flash crash in the pound
- The cable flash crash has the potential to be a mini-SNB moment for forex brokers
- The cable move could be some kind of fat finger
- Cable implodes - flash crash in the pound
- GBP hugely lower
What we do know is the French President Hollande was reported as flagging a very hard line Brexit negotiations: Financial Times here (gated)
- Britain must suffer the consequences of leaving the EU in order to save the institution from an existential crisis, François Hollande said on Thursday.
- "There must be a threat, there must be a risk, there must be a price. Otherwise we will be in a negotiation that cannot end well."
We have heard similar sort of hard line approaches from Europe before, when they come from Germany and France they carry more weight. Whether Hollande's remarks were an influence on the move (make no mistake, if they were they cannot be said to be only reason, at most they were a catalyst) was argued in the comments here at ForexLive. I think they were. Algos, stops, illiquidity, big selling, all against an increasing focus on a 'hard' Brexit, all played a part too.
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Elsewhere today, Japanese wages data for August slid back, coming in at -0.1% y/y (expected +0.4% and prior +1.2%) for 'Labor Cash Earnings'. Real Cash Earnings dropped to +0.5% y/y (from the prior +1.8%).
Chinese markets remained closed again today as Golden Week holidays continued. We did get some data from China, though, with FX reserves slipping in September, which seems likely to have been People's Bank of China selling of USD/yuan due to efforts to stabilise the yuan ahead of entry into the SDR basket (which happened on October 1)
USD/JPY backed well away from its US high, heading down towards (but nit getting to) 103.50 before a slight recovery as I update to above 103.80.
Other currencies had, for Asia, reasonable size moves also, especially for a pre-NFP session. As I update EUR and CHF are both weak against the USD. NZD/USD had a drop of around 50 points, AUD/USD less so but it was still weak on the session. Gold is higher while the oil price is little changed.
Regional equities:
- Nikkei -0.41%
- HK -0.53%
- ASX -0.23%
Still to come:
- ForexLive traders - are you ready? Get your entries in to the NFP competiton!
- Nonfarm payroll preview - here's a "what to watch"
- Welcome to pre-NFP day in Asia! Here's what Goldman Sachs expect for the number
