Forex news for Asia trading Friday 15 January 2016

It was a story of early stability in FX during the Asian morning. AUD, NZD and USD/JPY all traded sideways to higher ahead of the China opening. This wasn't to last.

China

  • Yuan - the CNH overnight HIBOR fix for today: 2.1%
  • 'Towering' Chinese debt mountain while the economy grows its slowest in 25 years
  • PBOC's Sheng: Market liquidity ample
  • China data out now - December new yuan loans 597.8bn (vs. 700bn expected)
  • Pre-market indications show the Shanghai Comp to open down 0.7%
  • China Securities Journal: Investors may have overestimated selling
  • People's Bank of China (PBOC) sets Friday's yuan reference rate at 6.5637
  • Economic Information Daily: China's FX reserves to keep falling at slower pace
  • Intel says its cautious on economic growth, particularly in China
  • BOJ's Kuroda: Japan inflation will steadily head towards 2% target
  • Japan PM Abe: yet to reach BOJ's 2% inflation target as oil prices plunge
  • NAB says RBA on hold through to mid-2017
  • Forecaster: Australian recession chance is higher than accepted, fewer tools to fight it
  • UK's Osborne says no planning being done by Treasury for the consequences of Brexit
  • Australian data: Nov. Home loans: +1.8% m/m (vs. expected -0.5%)
  • Technical analysis 'chart of the week': EUR/GBP further upside momentum
  • Japan economy minister Amari: Oil price declines, many positives for Japan
  • Poll: How many times will the fed raise rates this year?
  • Saudi Arabia plans new sovereign wealth fund
  • Australian bank cuts home loan rates
  • Australian mine shut down, unable to sell bauxite due to big Chinese stockpiles
  • Trade ideas thread for Friday 15 January 2016

USD/JPY fell from its +118.20 high as the Nikkei, after opening well, drifted back down. The USD/CNY fix came in at its highest for the past few days (but only marginally changed really) and Chinese stocks opened lower. USD/JPY ran into an overhang of sellers above 118.25 and along with the China moves gave back more than 30 points. Not, big, sharp movements at all, but down nonetheless.

It was down too for the AUD/USD and NZD/USD. Aussie housing finance data had little impact (well above expected loan growth) and once the slightly wobbly China came onto the scene traders were quick to offload AUD and NZD. Again, not big, sharp moves but 40-odd point losses for each (and further as the session went on)

Financing data from China (December) had been due sometime this week and it hit today. The 'New Yuan Loans' figure came in at a disappointing miss, but the broader 'Aggregate' financing result was a huge beat on expected. The discrepancy between the 'aggregate' beat and 'new loans' miss suggest most loan growth in the economy came from shadow banking activities. A concern is this could well be an expansion of loans for already indebted real-estate and related activities.

Later in the session we got comments from Bank of Japan (BOJ) Governor Kuroda, who was appearing before parliament. He said there were no current plans to ease policy further, which gave another shove lower for USD/JPY, down toward 117.60 as I update. His comment that the QQE policy has a risk for BOJ's finances was also a negative for USD/JPY on the session.

Updating further, China moves continue to influence; USD/CNH came a little lower (i.e. some strength for the offshore yuan) which gave AUD and NZD enough to bounce a few points from session lows.

Elsewhere on the currencies, EUR, CHF and GBP all had subdued ranges. Gold gained a few dollars and oil was heavy again.

Regional equities with Shanghai closed for the lunch break:

  • Nikkei -0.92%
  • Shanghai -1.54%
  • HK -0.81%
  • ASX -0.5%