Forex news for Asia trading Thursday 21 January 2016

  • BOJ's Kuroda: Recent flat core CPI due mostly to effect of oil price falls
  • More on PBOC cash injections, use of other tools, could substitute for RRR cut
  • Australian housing construction to remain high in H1, easing in H2
  • NZ traders - Fonterra CEO says may cut volumes if prices extend losses
  • PBOC biggest OMO cash injection for 3 years - indicates delay in RRR cut?
  • Yen lower today on boost to expectations for more BOJ easing. But is it?
  • Here are 5 questions on the ECB meeting coming up Thursday in Europe
  • Pre-market indications show the Shanghai Comp to open down 1.4%
  • People’s Bank of China (PBOC) sets yuan reference rate at 6.5585
  • Japan PM Abe aide says the conditions are right for more BOJ easing
  • PBOC economist Ma Jun says overuse of RRR cut is bad for the exchange rate
  • FX transactions by the RBA in December
  • UK data - RICS House Price Balance for December: 50% (expected 50, prior 49)
  • BOJ - Corporate loan demand rises in January
  • Australia data - HIA New Home Sales (November): -2.7% m/m (prior -3.0%)
  • NZ data - ANZ Consumer Confidence Index (January): +2.3% m/m (-3.3% in December)
  • Australian Consumer Inflation Expectation: 3.6% (vs. 4.0% in December)
  • George Soros says the EU is on the verge of collapse
  • Ex-PBOC adviser says set the yuan free from its US dollar shackle
  • Poll. OK ForexLive, 4 Fed rate hikes this year (stop laughing). What are the chances?
  • Poll shows 51% of Japanese firms want more BOJ stimulus in 2016
  • ANZ - investor nervousness "on the cusp of turning to panic", watch the 6 "C"s
  • RBNZ will cut the cash rate to 2% this year says HSBC
  • Oil - American Petroleum Institute (API) data - Inventories rise 4.6 million bbls
  • NZ manufacturing PMI for December: 56.7 (prior 54.7)
  • Trade ideas thread for Thursday 21 January 2016

The S&P and oil price bounce fed into better sentiment as Asia opened today. There was some early fun as the rally in oil prices was overstated somewhat - some market commentators mistook the new contract prices (7% or so higher than the expiring contract) as some sort of huge rally. Dear oh dear.

The USD/CNY daily price setting from the People's Bank of China was uneventful yet again, but the accompanying news of open market operations by the bank (where they drain or inject funds into money markets) was huge!

The PBOC injected 400bn yuan today, its biggest OMO injection in 3 years. With the lunar new year holiday coming up some extra cash injection was, and is, to be expected, but this huge amount today may also indicate the potential for an RRR and/or deposit rate cut are diminishing as the bank uses alternative tools for liquidity provision.

Stock markets continued rejoicing unitl pre-market indications from Chinese stocks made clear that they were not joining in the party. They opened lower and while they've improved and turned positive (as of updating) they dampened regional equity performance somewhat.

Currencies ...

USD/JPY was a good mover, the yen losing ground as 'risk' sentiment improved. Its topped just above 117.40 and has since dipped to 117.00. Its about 20 popint up from there as I update.

AUD and NZD were beneficiaries of the improved sentiment in Asia, AUD up near 50 points from session lows at one stage (its barely changed on the session now having given it all back). A similar story for the NZD, though net its up a few points.

EUR/USD too is barely changed on the session in a 20 or so point range only. CHF and GBP - not much of a change there either.

Regional equities with Shanghai closed for the lunch break:

  • Nikkei +0.23%
  • Shanghai +0.51%
  • HK +0.31%
  • ASX +0.53%