Forex news for Asia trading Monday 23 January 2017

  • Here is the Alternate Facts Asia Wrap for today! Tremendous day for the USD!
  • Japan data - Nov. All Industry Activity Index: 0.3% m/m (expected 0.4%, prior 0.2%)
  • Trump will not be releasing tax returns: "People didn’t care. They voted for him"
  • Brexit - UK May's sector deals - signal greater state intervention in the economy
  • ANZ say they expect China to widen GDP target band for 2017
  • Investigation of Trump’s national security adviser - links with Russian officials?
  • USD, EUR, GBP, CHF, CAD, AUD, NZD: Weekly Outlook - Morgan Stanley
  • People’s Bank of China sets yuan reference rate at 6.8572 (vs. Friday at 6.8693)
  • PBOC yuan central rate setting coming up - plenty of action since Friday's
  • Brexit - EY ITEM Club warns UK consumer spending expected to fall this year
  • More on the PBOC RRR cut
  • USD/JPY on the move in Tokyo morning
  • Reuters- Japan Corporate Survey - most see red line for USD/JPY at 125
  • Weekend oil output cut compliance meeting - smiles all 'round!
  • Trade ideas thread - Monday 23 January 2017 (and a NSFW video)
  • OIL - (W/e) Russian Energy Minister Novak says output cut deal a success
  • Monday morning forex opening price indications - 23 January 2017

Early prices for the week showed a sharp drop for USD/JPY, the rate under 114.00 initially. It stabilised around 114.25 and nearly covered the 'gap' down before Tokyo morning selling saw a more extended drop, back under 114 and then continuing lower to circa 113.50 for a whole big figure lower (give or take) from Friday's US closing levels.

Other currencies also gained against the USD, though the yen was the overall winner.

EUR/USD above 1.0730, cable approaching 1.2450, AUD toward 0.7580 and the NZD/USD above 0.7200 (and 0.7210 briefly). USD/CHF has managed to hold above 0.9980.

There was little in the way of any fresh market news, though weekend politics provided fodder:

  • Investigation of Trump's national security adviser - links with Russian officials?
  • Trump will not be releasing tax returns: "People didn't care. They voted for him"

China's new "temporary liquidity facility" funding tool

The PBOC strengthened the CNY today, in line with the weaker USD. The RRR cut on Friday has grabbed attention over the weekend and today, but of note also, and not so widely remarked upon, is the Bank's new "temporary liquidity facility" funding tool. The PBOC's own newspaper (Financial News) carried a front-page commentary on it today:

  • It gave the temporary liquidity facility to some major commercial banks for 28 days
  • In order to help ease a cash crunch before the Lunar New Year holiday (this is January 27 to February 2)
  • No amounts were mentioned
  • State TV has reported though that the facility exceeds 100 billion yuan
  • No collateral is required from those banks borrowing funds
  • The article stressed that while extending extra funds, PBOC is still pursuing other policy goals such as dialling back excessive borrowing and reining in systemic risks
  • While the purpose is for temporary funding it will be a permanent tool for the Bank

Analysts say the tool should be viewed as helping to meet seasonal liquidity demand, not viewed as a signal of easing.

Regional equities:

  • Nikkei -1.3%
  • Shanghai +0.34%
  • HK +0.06%
  • ASX -0.87%