Forex news for Asia trading Tuesday 26 2016

Terrible news from Japan to start the day: 19 dead, 20 injured in knife attack outside Tokyo

Back to the markets:

  • Japan economy minister Ishihara says growth won't improve without reforms
  • AUD & NZD higher. Gold lower.
  • "An early warning signal for financial distress has been starting to flash"
  • Japan govt forecasts - 'baseline' scenario assumes <1% real growth
  • USD/JPY to fresh session lows - Government stimulus pack shrinking
  • Talk of high street banks imposing negative rates in UK ramping up
  • Canada: British Columbia imposes 15% property transfer tax on foreign home buyers
  • PBOC sets USD/CNY central rate at 6.6778 (vs. yesterday at 6.6860)
  • Reports Japan stimulus draft calls for continued cooperation with the BOJ
  • UBS: FOMC on hold & BOJ 50/50 further easing this week
  • Australia - ANZ Roy Morgan weekly consumer sentiment: 115.5 (prior 114.9)
  • FT says BoE's Weale now favours immediate stimulus
  • New Zealand Trade Balance (June): 127m (expected 150m surplus)
  • IMF makes preparations to include Chinese yuan in SDR. Happening real soon.
  • FT report that a BoE MPC member has dropped opposition to stimulus
  • Australia: "RBA meeting is “live” & contingent on Wednesday’s CPI outcome"
  • Trade ideas thread - Tuesday 26 July 2016
  • Where is the volume in FX? USD/JPY & GBP/USD the big winners
  • Nomura on 3 reasons the BOJ will ease this week.
  • Economic data due from Asia today (NZ trade balance)

The yen strength for the Europe/UK/US time zones continued on, with a vengeance, in Asia today. USD/JPY dropped below 105.70, hesitated for a good while and then plunged as Tokyo desks got active. The overnight news (6tln yen stimulus package) was repeated (and only 2tln looks likely through a supplementary budget, the rest, if it comes, is not until the following FYs). USD/JPY dropped like a rock, sat around 105.20 for a few minutes then continued under the figure and eventually to below 104.65 to establish its session low. Its not much higher now as I update.

George Costanza on the Japanese government fiscal package

EUR and CHF didn't do much at all, barely changed on the session (against the USD ... much lower vs. the yen, of course)

GBP was a sharp mover early also. Bloomberg carried the headline that a Bank of England MPC member had changed his mind and wanted further stimulus and that's all it took to send cable from above 1.3130 to under 1.3090 (its since retraced toward 1.3120). Later confirmation named Martin Weale, with his new views in an FT interview.

AUD and NZD had decent pops during the session, but nothing too huge. AUD/USD from lows around 0.7465 to briefly above 0.7490. NZD/USD from 0.6985 to above 0.7005. We got some economic data from both countries, but none seem related to the moves.

Gold moved higher early, getting above 1322 briefly before dropping right back to earlier levels around 9and under) 1316. Oil is little changed after its overnight fall.

Regional equities:

  • Nikkei -1.35%
  • Shanghai +0.45%
  • HK +0.90%
  • ASX -0.19%