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1 Sep 2015
Aussie trims gains post eventless RBA, UK & EZ PMIs eyed
FXStreet (Mumbai) - The US dollar continues to get hammered as risk-off market profile dominates Asia with Asian indices extending their sell-off while traditional safe-havens such as JPY, EUR, gold etc. remained strongly bid. The Aussie kept its upbeat momentum intact on RBA’s status quo, clinging to 0.71 barrier.
Key headlines in Asia
RBA leaves rates on hold at 2%, AUD adjusting to commodity levels
Asian stocks deep in the red, China free-fall intensifies risk-off
China Caixin Aug final PMI at 47.3 vs 47.1 flash
China's official Aug PMI as expected
Dominating themes in Asia - centered on JPY, AUD, NZD
A volatile Asia as Asian equities extends the drop led by Nikkei as the persisting risk-off dynamics continues to bolster the safe-haven bids for the yen, making the export sector less appealing to investors. The dollar-yen pair consolidates around 120.75 region with JPY bulls restricting any attempt to the upside.
The US dollar – the newly pronounced risk currency, was broadly dumped as the traders flocked to safety assets amid falling US and Asian equities. While Antipodeans kept the bid tone intact during Asia with the Kiwi gaining momentum backed by a tad better than expectations Caixin China manufacturing PMI report and unexpectedly positive NZ terms of trade data.
New Zealand's terms of trade rose 1.3% last quarter after rising a revised 1.2% in the March quarter, according to Statistics New Zealand. The market predicted a 1.9% decline in the terms of trade last quarter. Moreover, the Caixin China manufacturing PMI was revised up from 47.1 to 47.3 in August, however came in below the 47.8 reading booked in July.
While the Aussie faded a spike to 0.7150 and retraced towards 0.7100 levels as the AUD bulls had already priced-in the RBA to be non-event. The RBA left interest rates on hold at record-low levels on Tuesday as the central bank continued to assess the positive impact past rate cuts and the weaker exchange rate have on growth.
The Asian equities continued to fall for the second straight session, with the Hong Kong's benchmark Hang Seng index losing nearly -1% at 21471 while mainland China's benchmark Shanghai Composite pared losses but still loses over 1% at 3172. Among other Asian indices, the Japanese benchmark Nikkei 225 falls over 2.60% at 18390 on stronger yen. While the benchmark Australian S&P/ASX 200 is tanking -1.50% at 5130.
Heading into Europe - centered on EUR, GBP
A busy Wednesday for the EUR, GBP traders ahead, with the UK markets back on track after Monday’s summer bank holiday. A raft of final manufacturing PMIs from the Euro area economies to dominate the EUR calendar while German and EZ employment data along with the UK’s manufacturing PMI report will also be closely watched.
The euro zone preliminary manufacturing PMI in August came in at 52.4 and the same result is expected in the final reading. The flash PMI for Germany's manufacturing sector activity recorded 53.2, with the indicator expected to hold in the final result.
While the UK manufacturing PMI is seen heading slightly higher to 52.0 from 51.9 recorded in July.
Germany will report labor data for August, with the unemployment rate expected to remain at 6.4%, after the same rate recorded in July.
The euro zone will also report its July labor data. The rate of registered unemployed in the region was 11.1% in June, and it is expected to remain at the same level.
Looking ahead, the North American session also appears to be a action-packed one, kicking-off with Canada’s GDP data followed by manufacturing PMI reports from the US including the ISM. The GDT prices index from New Zealand is also lined up release.
The US factory PMI weakened to two-year lows in the spring, but has improved since then and is pointing to a gradual recovery from the dollar and oil shocks. It had eased somewhat in July, but economists expect it will stabilize at 52.8 points in August, which is consistent with steady if mediocre growth.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The EUR/USD pair presents a neutral stance in the short term, as in the 1 hour chart, the price is moving back and forth around a flat 20 SMA, whilst the technical indicators present a tepid bearish slope around their mid-lines. In the same chart, the 100 SMA has crossed below the 200 SMA, both in the 1.1300 region, maintaining the risk towards the downside.”
“In the 4 hours chart, the 20 SMA maintains a strong bearish slope above the current price, whilst the Momentum indicator is ready to cross its mid-line towards the upside, and the RSI hovering around 42, suggesting also limited upward potential, as long as the price remains below the 1.1280 level, the 61.8% retracement of these last two weeks advance.”
Key headlines in Asia
RBA leaves rates on hold at 2%, AUD adjusting to commodity levels
Asian stocks deep in the red, China free-fall intensifies risk-off
China Caixin Aug final PMI at 47.3 vs 47.1 flash
China's official Aug PMI as expected
Dominating themes in Asia - centered on JPY, AUD, NZD
A volatile Asia as Asian equities extends the drop led by Nikkei as the persisting risk-off dynamics continues to bolster the safe-haven bids for the yen, making the export sector less appealing to investors. The dollar-yen pair consolidates around 120.75 region with JPY bulls restricting any attempt to the upside.
The US dollar – the newly pronounced risk currency, was broadly dumped as the traders flocked to safety assets amid falling US and Asian equities. While Antipodeans kept the bid tone intact during Asia with the Kiwi gaining momentum backed by a tad better than expectations Caixin China manufacturing PMI report and unexpectedly positive NZ terms of trade data.
New Zealand's terms of trade rose 1.3% last quarter after rising a revised 1.2% in the March quarter, according to Statistics New Zealand. The market predicted a 1.9% decline in the terms of trade last quarter. Moreover, the Caixin China manufacturing PMI was revised up from 47.1 to 47.3 in August, however came in below the 47.8 reading booked in July.
While the Aussie faded a spike to 0.7150 and retraced towards 0.7100 levels as the AUD bulls had already priced-in the RBA to be non-event. The RBA left interest rates on hold at record-low levels on Tuesday as the central bank continued to assess the positive impact past rate cuts and the weaker exchange rate have on growth.
The Asian equities continued to fall for the second straight session, with the Hong Kong's benchmark Hang Seng index losing nearly -1% at 21471 while mainland China's benchmark Shanghai Composite pared losses but still loses over 1% at 3172. Among other Asian indices, the Japanese benchmark Nikkei 225 falls over 2.60% at 18390 on stronger yen. While the benchmark Australian S&P/ASX 200 is tanking -1.50% at 5130.
Heading into Europe - centered on EUR, GBP
A busy Wednesday for the EUR, GBP traders ahead, with the UK markets back on track after Monday’s summer bank holiday. A raft of final manufacturing PMIs from the Euro area economies to dominate the EUR calendar while German and EZ employment data along with the UK’s manufacturing PMI report will also be closely watched.
The euro zone preliminary manufacturing PMI in August came in at 52.4 and the same result is expected in the final reading. The flash PMI for Germany's manufacturing sector activity recorded 53.2, with the indicator expected to hold in the final result.
While the UK manufacturing PMI is seen heading slightly higher to 52.0 from 51.9 recorded in July.
Germany will report labor data for August, with the unemployment rate expected to remain at 6.4%, after the same rate recorded in July.
The euro zone will also report its July labor data. The rate of registered unemployed in the region was 11.1% in June, and it is expected to remain at the same level.
Looking ahead, the North American session also appears to be a action-packed one, kicking-off with Canada’s GDP data followed by manufacturing PMI reports from the US including the ISM. The GDT prices index from New Zealand is also lined up release.
The US factory PMI weakened to two-year lows in the spring, but has improved since then and is pointing to a gradual recovery from the dollar and oil shocks. It had eased somewhat in July, but economists expect it will stabilize at 52.8 points in August, which is consistent with steady if mediocre growth.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The EUR/USD pair presents a neutral stance in the short term, as in the 1 hour chart, the price is moving back and forth around a flat 20 SMA, whilst the technical indicators present a tepid bearish slope around their mid-lines. In the same chart, the 100 SMA has crossed below the 200 SMA, both in the 1.1300 region, maintaining the risk towards the downside.”
“In the 4 hours chart, the 20 SMA maintains a strong bearish slope above the current price, whilst the Momentum indicator is ready to cross its mid-line towards the upside, and the RSI hovering around 42, suggesting also limited upward potential, as long as the price remains below the 1.1280 level, the 61.8% retracement of these last two weeks advance.”