25 Feb 2015
Asia Recap: Aussie reigns amid USD broad-based weakness
FXStreet (Bali) - The US Dollar resumed its soft tone during Asia, with the commodity currencies, especially the Australian Dollar, the currencies benefiting the most from Fed Chair Yellen's noncommittal stance on monetary policy on Tuesday.
The Australian Dollar wast the strongest of the pack in Asia, after the HSBC 'Flash' China manufacturing PMI for February hit a 4-month high at 50.1 vs 49.5, despite export orders shrunk to its faster rate in 20 months. The breakout in AUD/USD, through 0.7850 and stalling near high at 0.7880, reflects the short term positive sentiment in this market, with Yellen's less hawkish testimony to blame. Australia also had some economic indicators released, with Australian construction work Q4 2014 showing conditions weaker than the previous quarter, while Australian wage inflation held near record lows, in line wihth the global deflationary theme.
Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said: “Today's data point to a marginal improvement in the Chinese manufacturing sector going into the Chinese New Year period in February. However, domestic economic activity is likely to remain sluggish and external demand looks uncertain. We believe more policy easing is still warranted at the current stage to support growth."
NZD/USD also traded in a strong note, having recovered losses from Tuesday in its entirety, with the rate having reached offers around 0.7540, a key resistance area with more selling expected above. Reserve Bank of New Zealand Governor Wheeler appeared before the Finance Select Committee at NZ's parliament, noting that Auckland rents are increasing as market faces housing shortage, adding that low-deposit loan limits have reduced house inflation.
USD/JPY traded heavy under 119.00, with downside activity contained by 118.62. The noncommittal stance by Yellen helped push US US yields lower, weighing on the appetite to hold JPY shorts, which together with a soggy Nikkei 225 - -0.09% - , off from an early high of 119.00 to 118.62. Market sources reported Japanese exporters selling interest for month-end, with option expiries circa 118.50 and 118.00 likely to see interest for protection of the levels if Yen strength accelerates. On the upside, option expirations at 119.00, 119.40 and 120.00 suggest that recoveries should encounter option-related offers.
The Australian Dollar wast the strongest of the pack in Asia, after the HSBC 'Flash' China manufacturing PMI for February hit a 4-month high at 50.1 vs 49.5, despite export orders shrunk to its faster rate in 20 months. The breakout in AUD/USD, through 0.7850 and stalling near high at 0.7880, reflects the short term positive sentiment in this market, with Yellen's less hawkish testimony to blame. Australia also had some economic indicators released, with Australian construction work Q4 2014 showing conditions weaker than the previous quarter, while Australian wage inflation held near record lows, in line wihth the global deflationary theme.
Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said: “Today's data point to a marginal improvement in the Chinese manufacturing sector going into the Chinese New Year period in February. However, domestic economic activity is likely to remain sluggish and external demand looks uncertain. We believe more policy easing is still warranted at the current stage to support growth."
NZD/USD also traded in a strong note, having recovered losses from Tuesday in its entirety, with the rate having reached offers around 0.7540, a key resistance area with more selling expected above. Reserve Bank of New Zealand Governor Wheeler appeared before the Finance Select Committee at NZ's parliament, noting that Auckland rents are increasing as market faces housing shortage, adding that low-deposit loan limits have reduced house inflation.
USD/JPY traded heavy under 119.00, with downside activity contained by 118.62. The noncommittal stance by Yellen helped push US US yields lower, weighing on the appetite to hold JPY shorts, which together with a soggy Nikkei 225 - -0.09% - , off from an early high of 119.00 to 118.62. Market sources reported Japanese exporters selling interest for month-end, with option expiries circa 118.50 and 118.00 likely to see interest for protection of the levels if Yen strength accelerates. On the upside, option expirations at 119.00, 119.40 and 120.00 suggest that recoveries should encounter option-related offers.