17 Mar 2015
What's next: RBA/BoJ behind, EZ inflation/jobs eyed
FXStreet (Bali) - Find below the latest headlines from Tuesday Asia, the main themes during the Far-East session, in which the RBA minutes and BoJ dominated, and what to expect for the next European session.
Main headlines in Asia
RBA minutes: Considered rate cut, waiting for more data
BoJ keeps policy steady
Dominating themes in Asia - centered on JPY, AUD, NZD
The Australian Dollar saw the break of an intraday support zone at 0.7630/35 as the RBA minutes revealed that the Central Bank remains very much on track to cut rates further in the coming months, by noting that they considered a rate cut, but decided to wait for additional data. The lowest we traded in Asia was 0.7613, but additional pushes were absorbed by buyers, resulting in a withdraw of liquidity towards mentioned broken support 0.7630/35.
USD/JPY seesawed aimlessly, well capped by 121.50 offers, after the Bank of Japan decided to hold its policy steady, with the policy decision made by 8-1 vote. BOJ board member Kiuchi voted against keeping policy steady, saying that the policy before October 31 easing was appropriate. Kiuchi also proposed making 2 pct inflation target a medium- to long-term goal. BoJ added that the economy continues to recover moderately as a trend, and tha CPI is likely to move around 0% for time being. Next up is BOJ Governor Kuroda, who will hold a post-meeting press conference at 0630GMT.
NZD/USD found bids above the mid round number 0.7350, but remains limited by the 0.74 line, marginally broken during the last US session. Focus will now be in the latest Fonterra GDT action, with results to be published sometime between 12 and 15 GMT (it's a tentative release). According to BNZ Economist Craig Ebert: "Prices have lifted over 30% since a low point in early December, but we are cautious on pricing over the near term, including at this week’s auction. Indeed, we have a negative bias for this event given: a stronger USD, a weaker EUR, some rain in NZ, lower oil prices, uncertainty associated with the imminent EU production quota removal, low international grain prices and a general retreat in risk appetite in global markets."
Heading into Friday Europe - centered on EUR, GBP
The next European session comes loaded with key releases for the interest of EUR traders, with EZ inflation and employment data, as well as the German ZEW survey, all due at 10 GMT. Looking at the recent EUR/USD performance, the single currency is starting to show a bit more of a combatant profile, with the two dips seen below 1.05 since March 12 being bought up by what seems to be a market that is reaching somewhat of an exhaustion profile. One should remember though, that the main reason for the lack of follow through sub 1.05 may be explained by non-committal specs, as the key FOMC meeting approaches on Wednesday.
The British Pound has also been able to correct higher against the US Dollar, with a key test coming ahead between 1.4860 and 1.49, the origin of the latest sell-off, with some commentators blaming it to the latest headlines from BoE Carney late last week, in which he suggested that there is no rush to hike rates. Continuous monitoring of the UK national election polls has also become a critical component to keep an eye on for the interest of GBP traders.
According to RBS: "The UK polls remain very close but the Conservatives appear to have begun to edge ahead, having eroded Labour’s lead at a seemingly glacial pace since late 2014. On the standard assumption of a uniform national swing, the % voting shares (taking the last 10 polls) would still see Labour as the largest party. But, adjusting for the polling data in Scotland (a traditional Labour electoral heartland but where the party trails by a substantial margin in the polls), leaves the two main parties neck-and-neck in terms of projected Commons seats. Among the various ‘hung parliament’ outcomes, betting markets are pricing-in an ever higher probability of a minority government rather than a coalition – the risks of short-term political gridlock and a second election are rising."
Main headlines in Asia
RBA minutes: Considered rate cut, waiting for more data
BoJ keeps policy steady
Dominating themes in Asia - centered on JPY, AUD, NZD
The Australian Dollar saw the break of an intraday support zone at 0.7630/35 as the RBA minutes revealed that the Central Bank remains very much on track to cut rates further in the coming months, by noting that they considered a rate cut, but decided to wait for additional data. The lowest we traded in Asia was 0.7613, but additional pushes were absorbed by buyers, resulting in a withdraw of liquidity towards mentioned broken support 0.7630/35.
USD/JPY seesawed aimlessly, well capped by 121.50 offers, after the Bank of Japan decided to hold its policy steady, with the policy decision made by 8-1 vote. BOJ board member Kiuchi voted against keeping policy steady, saying that the policy before October 31 easing was appropriate. Kiuchi also proposed making 2 pct inflation target a medium- to long-term goal. BoJ added that the economy continues to recover moderately as a trend, and tha CPI is likely to move around 0% for time being. Next up is BOJ Governor Kuroda, who will hold a post-meeting press conference at 0630GMT.
NZD/USD found bids above the mid round number 0.7350, but remains limited by the 0.74 line, marginally broken during the last US session. Focus will now be in the latest Fonterra GDT action, with results to be published sometime between 12 and 15 GMT (it's a tentative release). According to BNZ Economist Craig Ebert: "Prices have lifted over 30% since a low point in early December, but we are cautious on pricing over the near term, including at this week’s auction. Indeed, we have a negative bias for this event given: a stronger USD, a weaker EUR, some rain in NZ, lower oil prices, uncertainty associated with the imminent EU production quota removal, low international grain prices and a general retreat in risk appetite in global markets."
Heading into Friday Europe - centered on EUR, GBP
The next European session comes loaded with key releases for the interest of EUR traders, with EZ inflation and employment data, as well as the German ZEW survey, all due at 10 GMT. Looking at the recent EUR/USD performance, the single currency is starting to show a bit more of a combatant profile, with the two dips seen below 1.05 since March 12 being bought up by what seems to be a market that is reaching somewhat of an exhaustion profile. One should remember though, that the main reason for the lack of follow through sub 1.05 may be explained by non-committal specs, as the key FOMC meeting approaches on Wednesday.
The British Pound has also been able to correct higher against the US Dollar, with a key test coming ahead between 1.4860 and 1.49, the origin of the latest sell-off, with some commentators blaming it to the latest headlines from BoE Carney late last week, in which he suggested that there is no rush to hike rates. Continuous monitoring of the UK national election polls has also become a critical component to keep an eye on for the interest of GBP traders.
According to RBS: "The UK polls remain very close but the Conservatives appear to have begun to edge ahead, having eroded Labour’s lead at a seemingly glacial pace since late 2014. On the standard assumption of a uniform national swing, the % voting shares (taking the last 10 polls) would still see Labour as the largest party. But, adjusting for the polling data in Scotland (a traditional Labour electoral heartland but where the party trails by a substantial margin in the polls), leaves the two main parties neck-and-neck in terms of projected Commons seats. Among the various ‘hung parliament’ outcomes, betting markets are pricing-in an ever higher probability of a minority government rather than a coalition – the risks of short-term political gridlock and a second election are rising."