Market Drivers April 22, 2014
AU LEI bit better, AU government unhappy with RBA neutral bias
Nikkei drop pulls USD/JPY back to 102.50
Nikkei -0.85% Europe 0.51%
Oil $104/bbl
Gold $1289/oz.
Europe and Asia:
AU LEI 0.3% vs. 0.2%
North America:
USD Existing Home Sales 10:00 AM
Currency trading remained very quiet for the second day in a row as many dealing centers were just coming back from Easter holiday and economic calendars across the G-20 were essentially barren.
In Asia USD/JPY once again failed to clear the 102.70 level and the pair sold off back to 102.50 on the back of a last hour decline in the Nikkei. The Nikkei dropped -0.85% as profit taking kicked in amidst a very quiet Japanese economic calendar.
USD/JPY has managed to record 7 consecutive days of gains since bottoming out at 101.37, but its total rally during that time has amounted to just a little more than 100 point as progress has been exceedingly slow. The pair continues to tightly correlate with the price action in the Nikkei and with US 10 year rate and currency investors are waiting for further evidence of US economic growth before lifting the pair over the key 103.00 figure. Today, the US calendar carries only Existing Homes Sales figures which are expected to print slightly lower than the month prior.
Meanwhile there was some rumblings from the Abbott government in Australia regarding the neutral monetary stance of the RBA. According to the Australian Financial Review, government officials are unhappy with RBA de facto move towards tightening which has resulted in the strengthening of the Aussie, causing difficulties for the Federal budget. The fiscal officials are concerned that any further gains by the AUD/USD will prove to be a drag on the economy, but so far Australian demand has remained surprisingly robust, despite a more restrictive monetary policy.
Tonight, the market will get a glimpse of AU CPI data as well as the flash reading of the HSBC Chinese Manufacturing PMI. The inflation numbers are expected to decline on a trimmed mean basis and Chinese data is projected to show no improvement. If the numbers come in soft, the pair could test the 9300 figure and with the clear displeasure of the Abbott government at their back, aggressive shorts may seek to push the pair lower to see if this can be the start of a deeper correction.
In Europe trading was lackluster as well with EUR/USD hugging the 1.3800 line for the second day in a row. Markets will likely remain moribund until tomorrow's flash PMI readings for April which are setting up to become the key event risk for the market this week. Markets are looking for a slight improvement from the month prior and if the data does tick up, it will remove much of the pressure on the ECB to act.
The euro has remained remarkably well bid despite the lackluster economic growth in the region and the threat of an expanding geopolitical threat with Ukraine. Much of the reason for its resilience lies in the fact that the markets remain highly skeptical of any ECB easing action. If tomorrow's data serves to only reinforce those doubts, the EUR/USD could mount another run at the 1.3900 level as short covering kicks in earnest.
AU LEI bit better, AU government unhappy with RBA neutral bias
Nikkei drop pulls USD/JPY back to 102.50
Nikkei -0.85% Europe 0.51%
Oil $104/bbl
Gold $1289/oz.
Europe and Asia:
AU LEI 0.3% vs. 0.2%
North America:
USD Existing Home Sales 10:00 AM
Currency trading remained very quiet for the second day in a row as many dealing centers were just coming back from Easter holiday and economic calendars across the G-20 were essentially barren.
In Asia USD/JPY once again failed to clear the 102.70 level and the pair sold off back to 102.50 on the back of a last hour decline in the Nikkei. The Nikkei dropped -0.85% as profit taking kicked in amidst a very quiet Japanese economic calendar.
USD/JPY has managed to record 7 consecutive days of gains since bottoming out at 101.37, but its total rally during that time has amounted to just a little more than 100 point as progress has been exceedingly slow. The pair continues to tightly correlate with the price action in the Nikkei and with US 10 year rate and currency investors are waiting for further evidence of US economic growth before lifting the pair over the key 103.00 figure. Today, the US calendar carries only Existing Homes Sales figures which are expected to print slightly lower than the month prior.
Meanwhile there was some rumblings from the Abbott government in Australia regarding the neutral monetary stance of the RBA. According to the Australian Financial Review, government officials are unhappy with RBA de facto move towards tightening which has resulted in the strengthening of the Aussie, causing difficulties for the Federal budget. The fiscal officials are concerned that any further gains by the AUD/USD will prove to be a drag on the economy, but so far Australian demand has remained surprisingly robust, despite a more restrictive monetary policy.
Tonight, the market will get a glimpse of AU CPI data as well as the flash reading of the HSBC Chinese Manufacturing PMI. The inflation numbers are expected to decline on a trimmed mean basis and Chinese data is projected to show no improvement. If the numbers come in soft, the pair could test the 9300 figure and with the clear displeasure of the Abbott government at their back, aggressive shorts may seek to push the pair lower to see if this can be the start of a deeper correction.
In Europe trading was lackluster as well with EUR/USD hugging the 1.3800 line for the second day in a row. Markets will likely remain moribund until tomorrow's flash PMI readings for April which are setting up to become the key event risk for the market this week. Markets are looking for a slight improvement from the month prior and if the data does tick up, it will remove much of the pressure on the ECB to act.
The euro has remained remarkably well bid despite the lackluster economic growth in the region and the threat of an expanding geopolitical threat with Ukraine. Much of the reason for its resilience lies in the fact that the markets remain highly skeptical of any ECB easing action. If tomorrow's data serves to only reinforce those doubts, the EUR/USD could mount another run at the 1.3900 level as short covering kicks in earnest.
Recommended Content
Editors’ Picks
GBP/USD stays weak near 1.2400 after UK Retail Sales data
GBP/USD stays vulnerable near 1.2400 early Friday, sitting at five-month troughs. The UK Retail Sales data came in mixed and added to the weakness in the pair. Risk-aversion on the Middle East escalation keeps the pair on the back foot.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Israel vs. Iran: Fear of escalation grips risk markets
Recent reports of an Israeli aerial bombardment targeting a key nuclear facility in central Isfahan have sparked a significant shift out of risk assets and into safe-haven investments.