20 Aug 2015
Dovish FOMC minutes keep USD undermined in Asia, UK Retail Sales eyed
FXStreet (Mumbai) - Broad based US dollar weakness persists in Asia, lifting most G10 currencies across the FX board. The European currency was biggest gainer, sitting firmly above 1.11 barrier. Kiwi also climbed higher despite weak NZ fundamentals, while the gains in the Aussie were checked on tumbling Chinese equities amid no rescue effort seen from the Chinese authorities so far. USD/JPY is striving for 124 handle, staging a comeback from previous drop somewhat.
Key headlines in Asia
Shanghai Composite back in the red, drags Asia lower
NZ consumer sentiment lowest since mid-2012 - ANZ
Yuan inclusion in IMF's SDR basket not until Oct 2016
Dominating themes in Asia - centered on JPY, AUD, NZD
A relatively data-quiet Asian session, with most Asian currencies enjoying gains from broad based US dollar weakness induced by the dovish FOMC July 29 meeting. Despite, persisting greenback softness, USD/JPY tries to recover lost ground mainly driven profit-taking after the recent fall.
The minutes last night revealed that the policymakers at the Federal Reserve thought that the jobs market was near the point that would justify a rate hike, but the inflation side of the mandate remained a major obstacle for the first increase in benchmark interest rates in almost a decade.
The Antipodean currencies remain well bid with the Aussie struggling hard to extend gains and the Chinese stocks slipped back in to the negative territory today after a brief recovery seen on Wednesday. While Kiwi ignored downbeat consumer confidence figures and edged higher beyond 0.66 handle. The ANZ Consumer Confidence Index fell from 113.9 in July to 109.8 this month, its weakest level since mid-2012.
Asian markets keep losses mainly driven by resumption of the downtrend in the China stocks. The Japanese benchmark Nikkei 225 tanked -0.61% at 20098. While Hong Kong's benchmark Hang Seng index is down -1.49% at 22843 and mainland China's benchmark Shanghai Composite pared losses and now trades -0.40% at 3779. The benchmark Australian S&P/ASX dropped -1.26% and trades at 5312, reversing previous rally.
Heading into Europe - centered on EUR, GBP
There is nothing much of relevance to be published in terms of economic news in the European session ahead with only the UK retail sales data to remain the major highlight.
Retail sales from the UK disappointed in June, as the number of people visiting UK shops dropped when compared to May. At the start of the third quarter in July, both total and ex auto sales volumes are expected to have bounced back 0.4% in July, from a decline of 0.2% a month before.
Besides, Greek big bond repayment to ECB looms, where Greece is scheduled to honor a big €3.5 billion bond repayment to the European Central Bank (ECB).
Looking ahead, we have a busy NA session with US weekly jobless claims, existing home sales and Philly Fed manufacturing index on the cards.
EUR/USD Technicals
The AceTrader Team noted, “Despite euro's re-test of Tuesday's low at 1.1018 yesterday, subsequent rally to 1.1134 in New York afternoon on dollar's broad-based weakness following the release of dovish FOMC minutes suggests the pullback from last Wednesday's 1-month high at 1.1214 has ended there and consolidation with upside bias would be seen, above resistance at 1.1189 would confirm this view and yield resumption of recent uptrend for a re-test of aforesaid high.”
“On the downside, only below 1.1018 would confirm a temporary top has been made and risk would shift to the downside for a stronger retracement towards 1.0960.”
Key headlines in Asia
Shanghai Composite back in the red, drags Asia lower
NZ consumer sentiment lowest since mid-2012 - ANZ
Yuan inclusion in IMF's SDR basket not until Oct 2016
Dominating themes in Asia - centered on JPY, AUD, NZD
A relatively data-quiet Asian session, with most Asian currencies enjoying gains from broad based US dollar weakness induced by the dovish FOMC July 29 meeting. Despite, persisting greenback softness, USD/JPY tries to recover lost ground mainly driven profit-taking after the recent fall.
The minutes last night revealed that the policymakers at the Federal Reserve thought that the jobs market was near the point that would justify a rate hike, but the inflation side of the mandate remained a major obstacle for the first increase in benchmark interest rates in almost a decade.
The Antipodean currencies remain well bid with the Aussie struggling hard to extend gains and the Chinese stocks slipped back in to the negative territory today after a brief recovery seen on Wednesday. While Kiwi ignored downbeat consumer confidence figures and edged higher beyond 0.66 handle. The ANZ Consumer Confidence Index fell from 113.9 in July to 109.8 this month, its weakest level since mid-2012.
Asian markets keep losses mainly driven by resumption of the downtrend in the China stocks. The Japanese benchmark Nikkei 225 tanked -0.61% at 20098. While Hong Kong's benchmark Hang Seng index is down -1.49% at 22843 and mainland China's benchmark Shanghai Composite pared losses and now trades -0.40% at 3779. The benchmark Australian S&P/ASX dropped -1.26% and trades at 5312, reversing previous rally.
Heading into Europe - centered on EUR, GBP
There is nothing much of relevance to be published in terms of economic news in the European session ahead with only the UK retail sales data to remain the major highlight.
Retail sales from the UK disappointed in June, as the number of people visiting UK shops dropped when compared to May. At the start of the third quarter in July, both total and ex auto sales volumes are expected to have bounced back 0.4% in July, from a decline of 0.2% a month before.
Besides, Greek big bond repayment to ECB looms, where Greece is scheduled to honor a big €3.5 billion bond repayment to the European Central Bank (ECB).
Looking ahead, we have a busy NA session with US weekly jobless claims, existing home sales and Philly Fed manufacturing index on the cards.
EUR/USD Technicals
The AceTrader Team noted, “Despite euro's re-test of Tuesday's low at 1.1018 yesterday, subsequent rally to 1.1134 in New York afternoon on dollar's broad-based weakness following the release of dovish FOMC minutes suggests the pullback from last Wednesday's 1-month high at 1.1214 has ended there and consolidation with upside bias would be seen, above resistance at 1.1189 would confirm this view and yield resumption of recent uptrend for a re-test of aforesaid high.”
“On the downside, only below 1.1018 would confirm a temporary top has been made and risk would shift to the downside for a stronger retracement towards 1.0960.”