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10 Feb 2016
Yen bulls retain control in Asia, focus on Yellen’s testimony
The JPY bulls extend control into Asia amid broad based USD weakness, while the Japanese stocks extend the slump and drop to the lowest levels since Oct 2014. As a result, wide-spread risk-aversion prevailed in the Asian session, with the Antipodeans fall further in the red and ignore the recovery in the oil prices.
Key headlines in Asia
Old school rate checking by BOJ behind USD/JPY pop?
Japan’s EcoMin hopes BOJ takes appropriate action based on economic, price situation
Fedwatch: Chances of another rate hike before year-end at 20%
Dominating themes in Asia – centered on JPY, AUD and NZD
Risk-aversion continues to dominate markets as commodities and equities continue to slide and add to the volatility amid holiday-thinned trades. As a result, the yen continues to remain in demand on the back of increased flight to safety, with USD/JPY keep range near the lowest levels since Nov 2014, around 114.40. Over the last hours, the dollar-yen pair is seen reversing a freak spike to 115.10 levels on a different type of BOJ intervention. Apparently, BOJ did a rate-checking by calling some inter-bank dealers, with markets taking that as the BOJ’s invisible hand in a bid to halt the yen appreciation.
Both Antipodeans are heavily sold-off into the risk-off market profile, with the AUD/USD pair ignoring the upbeat home loans data and drops -0.32% to 0.7048, while the Kiwi snapped previous rebound and now drops -0.40% to test 0.66 handle on its way to 200-DMA. Markets eagerly await tonight’s Yellen’s testimony and RBA Governor Steven’s speech due tomorrow for fresh insights on the OZ currencies.
Among the Asian equities, Japan’s Nikkei continues to slide on continued yen rise and also as BOJ’s negative interest policy stance appear to have back-fired. The index sinks nearly -4% to the lowest levels since Oct 2014 and breaks below 15,500 levels. The Australian ASX 200 index also followed suit and drops -1.25% towards closing hours. Rest of Asia remains closed for the Lunar New Year. China and Taiwan are shut for the week on Spring Festival holidays.
Heading into Europe and North America
Nothing of note in terms of economic news from the Euro zone in the session ahead, except for the industrial and manufacturing production figures likely to be reported from the UK docket.
UK industrial output in December is seen to show 0.1% dip on a monthly basis after the 0.7% drop reported a month ago, and adding 1.0% on an annual basis compared to the 0.9% growth in November. Meanwhile, manufacturing production may rise 0.1% m/m, following the 0.4% decline in November, and a fall of 1.4% y/y after a 1.2% drop a month ago.
Apart from data, ECB board member Peter Praet is scheduled to deliver a keynote speech at a conference organized by Harvard University in Washington, USA. While OPEC will release its monthly oil market report.
The NY session ahead remains absolutely data-empty as the entire focus remains on the Fed Chair Yellen; as she is due to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC.
Analysts at ANZ noted, “Her delivery on the Monetary Policy Report is expected to exude a sense of cautious optimism. With Yellen’s testimony tonight, it’s time to find out whether policymakers have more cards up their sleeves."
Key headlines in Asia
Old school rate checking by BOJ behind USD/JPY pop?
Japan’s EcoMin hopes BOJ takes appropriate action based on economic, price situation
Fedwatch: Chances of another rate hike before year-end at 20%
Dominating themes in Asia – centered on JPY, AUD and NZD
Risk-aversion continues to dominate markets as commodities and equities continue to slide and add to the volatility amid holiday-thinned trades. As a result, the yen continues to remain in demand on the back of increased flight to safety, with USD/JPY keep range near the lowest levels since Nov 2014, around 114.40. Over the last hours, the dollar-yen pair is seen reversing a freak spike to 115.10 levels on a different type of BOJ intervention. Apparently, BOJ did a rate-checking by calling some inter-bank dealers, with markets taking that as the BOJ’s invisible hand in a bid to halt the yen appreciation.
Both Antipodeans are heavily sold-off into the risk-off market profile, with the AUD/USD pair ignoring the upbeat home loans data and drops -0.32% to 0.7048, while the Kiwi snapped previous rebound and now drops -0.40% to test 0.66 handle on its way to 200-DMA. Markets eagerly await tonight’s Yellen’s testimony and RBA Governor Steven’s speech due tomorrow for fresh insights on the OZ currencies.
Among the Asian equities, Japan’s Nikkei continues to slide on continued yen rise and also as BOJ’s negative interest policy stance appear to have back-fired. The index sinks nearly -4% to the lowest levels since Oct 2014 and breaks below 15,500 levels. The Australian ASX 200 index also followed suit and drops -1.25% towards closing hours. Rest of Asia remains closed for the Lunar New Year. China and Taiwan are shut for the week on Spring Festival holidays.
Heading into Europe and North America
Nothing of note in terms of economic news from the Euro zone in the session ahead, except for the industrial and manufacturing production figures likely to be reported from the UK docket.
UK industrial output in December is seen to show 0.1% dip on a monthly basis after the 0.7% drop reported a month ago, and adding 1.0% on an annual basis compared to the 0.9% growth in November. Meanwhile, manufacturing production may rise 0.1% m/m, following the 0.4% decline in November, and a fall of 1.4% y/y after a 1.2% drop a month ago.
Apart from data, ECB board member Peter Praet is scheduled to deliver a keynote speech at a conference organized by Harvard University in Washington, USA. While OPEC will release its monthly oil market report.
The NY session ahead remains absolutely data-empty as the entire focus remains on the Fed Chair Yellen; as she is due to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC.
Analysts at ANZ noted, “Her delivery on the Monetary Policy Report is expected to exude a sense of cautious optimism. With Yellen’s testimony tonight, it’s time to find out whether policymakers have more cards up their sleeves."