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31 Aug 2015
Safe-havens strongly bid in Asia, German retail sales, EZ CPI – Next in focus
FXStreet (Mumbai) - Renewed wave of risk-aversion gripped the markets on the first trading day of the week after Chinese equities halted their recovery path and swung back into losses re-fuelling concerns over China’s economy. The safe-haven currencies such as the yen, euro and the Swissie enjoyed solid on risk-off trades while the Antipodeans suffered with the Kiwi losing the most on NZ GDP downward revisions.
Key headlines in Asia
China stocks back in the red on fading state-support, drags Asia lower
NZ Treasury: Annual growth in 2015 may fall to 2.0%
New Zealand: Building permits at highest since April 08 - ANZ
Dominating themes in Asia - centered on JPY, AUD, NZD
An eventful Asia, with risk-off profile dominating across the board as Chinese equities resumed their broader downtrend while markets remain cautious awaiting the key US NFP report which may influence the Fed decision due in the next two weeks.
The dollar-yen pair gave up the 121 handle mainly driven by yen strength on rising demand for safe-haven assets amid resurfacing Chinese slowdown fears. While, the yen remained unperturbed versus the greenback following the release of below estimates Japan’s industrial production data which revealed that Japan’s industrial output unexpectedly fell in July, sapping a rebound in the economy from a slump last quarter. Output fell 0.6% from June, when it increased 1.1%, compared with the median forecast for a 0.1% gain in Bloomberg survey.
The Antipodeans were dumped with the New Zealand dollar, the biggest loser, after the NZ treasury downgraded GDP forecasts in the June quarter to be around 0.6%, lower than the BEFU forecast, while annual growth in 2015 may fall to 2.0% on softening domestic demand. Moreover, China’s economic slowdown worries also collaborated with the falling oil prices, dragging the Aussie as well as the NZD lower. AUD/USD now loses -0.33% to trade at 0.7140 while the Kiwi is down -0.56% at 0.6422.
The Asian equities snapped their recent gains and fell back into the red zone, with the Hong Kong's benchmark Hang Seng index losing over -1% at 21381 while mainland China's benchmark Shanghai Composite drops nearly 3% at 3148. Among other Asian indices, the Japanese benchmark Nikkei 225 falls over 1.80% at 18772 on stronger yen. While the benchmark Australian S&P/ASX 200 is tanking -1.69% at 5174.
The negative performance of the Asian indices can be attributed to the drop in Chinese stocks after risk-off sentiment resurfaced amid reports that Chinese authorities have decided not intervene in order to prop up the stock markets now.
Heading into Europe - centered on EUR, GBP
A busy week ahead for EUR, GBP traders, as the focus will shift again to Mario Draghi's team of ECB policymakers, and their reaction to the recent turmoil in global markets.
Also, a large set of macroeconomic data is scheduled for release, including fresh PMI data for the euro zone and inflation figures.
The euro zone will publish its August inflation data estimate on Monday, with inflation expected to register a 0.1% increase y/y. In July, consumer price growth in the euro zone reached a 0.2% annual level.
Germany will publish the results of retail sales in July with a 1.3% gain forecast on a monthly basis, following the 2.3% decline in June, and a 1.5% hike annually after advancing 5.1% y/y a month ago.
Looking ahead, the North American session remains data-light on the first trading session of the week with Chicago PMI from the US and current account figures from Canada to be on the cards.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The EUR/USD pair has fell steadily for the last four days, having also broken below the 61.8% retracement of these last two-weeks advance, at 1.1280. The daily chart shows that the technical indicators maintain strong bearish slopes, coming from oversold territory and pointing to break below their mid-lines, should the price continue falling.”
“In the same chart, the 100 and 200 DMAs converge around 1.1120, also a critical support level, meaning a break below it is required to confirm additional bearish momentum. In the 4 hours chart, the technical indicators are hovering with no directional strength near oversold territory, whilst the 20 SMA maintains a sharp bearish slope well above the current price, supporting the longer term view.”
Key headlines in Asia
China stocks back in the red on fading state-support, drags Asia lower
NZ Treasury: Annual growth in 2015 may fall to 2.0%
New Zealand: Building permits at highest since April 08 - ANZ
Dominating themes in Asia - centered on JPY, AUD, NZD
An eventful Asia, with risk-off profile dominating across the board as Chinese equities resumed their broader downtrend while markets remain cautious awaiting the key US NFP report which may influence the Fed decision due in the next two weeks.
The dollar-yen pair gave up the 121 handle mainly driven by yen strength on rising demand for safe-haven assets amid resurfacing Chinese slowdown fears. While, the yen remained unperturbed versus the greenback following the release of below estimates Japan’s industrial production data which revealed that Japan’s industrial output unexpectedly fell in July, sapping a rebound in the economy from a slump last quarter. Output fell 0.6% from June, when it increased 1.1%, compared with the median forecast for a 0.1% gain in Bloomberg survey.
The Antipodeans were dumped with the New Zealand dollar, the biggest loser, after the NZ treasury downgraded GDP forecasts in the June quarter to be around 0.6%, lower than the BEFU forecast, while annual growth in 2015 may fall to 2.0% on softening domestic demand. Moreover, China’s economic slowdown worries also collaborated with the falling oil prices, dragging the Aussie as well as the NZD lower. AUD/USD now loses -0.33% to trade at 0.7140 while the Kiwi is down -0.56% at 0.6422.
The Asian equities snapped their recent gains and fell back into the red zone, with the Hong Kong's benchmark Hang Seng index losing over -1% at 21381 while mainland China's benchmark Shanghai Composite drops nearly 3% at 3148. Among other Asian indices, the Japanese benchmark Nikkei 225 falls over 1.80% at 18772 on stronger yen. While the benchmark Australian S&P/ASX 200 is tanking -1.69% at 5174.
The negative performance of the Asian indices can be attributed to the drop in Chinese stocks after risk-off sentiment resurfaced amid reports that Chinese authorities have decided not intervene in order to prop up the stock markets now.
Heading into Europe - centered on EUR, GBP
A busy week ahead for EUR, GBP traders, as the focus will shift again to Mario Draghi's team of ECB policymakers, and their reaction to the recent turmoil in global markets.
Also, a large set of macroeconomic data is scheduled for release, including fresh PMI data for the euro zone and inflation figures.
The euro zone will publish its August inflation data estimate on Monday, with inflation expected to register a 0.1% increase y/y. In July, consumer price growth in the euro zone reached a 0.2% annual level.
Germany will publish the results of retail sales in July with a 1.3% gain forecast on a monthly basis, following the 2.3% decline in June, and a 1.5% hike annually after advancing 5.1% y/y a month ago.
Looking ahead, the North American session remains data-light on the first trading session of the week with Chicago PMI from the US and current account figures from Canada to be on the cards.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The EUR/USD pair has fell steadily for the last four days, having also broken below the 61.8% retracement of these last two-weeks advance, at 1.1280. The daily chart shows that the technical indicators maintain strong bearish slopes, coming from oversold territory and pointing to break below their mid-lines, should the price continue falling.”
“In the same chart, the 100 and 200 DMAs converge around 1.1120, also a critical support level, meaning a break below it is required to confirm additional bearish momentum. In the 4 hours chart, the technical indicators are hovering with no directional strength near oversold territory, whilst the 20 SMA maintains a sharp bearish slope well above the current price, supporting the longer term view.”