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10 Feb 2015
Asia Recap: Soft China inflation hints further PBOC easing
FXStreet (Bali) - The antipodean currencies were the main beneficiaries on a soft Chinese inflation report, with expectations of further easing by the PBOC the main driver.
AUD/USD saw a counter-intuitive spike following the weak Chinese inflation data, with an initial algo-led dip to 0.7792 (day pivot) followed by strong buying interest from leveraged names, pricing in further PBOC easing. The rate reached its highest level for the day at 0.7840, tripping some weak stops above Monday's high, before easing off over 10/15 pips. There is more and bigger stops above 0.7880.
NZD/USD was also better bid in Asia, with an early decline below 0.74 leading to a vigorous 40+ pips rebound towards 0.7438 key resistance, a level that matches the pair's value from back on Jan 28th, when the RBNZ published its latest monetary policy, in which the explicit tightening bias was dropped. During today's Asian session, there was renewed talk of macro-prudential measures in New Zealand, with Greg Gibbs, FX Trading Strategist at RBS, noting that "could be a factor limiting strength in NZD."
"No asset price can go up at over 10 per cent a year forever. Sometime it'll stop," English told reporters. The NZ-based news website Stuff, added: "While the government was working to increase supply, especially in Auckland, English admitted the Reserve Bank faced a "dilemma" as it probably could not raise interest rates to slow borrowing with inflation already below the 1-3 per cent target."
"They've got a bit of a dilemma here. Very low interest rates environment. There's no good reason to put interest rates up. They don't really have that tool to enable them to control the housing market," English said, suggesting that interest rates would be unchanged for "a while".
As per USD/JPY, the spot drifted lower in sync with a weaker Nikkei 225, with Japanese investors and local importers reportedly assisting to limit declines. On the topside, there continues to be talk of exporters’ offers near 119.00 and light stops up to 118.10.
Main headlines in Asia
New Zealand truckometer: Growth trend solid in January
Headline risks around Greece to be high this week - RBS
Fed's Powell: US jobless rate underestimates labour market slack
Japan: Investment flows remain JPY negative - Nomura
RBNZ should target property investors - NZ FinMin
United Kingdom BRC Retail Sales Monitor - All (YoY) came in at 0.2%, below expectations (0.5%) in January
Japan Money Supply M2+CD (YoY) came in at 3.4% below forecasts (3.6%) in January
Japan Tertiary Industry Index (MoM) below forecasts (0.1%) in December: Actual (-0.3%)
Australian business confidence edges up in January
Australia House Price Index (YoY) declined to 6.8% in 4Q from previous 9.1%
China inflation weaker in January
Fed's Foster: Early rate hikes can foster financial stability
Macroprudential discussion resumes in New Zealand - RBS
AUD/USD saw a counter-intuitive spike following the weak Chinese inflation data, with an initial algo-led dip to 0.7792 (day pivot) followed by strong buying interest from leveraged names, pricing in further PBOC easing. The rate reached its highest level for the day at 0.7840, tripping some weak stops above Monday's high, before easing off over 10/15 pips. There is more and bigger stops above 0.7880.
NZD/USD was also better bid in Asia, with an early decline below 0.74 leading to a vigorous 40+ pips rebound towards 0.7438 key resistance, a level that matches the pair's value from back on Jan 28th, when the RBNZ published its latest monetary policy, in which the explicit tightening bias was dropped. During today's Asian session, there was renewed talk of macro-prudential measures in New Zealand, with Greg Gibbs, FX Trading Strategist at RBS, noting that "could be a factor limiting strength in NZD."
"No asset price can go up at over 10 per cent a year forever. Sometime it'll stop," English told reporters. The NZ-based news website Stuff, added: "While the government was working to increase supply, especially in Auckland, English admitted the Reserve Bank faced a "dilemma" as it probably could not raise interest rates to slow borrowing with inflation already below the 1-3 per cent target."
"They've got a bit of a dilemma here. Very low interest rates environment. There's no good reason to put interest rates up. They don't really have that tool to enable them to control the housing market," English said, suggesting that interest rates would be unchanged for "a while".
As per USD/JPY, the spot drifted lower in sync with a weaker Nikkei 225, with Japanese investors and local importers reportedly assisting to limit declines. On the topside, there continues to be talk of exporters’ offers near 119.00 and light stops up to 118.10.
Main headlines in Asia
New Zealand truckometer: Growth trend solid in January
Headline risks around Greece to be high this week - RBS
Fed's Powell: US jobless rate underestimates labour market slack
Japan: Investment flows remain JPY negative - Nomura
RBNZ should target property investors - NZ FinMin
United Kingdom BRC Retail Sales Monitor - All (YoY) came in at 0.2%, below expectations (0.5%) in January
Japan Money Supply M2+CD (YoY) came in at 3.4% below forecasts (3.6%) in January
Japan Tertiary Industry Index (MoM) below forecasts (0.1%) in December: Actual (-0.3%)
Australian business confidence edges up in January
Australia House Price Index (YoY) declined to 6.8% in 4Q from previous 9.1%
China inflation weaker in January
Fed's Foster: Early rate hikes can foster financial stability
Macroprudential discussion resumes in New Zealand - RBS