Forex news for Asia trading Monday 16 January 2017

Monday:

  • ESM's Regling: Brexit is a bigger problem for UK than the rest of Europe
  • SGD traders - speech from head of the Monetary Authority of Singapore
  • USD, EUR, GBP, CHF, CAD, AUD, NZD: Weekly Outlook - Morgan Stanley
  • Japan - Former MOF official Yamasaki surprised by lack of yen talk from Trump
  • More on CFTC: Leveraged funds added to net short GBP positions (highest in 8 weeks)
  • People’s Bank of China sets yuan reference rate at 6.8874 (vs. Friday at 6.8909)
  • BOJ's Kuroda: Will adjust mon pol as needed
  • UK M&A to drop sharply in 2017, investors await Brexit clarity (Baker McKenzie)
  • UK Rightmove House Prices (January) +0.4% m/m (prior -2.1%)
  • Australia private inflation gauge for Dec: 0.5% m/m (prior 0.1%)
  • More on Trump: Disses NATO,EU; threatens BMW tax; all set to cut ties with Merkel
  • Japan: Nov Machine Orders -5.1% m/m (expected -1.4%) & Dec PPI -1.2% y/y (expected -1.4%)
  • Fitch puts Australian banks on a negative sector outlook (from stable)
  • China Securities Journal: Should allow yuan to float freely
  • GBP update - a bounce from the early lows (EUR/USD bounce also)
  • OIL - Venezuela will circulate new proposal next week to support oil prices
  • UK Times reports: Trump says Brexit will end up being a great thing
  • Trade ideas thread for (just another manic) Monday: 16 January 2017
  • NZ data - December food prices -0.8% m/m (prior was -0.1%)
  • So, apparently its Blue Monday (for GBP that should be Red Monday, right?)
  • CFTC commitment of traders latest shows traders short GBP
  • It looks like Brexit will be hard. A GBP weekend recap shouldn't be.
  • Monday morning forex opening price indications

Weekend:

  • Hammond says the UK will "do whatever we have to do" to remain competitive
  • UK's May set to lay out plans for "hard" Brexit
  • Trump: "Everything is under negotiation including one China". China: No, "nonnegotiable"
  • China Xinhua again: Chinese economy likely to hit bottom in 2017
  • China press (Xinhua): "China collapse" would be good for no one
  • Tough to see how protectionism could help USD; at least in the short-term
  • SocGen on what's next for USD/JPY
  • Trump says he is "willing to work with Russia and China"
  • Barnier says EU needs "special vigilance on financial stability risk" post-Brexit
  • UK's May under more pressure to reveal Brexit plans
  • A technical look at the EURUSD for the week starting Jan 16th

Over the weekend we got UK's May set to lay out plans for "hard" Brexit. That was enough to send GBP dropping in the wee small hours of Monday morning here:

  • Monday morning forex opening price indications
  • It looks like Brexit will be hard. A GBP weekend recap shouldn't be.

Cable fell under 1.2 in the super-thin liquidity conditions, down to under 1.1990 before finding enough in the way of bids and reduced selling to see it stabilise somewhat. Over the course of an hour it sat more or less sideways before recovering a few points towards 1.2050 where it once again struggled.

GBP crosses fell along with GBP/USD, of course. Currencies elsewhere opened (mainly) weaker. EUR, CHF, AUD and NZD all lower against the USD. JPY was the exception with some safety-seeking apparently helping the yen.

EUR/USD traded down to circa 1.0594 before covering its 'gap'. AUD lows were around 0.7473 and NZD/USD 0.7090 (all prices are guides, not definitive). Bounces for these were to (again, not definitive) 1.0635, 0.7510 and 0.7147.

NZD/USD has been particularly weak since its bounce high, its on the day's lows as I update now. AUD is not too far off while EUR/USD is around 1.0610 and just under.

Iron ore, rebar surged in China futures today, but this did not translate into AUD higher.

Japanese core machinery orders today was a notable data point - the m/m came in at a very weak reading (a big miss which does not augur well for capex 6 to 9 months out; a further concern is if the weak orders is due to Japanese business assessing global demand as weak there are implications outside of Japan for growth as well).

As usual, US politics bubbled away in the background, over the weekend and into monday, with president-elect trump giving an interview to both the UK Times (UK Times reports: Trump says Brexit will end up being a great thing) and German paper Bild (More on Trump: Disses NATO,EU; threatens BMW tax).

Regional equities:

  • Nikkei -0.87%
  • Shanghai -1.40%
  • HK -1.03%
  • ASX +0.50%

Still to come:

  • It's a US holiday for Martin Luther King Day - financial markets are closed.

More: