Forex news for Asia trading Thursday 19 January 2017

  • Goldman Sachs' scenario for a Reserve Bank of Australia rate hike
  • Analyst reactions the Australian employment report
  • Japan data - Tokyo condominiums sales +13.2% y/y (& why I'm posting this)
  • Donald Trump’s inauguration looks like it'll be a country music party
  • PBOC is gauging demand for MLF loans
  • More comments from China - SAFE and Commerce Ministry
  • China SAFE says pressure on capital outflows eased in 2016
  • Data due from the US Thursday, and Yellen speaks again
  • PBOC sets USD/CNY mid-point today at 6.8568 (vs. yesterday at 6.8525)
  • Australia jobs report (December) - Employment Change: +13.5K (expected +10K)
  • UK data: RICS House Price balance (December): 24% (expected 30%)
  • NZ data - ANZ Consumer Confidence Index (January): 3.4% m/m (prior -2.1%)
  • Australia data - January consumer inflation expectations: 4.3% (prior 3.4%)
  • Fed head Janet Yellen spoke overnight - here's what she said
  • ECB meets Thursday - what to expect (preview)
  • Japan press: BOJ to consider upgrading growth forecast, but remains cautious on inflation
  • Trade ideas thread - Thursday 19 January 2017
  • Oil - private inventory shows a headline draw
  • New Zealand Building consents (permits) for November: -9.2% m/m (prior +2.6%)
  • New Zealand - BusinessNZ Manufacturing PMI (December): 54.5 (prior 54.5)
  • El-Erian on Yellen - says her comments were more dovish than he expected

A fairly subdued session for the FX markets in Asia today following the surge in the USD overnight. The imminent ECB meeting (Europe time, preview here: ECB meets Thursday - what to expect (preview)) looks to be weighing on activity.

USD/JPY edged toward 114.90 and then slipped back a little, down to around 114.50 where it is as I update. There was little in the way of news or data from Japan today.

EUR/USD and USD/CHF extended their US moves slightly also but have both retraced a tiny amount. Cable ditto, but a bigger range, up from lows circa 1.2250 to around 1.2290.

The Australian (December) employment report was the data focus here today. It was a headline beat but otherwise a lacklustre report. The data and my take on it:

  • Australia jobs report (December) - Employment Change: +13.5K (expected +10K)

More:

  • Goldman Sachs' scenario for a Reserve Bank of Australia rate hike
  • Analyst reactions the Australian employment report

The Australian dollar extended a little lower during the session with a bit of a sharper dip on the report release. Its retraced somewhat now though. NZD/USD followed a similar sort of pattern within a slightly smaller points range.

Gold dropped down toward 1197.50 before bouncing back above 1200.

China:

Another big injection of cash into money markets today from the People's Bank of China (following three big days already this week):

The PBOC injected:

  • 100 bn yuan via 7-day reverse repos
  • 150 bn yuan via 28-day reverse repos

The net injection (after 60bn yuan in maturing loans today) was 190bn yuan

  • Brings the total for the week so far to 1.035tln yuan (biggest since 2008)

Cash demand is surging:

  • Ahead of the Lunar New Year holidays (there are much larger than normal cash withdrawals for gifts, parties and travel over the holiday, January 27 through February 2.
  • Also due this month are corporate tax payments

(ps. The PBOC is also said to be gauging demand for MLF loans. No further word on this yet but you can bet Mike will have the details if the Bank splash some cash here).

Join me tomorrow for the Q4 China GDP report.

Regional equities:

  • Nikkei +0.99%
  • Shanghai -0.06%
  • HK -0.59%
  • ASX +0.11%

Still to come:

  • ECB meets Thursday - what to expect (preview)
  • Data due from the US Thursday, and Yellen speaks again