Forex news for Asia trading Thursday 7 January 2016

Chinese stock market circuit breakers got a work out today with trade halted for 15 minutes after a 5% fall only to close trade for the day completely within seconds of reopening as the index plunged 7%

China:

  • Here's what China stock market trading looked like today - video coverage
  • Here's how the China stock market 'circuit breaker' works
  • China stock market regulator announces new rules governing share sales
  • Comments from China on the yuan
  • McDonald's Ronald says Chinese yuan is way undervalued
  • Stockmarkets - China closed for the day - lets look at the scoreboard
  • Oil getting smashed
  • CHINA - stocks down 7% - shut for the day!
  • CHINA - CSI300 down 5% - Trading Halt triggered
  • USD/JPY hit down below 118.00.
  • China stocks open: Shanghai down 2%, Shenzen down 2.6%, CSI300 down 2.1%
  • China stockmarket opening indications - Shanghai Comp to open down 1.6%
  • People’s Bank of China (PBOC) sets yuan reference rate at 6.5646
  • Here comes China - yuan fix soon followed by stock market open
  • Will we see intervention from the PBOC?
  • China data coming out today - FX Reserves. Will anyone even care?
  • NZD traders - Fonterra see at least 6% milk production drop this season
  • Australia data - Building approvals (November): -12.7% m/m (expected -3.0%)
  • Australia data - Trade balance (November): -2906m (expected -2985m)
  • 9 key points from the FOMC Minutes
  • UK's Osborne warns economy faces 'cocktail of threats'
  • BNP recommend a USD/JPY long
  • Heads up for USD/JPY traders - large option expiry at 119.00 today
  • An early look at what's expected for the NFP on Friday
  • BNP on the FOMC Minutes: 80% chance of a rate hike in March
  • Canada finance minister declines to reiterate 2019/20 budget balance goal
  • Trade ideas thread for Thursday 007 January 2016

It really was all about China again today, but lets take it from the top.

Australian data today was trade balance:

  • a slight improvement in the deficit in November from October , but still the the 20th consecutive trade deficit)

and building approvals

  • their biggest fall for 3 and a half years
  • Slowing housing construction ahead threatens to weigh on economic growth and slowing house prices have the potential to impact via lower household spending as the 'wealth effect' drops away; this will reignite chatter of RBA rate cuts.

OK, now thats out of the way, back to the main course.

The People's Bank of China yet again devalued the yuan sharply, with a >0.5% decline at the mid-point fixing.

The spread of the CNY to the CNH gapped higher again to around a record of 1,650 pips.

AUD and NZD were both marked lower immediately, as was USD/JPY. AUD/JPY and NZD/JPY, logically, were both smashed lower.

A few minutes later we got the opening of the Chinese sharemarkets. This wasn't to last long.

Shanghai and Shenzen both opened lower, as did the 'growth board' (stop laughing) ChiNext. Losses quickly extended and in under a quarter of an hour trade was suspended for 15 minutes under the 5% decline circuit breaker (a 5% decline in the CSI300, which is an index of the top 300 shares in China).

After a nice cup of tea trade resumed for a few seconds before the day's second, and final, circuit breaker kicked in. The CSI300 dropped like a rock, to hit down 7% and close trade for the day.

Thats right - stock market trading was completely closed for the rest of the day. See ya Friday! Today marks the shortest ever trading session for Chinese share markets in their 25 year history. In total there was 14 minutes of trade.

The final score in China today:

  • CSI300 -7.2%
  • Shanghai Composite -7.3%
  • Shenzen -8.3%
  • ChiNext -8.7%

To continue with China for just a few moments longer, offshore yuan recovered its opening losses today in what appeared to be PBOC intervention to smooth the moves (intervention not confirmed as yet) ... .see bullets, above.

USD/JPY had hit a low under 117.70 briefly before recovering for the balance of the session, up to above 118.20 before it has settled back around 118 (though 'settled' is not really an accurate description). Talk now of a barrier option at 117.50 in USD/JPY.

AUD and NZD both came back from their lows also, AUD/USD from sub 0.7030 to just above 0.7050, NZD/USD sub 0.6615 to 0.6640+ as I update.

EUR/USD was a steady gainer for much of the session, from under 1.0780 to now trading toward 1.0825. USD/CHF its mirror, back under 1.0030 as of updating. Cable is reasonably steady.

Gold had a good session, cracking back above USD1100 (albeit briefly, its around 1098 now).

Oil, on the other hand, hit the skids again, CL futures under $33 at one stage.

As I sign off, the latest from China is the stock market regulator there, the China Securities Regulatory Commission (CSRC) is to hold meetings on the circuit breaker mechanism. Nothing further at this stage.

Regional equities :

  • Nikkei -2.25%
  • Shanghai, err ... see above.
  • HK -2.50%
  • ASX -1.93%