The absence of fresh economic data releases overnight did nothing to address lingering investor uncertainty over the sustainability of the global recovery. This made for generally range-bound FX trading conditions, although optimism was momentarily boosted when USDCNY fixed at a new all-time-low of 6.2891. Continue reading →

AUDUSD dropped 100 pips after China’s flash PMI estimate for March came in well below February’s final print (48.1 versus previous 49.6). The PMI also added to the kiwi’s troubles, compounding the selloff that began earlier after very weak New Zealand Q4 GDP. Continue reading →

The Australian dollar managed to steady itself overnight after Tuesday’s scare about China’s appetite for iron ore, but the currency could not fully recover lost ground. Tuesday’s comments from an Australian miner appeared to provide anecdotal evidence of a Chinese slowdown and we can expect AUD to show extreme sensitivity to any further remarks of this nature. Continue reading →

The RBA sounded a cautious but steady note with its release of policy meeting minutes, but this did not prevent AUD from taking a knock after commercial entities voiced concerns about Chinese demand for resources. The reaction function for the AUD just goes to show how the individual exposures for various currencies matter at this point, especially within the risk bloc, and investors have become more mindful of individual catalysts. Continue reading →

Ranges were broadly flat overnight but the dollar has checked some of its advance amid fears that data is still not strong enough in the US for the Fed to continue allowing the market to price out expectations for monetary easing. On Friday the University of Michigan consumer sentiment index slipped to 74.3 in early March from 75.3 in February; industrial production was unchanged m/m in February; and the y/y reading for core consumer prices slowed to 2.2% in February from 2.3% in January. Continue reading →

Currency markets were mostly indecisive during the Asia session despite the brief episode of dollar buying when Richmond Fed President Lacker explained why he dissented again at Tuesday’s FOMC. Even before this, Lacker had revealed his preference for a rate hike in 2013, but this time the FX reaction was more apparent. Continue reading →

Broad USD strength amid the post-FOMC rise in US Tresury yields remains the dominant theme. While USDJPY broke above 84 in the Asia session, EURUSD is threatening to slip through 1.30. Although Japanese bonds were under pressure, USDJPY was driven by the widening 2y UST-JGB yield spread on expectations of a Fed-BoJ policy divergence. Continue reading →

The US yield curve was prodded into life by last night’s FOMC policy statement. US 2y yields climbed above 35 bp overnight and the 10y has finally hit 2.15%. This kept the yen in particular on the defensive, and the dollar also advanced more generally. Continue reading →

The Bank of Japan kept market participants waiting much longer than usual for their overnight policy decision. The delay prompted speculation that a further round of easing might be in the pipeline, but USDJPY dropped 30 pips when no material shift in stance emerged. Crucially, unlike the previous meeting, there was no change to the BoJ’s JGB-purchase ambitions: rinban operations will continue at the same pace, and purchases of shorter-dated JGBs by the asset purchase facility will also continue as before. Continue reading →

The dollar-positive afterglow from Friday’s strong US payrolls report lasted into the Asia session on Monday. EURUSD is now firmly back on the 1.30 handle, and both AUD and NZD are struggling. Continue reading →

A cautious tone prevailed in Asia, with the commodity currencies starting on the back foot amid broad-based declines across the major equity indices. AUDUSD was initially pressured by the weaker-than-expected 0.4% q/q Australian GDP print for Q4 2011 – which significantly undercut the 0.8% q/q consensus estimate – but managed to stabilise later in the session as equities pared early declines. Continue reading →