Asian Session Recap – March 7, 2014

  • RBA Gov Stevens acknowledged rate cut cycle may be over
  • Japanese leading indicators up by 112.2% from 111.7%
  • PBOC likely to keep expanding yuan trading band this year
  • China’s Shanghai Chaori officially announces corporate bond default

Surf’s up for the Aussie! After a round of stronger than expected economic data, RBA Governor Stevens followed it up with hawkish remarks in his recent testimony. Apart from refraining to jawbone the Aussie too much, he also acknowledged that the rate cut cycle may be over for the RBA as he reiterated that the previous easing moves were enough to keep the economy stable.

Although risk appetite seemed to stay in the markets during the Asian session, most higher-yielding currencies appeared hesitant to extend their rallies prior to today’s NFP release. Concerns about more companies announcing corporate bond defaults in China, sparked by Shanghai Chaori’s official announcement of interest payment default, and the PBOC’s plans to keep expanding the yuan trading band this year also led traders to be cautious about adding to their pro-risk positions.

In the next few hours, we’ll see medium-tier data from Switzerland and the euro zone. Swiss CPI and foreign currency reserves data are up for release, with the inflation figure set to show a 0.4% rebound from the previous 0.3% decline in price levels. German industrial production, which might print a 0.7% uptick, and French trade balance are also on today’s set of releases. Be ready for a bit of tight consolidation ahead of the U.S. session fireworks though!

See also:

U.S. Session Recap

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