Asian Session Recap – July 24, 2014

  • Japanese trade deficit at 1.08T JPY vs. 1.11T JPY estimate
  • Japan’s July flash manufacturing PMI at 50.8 vs. 51.9 consensus
  • Nikkei down by 0.29% for the day
  • RBNZ hiked interest rates by 0.25% as expected
  • Chinese HSBC flash manufacturing PMI up from 50.7 to 52.0
  • German and French manufacturing and services PMIs due
  • U.K. retail sales to show 0.2% rebound?

What a bloodbath for the Kiwi! Although the RBNZ hiked interest rates by 0.25% in today’s rate statement, NZD/USD plummeted from the .8700 area to a low of .8570 as of this writing. Governor Graeme Wheeler hinted that they would take a break from their streak of rate hikes and reassess how their moves have been affecting the New Zealand economy.

To top it off, he also tried to jawbone the New Zealand dollar when he spoke of the exchange rate not being justified by fundamentals. He said that the currency is trading at unsustainable levels, leading many to speculate about an actual central bank intervention later on.

In other news, the Australian dollar was able to draw support from the improvement in China’s HSBC flash manufacturing PMI for July. The report showed a climb from 50.7 to 52.0, reflecting stronger expansion in the industry and hinting at a potential pickup in raw material imports from Australia.

In Japan, the Nikkei closed 0.29% lower as risk aversion still weighed on Asian equity trading. Data was mixed, as the Japanese economy reported a smaller than expected trade deficit of 1.08T JPY versus the estimated 1.11T JPY while the flash manufacturing PMI fell short of the 51.9 consensus and landed at 50.8.

The upcoming London trading session might be a volatile one for the euro, as Germany and France are set to print their latest manufacturing and services PMI reports. Small improvements are expected but another round of disappointments might lead to more losses for the euro. Meanwhile, the U.K. has its retail sales report due and might show a 0.2% rebound from the previous 0.5% decline.

See also:

U.S. Session Recap

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