Article Highlights

  • AU markets out on Australia Day
  • NZ business services index at 57.5 vs. 56.4 previous
  • Japan’s December trade deficit is highest in 2013
  • Did PBoC order banks to suspend cash transfers?
  • Nikkei closes down 2.51%
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Risk aversion continued to dominate the Asian session price action thanks to cash concerns in China and the continued slide of emerging market currencies. The low-yielding yen didn’t benefit this time since traders got spooked over Japan’s December trade deficit figure, which clocked in as the highest in 2013.

It didn’t help risk appetite that a report from Forbes suggested that the PBoC ordered commercial banks to suspend cash transfers. Citibank, which was cited in the column, explained that customers can still transfer funds online, but, thanks to the Lunar New Year break, the receiving bank would most likely receive those funds by February 7. Unfortunately, the damage was already done and traders used the cash crunch scare to move their money out of their high-yielding investments.

USD/JPY found support at the 101.80 handle while EUR/JPY, GBP/JPY, and even AUD/JPY showed yen weakness. Major comdoll pairs like NZD/USD also found support at early Asian session levels as the heat was concentrated on emerging market currencies and the yen.

Will the selloff carry over to London session trading? At 10:00 am GMT we’ll see Germany’s IfO business climate report, which is expected to climb from 109.50 to 110.00 in January. Germany’s Bundesbank will also release its monthly report at 12:00 pm GMT while the Eurogroup is also scheduled to start their meetings today.

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U.S. Session Recap

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