The low-yielding yen dominated the forex scene as overall risk aversion overshadowed the Fed’s hawkish FOMC minutes and the return of Chinese traders from their holiday.
- New Zealand’s credit card spending (y/y) up by 4.6% vs. 6.2% growth in December
- China’s markets bank from the holiday and, of course, the PBoC got busy
Chinese traders are back from their holiday
After a week-long holiday, Chinese market players are playing catch up to the global markets.
The People’s Bank of China (PBoC), in particular, adjusted for the Greenback’s strength and lowered its yuan fixing from 6.3428 last February 14 to 6.3428, the weakest in almost a month.
Overall risk aversion
The biggest story of the hour is traders selling their higher-yielding bets in anticipation of faster tightening from major central banks.
As mentioned in my U.S. session recap, Mark Carney and his gang left no doubt of their optimism and their hawkishness.Meanwhile, the Fed’s meeting minutes also talked positively about growth and inflation, leading some analysts to believe that we’ll see more than three rate hikes this year.
Unfortunately for the Asian bourses, “tightening” translated into “end of easy money” and market players priced in accordingly.
- Nikkei is down by 1.13% to 21,722.7;
- Australia’s A SX 200 is up by 0.55% to 5,942.5, and
- Hang Seng is down by 1.07% to 21,095.8.
- Meanwhile, the end of Lunar New Year holidays pushed the Shanghai index 1.95% higher to 3,261.555.
Even the major commodities were hit by overall dollar strength (from the previous session) and overall risk aversion:
- Gold is down by 0.03$ to $1,323.88;
- Brent crude oil is down by 0.37% to $64.88, and
- U.S. WTI is down by 0.49% to $61.01.
Major Market Mover(s):
Other higher-yielding currencies took small hits across the board, but it was the yen’s moves that dominated the forex space during the Asian session.
Not surprisingly, the overall risk aversion pushed the low-yielding currency higher as concerns over the U.S. equities made the Greenback a less appetizing alternative.
USD/JPY is down by 48 pips (-0.44%) to 107.29;
EUR/JPY is down by 64 pips (-0.49%) to 131.73;
GBP/JPY is down by 70 pips (-0.47%) to 149.27, and
AUD/JPY is down by 43 pips (-0.51%) to 83.67.
Watch Out For:
- 5:15 am GMT: FOMC voting member Quarles to make a speech in Tokyo
- 7:45 am GMT: France’s final CPI to maintain its -0.1% rate?
- 9:00 am GMT: Germany’s IfO business climate (117.1 expected, 117.6 previous)
- 9:30 am GMT: U.K.’s second GDP estimate expected to remain at 0.5% in Q4 2017
- 9:30 am GMT: U.K.’s preliminary business investment (q/q) (0.5% expected and previous)
- 11:00 am GMT: U.K.’s CBI realized sales (13 expected, 12 previous)