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  • (BFW) Daily FX View: AUD, NZD Fall As China Fincl Conditions Tighten 0 comments
    Oct 23, 2013 6:49 AM

    NZD, AUD underperformed, JPY outperformed as China bank borrowing costs rise, banks increase bad loan write-offs, Bloomberg strategist TJ Marta writes.

    • China conditions tightening:
    • Bank borrowing costs higher; 7-day repo +47bps to 4.05%; overnight rate +72bps to 3.80%
    • Largest Chinese banks triple bad loan write-offs for 1H, stoking concern they may be clearing accounts for new defaults

    • NZD underperformed 22 peers overnight:
    • NZD/USD down sharply, breaking lower from 3-day consolidation of mid-Oct. rally
    • Support 0.8194 Oct. 2 low, 0.8163 Aug. 19 high

    • AUD underperformed 20 peers
    • Losses mitigated by 3Q CPI 1.2%q/q vs est. 0.8%
    • AUD/USD forming outside day lower after reaching new high since June
    • Technicals signal AUD extremely overbought: stochastics near high for 2013, MACD high since 2012, RSI falling from high since 2011
    • Support 0.9529 Sept. 18 high, 0.9281 Sept. 30 low

    • JPY outperformed 22 peers:
    • USD/JPY continued correction from 99.17 Oct. 17 high
    • MACD about to cross lower, stochastics crossing lower, supporting continued move lower
    • Support ~97 late-Aug. lows, 96.57 Oct. 8 low

    • CAD risk from BoC decision/statement
    • Unanimous est. from 23 economists for unch. 1.00% rate
    • Statement watched for reiteration or removal of tightening bias
    • USD/CAD higher on China developments
    • On daily chart, rebounding after consolidating for 3 days at/below 1.03; resistance 1.0420 Oct. 10 high

    • NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.

    Themes: Forex, Macro View
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