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Asian FX market wrap: NZD volatility the only highlight

  • Prospects of an imminent rate hike in New Zealand are receding after the unemployment rate rose to a 10-year high, fuelled in the main by increased migration
  • The NZD/USD fell from .7080 to .7005 immediately after the announcement and has failed to recover as the session progressed, closing close to it's fresh new lows at .6975
  • The AUD also fell sharply on much worse than expected December retail sales
  • The AUD recovered lost ground quickly on strong home building approvals
  • China: new loans in January >1.5 trillion Yuan
  • Toyota shares slump dragging the Nikkei lower
  • South Korea still aims for 5% GDP growth but uncertainties growing
  • Other regional bourses fall, losing 1% on average
  • Gold steady around $1110/oz

Traders generally had expected a very quiet session today with both the ECB and BoE meeting in a few hours.

The NZD ensured some early volatility after the very poor unemployment numbers. The NZD fell dragging the AUD down along with it. This spread somewhat into the other majors as NZD/JPY selling from Japanese retail accounts spilt over into the other JPY crosses.

The AUD/USD fell from .8820 to .8775 on the disappointing retail sales numbers but traders were unwilling to challenge supposedly strong corporate and Sovereign bids starting at .8770. The AUD/USD then jumped quickly back above .8800 when the market assessed the strong building approval numbers. Lots of bids between .8750/70 but watch for heavy stops just below. Range: .8775/.8830

EUR/USD also tried to break lower when the NZD/JPY selling was at its peak but it couldn't get much below 1.3870. The talk is of heavy buying interest from both China and the BIS ahead of 1.3850, but as in the case of the AUD/USD, large stops are tipped below 1.3850. Range: 1.3868/1.3903. NY close 1.3895.

Cable has been generally well bid today as traders anticipate the BoE initiating a pause in its bond buying program. EUR/GBP has drifted slightly lower. Range: 1.5882/1.5918. NY close 1.5895.

USD/JPY has been unaffected by the Toyota story and has traded again in a tight 90.80/91.06 range. EUR/JPY has drifted slightly lower in a 136.08/47 range. There is still talk of good sized bids at 125.75.

Markets: Nikkei -0.5%, HK -1.5%, Shanghai -0.5%, Sydney -0.8%, Kospi -0.3%. Gold steady at $1110/oz.