Asia Session: Risk currencies continue to push higher amidst thin trading conditions and risk-on sentiment
Asia Session
Updated Oct 17, 2012 12:57:09 AM Written by Chris Tedder
Commodity
currencies and the euro have continued their march higher against the
US dollar. AUDUSD punched through 1.0300 early in the session, before
finding some resistance just short of the pair’s 38.2% retracement level
from the sell-off that started in mid-September. Driving the push
higher for risk currencies was some positive earnings out the US and, in
particular, renewed belief that Spain will apply for a bailout in the
not too distant future, coupled with the fact that there appears to be
softening resistance in Germany to playing a more active role in helping
struggling European nations. The push higher was also aided by thin
market conditions as investors await an EU economic summit and Chinese
GDP data.
Whilst today was a fairly light data day in Asia, the coming days may prove to be decisive for investor sentiment. First up, tomorrow’s GDP data out of China may be a key driver for commodity currencies. A weak GDP print may be the straw that breaks the camel’s back for AUD. For an in-depth look at tomorrow’s GDP data out China please see: Fundamental Update: Investors nervously await the release of Chinese GDP data.
In other news, the almost complete lack of economic data releases in Asia kept attention focused on the second debate between Obama and Romney. The president looked a lot more comfortable this time around, but the ever charismatic Republican held his own. The overall winner will depend on who you talk to. But one thing is for sure – the race is definitely heating up for America’s top job.
The candidates touched on a lot during the debate, including the yuan. Romney was quick to state that he will label China a currency manipulator on day one. But is the yuan really massively undervalued? The case for a significant appreciation of China’s currency has gotten a lot weaker of late, especially when the Fed decided to turn on the printing press, thereby flooding the market with USD.
In other news, whilst the euro and aussie have been able to push through significant resistance levels of late (1.3000 for EUR and 1.0300 for AUD), the kiwi hasn’t. NZD was hit hard by inflation data out earlier in the weak which printed at its lowest level since 1999. As a result, NZDUSD appears to be trapped beneath 0.8200, but has thus far managed to hold above its upward trend line on a daily chart, and AUDNZD has broken through a 25% retracement level (see chart below).
AUDNZD – daily
Whilst today was a fairly light data day in Asia, the coming days may prove to be decisive for investor sentiment. First up, tomorrow’s GDP data out of China may be a key driver for commodity currencies. A weak GDP print may be the straw that breaks the camel’s back for AUD. For an in-depth look at tomorrow’s GDP data out China please see: Fundamental Update: Investors nervously await the release of Chinese GDP data.
In other news, the almost complete lack of economic data releases in Asia kept attention focused on the second debate between Obama and Romney. The president looked a lot more comfortable this time around, but the ever charismatic Republican held his own. The overall winner will depend on who you talk to. But one thing is for sure – the race is definitely heating up for America’s top job.
The candidates touched on a lot during the debate, including the yuan. Romney was quick to state that he will label China a currency manipulator on day one. But is the yuan really massively undervalued? The case for a significant appreciation of China’s currency has gotten a lot weaker of late, especially when the Fed decided to turn on the printing press, thereby flooding the market with USD.
In other news, whilst the euro and aussie have been able to push through significant resistance levels of late (1.3000 for EUR and 1.0300 for AUD), the kiwi hasn’t. NZD was hit hard by inflation data out earlier in the weak which printed at its lowest level since 1999. As a result, NZDUSD appears to be trapped beneath 0.8200, but has thus far managed to hold above its upward trend line on a daily chart, and AUDNZD has broken through a 25% retracement level (see chart below).
AUDNZD – daily
Source: FOREX.com
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