Back
4 Sep 2015
Yen rockets as risk-aversion grips Asia, US NFP – Key event
FXStreet (Mumbai) - The re-emergence of risk-off sentiment was the underlying theme in Asia as volatility returns along with increased demand for safe-haven such as yen which benefitted the most from the sell-off. While the Aussie was the biggest loser, languishing near fresh multi-year lows near 0.6960 levels.
Key headlines in Asia
Asian stocks back in the red as risk-off returns, Nikkei – biggest loser
Hong Kong PMI: Quickest deterioration since GFC
Big sell-off in Asia: Aussie big loser, Yen through the roof
Dominating themes in Asia - centered on JPY, AUD, NZD
A volatile Asian session with no relevant economic news reported amid dominant risk-off environment back in the markets as caution seems to be adopted ahead of payrolls.
The Japanese yen enjoyed solid gains versus the US dollar as the risk-off market profile has become the ‘new normal’ in recent times. Traders continue to bolster their confidence in the safe-haven asset – yen amid falling equities and persisting broad based sell-off. USD/JPY drops nearly 100 pips and now hovers above 119 handle, down -0.63% on the day. While EUR/USD edged up slightly and trades above 1.11 barrier, after having smashed to 1.1080 post Draghi’s presser on Thursday.
While the Antipodeans emerged the biggest loser, as markets give up riskier assets in search safer bets. The Australian dollar fell to its lowest in six-and-a-half years against the greenback at 0.6959 on Friday, and some strategists say the currency has further to go before finding a new floor. The Kiwi was heavily sold in to the prevailing risk-off sentiment and now trades near lows at 0.6252 levels.
Westpac strategist Sean Callow noted, "It is hard to be too upbeat on AUD/USD in the wake of fresh lows since Apr 2009. Domestic data flow has been somewhat soft but not alarming. Rates markets are already pricing a rate cut by Feb."
Meanwhile, the sell-off in the Asian equities intensified with the Japan’s benchmark index, the Nikkei tanking nearly -3% at 17387 while the Hong Kong's benchmark Hang Seng index trades -0.72% lower at 20,784, the benchmark Australian S&P/ASX 200 loses -0.12% at 5,021. While Korea's benchmark Kospi index accelerated losses and now trades at 1,888 points in Seoul.
Heading into Europe - centered on EUR, GBP
After the ECB event on Thursday, the EUR calendar for today remains fairly-light with markets still digesting the latest downwardly revised EZ forecasts and dovish bias as spelled by ECB Chief Draghi.
Looking at the European session ahead, Germany will report the state of its July factory orders, with 0.8% decline expected in the seventh month of the year, and 0.3% growth annually. The country reported a 2.0% decline in orders in June month-on-month, while it saw 7.2% growth on an annual basis.
G-20 finance ministers and central bank governors are due to meet in Ankara, Turkey, to discuss global economic affairs. US Treasury Secretary Jacob J. Lew and German Finance Minister Wolfgang Schaeuble are expected to attend.
ECB Governing Council member Ewald Nowotny will participate in a panel discussion at Forum Alpbach, Austria.
All eyes on NFP
A very busy North American session to unfold, with Canadian labor data likely to play second fiddle to the most awaited data of the month – the US non-farm payrolls.
The August payrolls report is likely to bring more questions than answers given the looming Fed rate hike or no rate hike.
A weak payrolls result would surely rule out a September hike; but August has been a notorious underachiever; then again the Fed is watching the trends, so a single employment report cannot change its policy intentions; yet the July policy statement said only "some" further progress was necessary to meet lift-off conditions, are just some of the possible narratives investors might find themselves contemplating on Friday.
The market is predicting a sturdy 218,000 increase in jobs in August, which is pretty close to the average over the past six months, as well as to the reading from July - the last two reports have to be viewed in conjunction since they will represent the net change since the Fed's last gathering.
Key headlines in Asia
Asian stocks back in the red as risk-off returns, Nikkei – biggest loser
Hong Kong PMI: Quickest deterioration since GFC
Big sell-off in Asia: Aussie big loser, Yen through the roof
Dominating themes in Asia - centered on JPY, AUD, NZD
A volatile Asian session with no relevant economic news reported amid dominant risk-off environment back in the markets as caution seems to be adopted ahead of payrolls.
The Japanese yen enjoyed solid gains versus the US dollar as the risk-off market profile has become the ‘new normal’ in recent times. Traders continue to bolster their confidence in the safe-haven asset – yen amid falling equities and persisting broad based sell-off. USD/JPY drops nearly 100 pips and now hovers above 119 handle, down -0.63% on the day. While EUR/USD edged up slightly and trades above 1.11 barrier, after having smashed to 1.1080 post Draghi’s presser on Thursday.
While the Antipodeans emerged the biggest loser, as markets give up riskier assets in search safer bets. The Australian dollar fell to its lowest in six-and-a-half years against the greenback at 0.6959 on Friday, and some strategists say the currency has further to go before finding a new floor. The Kiwi was heavily sold in to the prevailing risk-off sentiment and now trades near lows at 0.6252 levels.
Westpac strategist Sean Callow noted, "It is hard to be too upbeat on AUD/USD in the wake of fresh lows since Apr 2009. Domestic data flow has been somewhat soft but not alarming. Rates markets are already pricing a rate cut by Feb."
Meanwhile, the sell-off in the Asian equities intensified with the Japan’s benchmark index, the Nikkei tanking nearly -3% at 17387 while the Hong Kong's benchmark Hang Seng index trades -0.72% lower at 20,784, the benchmark Australian S&P/ASX 200 loses -0.12% at 5,021. While Korea's benchmark Kospi index accelerated losses and now trades at 1,888 points in Seoul.
Heading into Europe - centered on EUR, GBP
After the ECB event on Thursday, the EUR calendar for today remains fairly-light with markets still digesting the latest downwardly revised EZ forecasts and dovish bias as spelled by ECB Chief Draghi.
Looking at the European session ahead, Germany will report the state of its July factory orders, with 0.8% decline expected in the seventh month of the year, and 0.3% growth annually. The country reported a 2.0% decline in orders in June month-on-month, while it saw 7.2% growth on an annual basis.
G-20 finance ministers and central bank governors are due to meet in Ankara, Turkey, to discuss global economic affairs. US Treasury Secretary Jacob J. Lew and German Finance Minister Wolfgang Schaeuble are expected to attend.
ECB Governing Council member Ewald Nowotny will participate in a panel discussion at Forum Alpbach, Austria.
All eyes on NFP
A very busy North American session to unfold, with Canadian labor data likely to play second fiddle to the most awaited data of the month – the US non-farm payrolls.
The August payrolls report is likely to bring more questions than answers given the looming Fed rate hike or no rate hike.
A weak payrolls result would surely rule out a September hike; but August has been a notorious underachiever; then again the Fed is watching the trends, so a single employment report cannot change its policy intentions; yet the July policy statement said only "some" further progress was necessary to meet lift-off conditions, are just some of the possible narratives investors might find themselves contemplating on Friday.
The market is predicting a sturdy 218,000 increase in jobs in August, which is pretty close to the average over the past six months, as well as to the reading from July - the last two reports have to be viewed in conjunction since they will represent the net change since the Fed's last gathering.