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1 Jul 2015
Kiwi staged a solid-comeback in Asia, BOE FSR & Manufacturing PMIs – Next up
FXStreet (Mumbai) - Alas! Markets shifted their focus from Greece to the economic fundamentals which drove most fx pairs in Asia today. While the US dollar remained broadly muted, consolidating previous gains bolstered by Greece and upbeat US macro data. Both the Antipodeans remained strongly bid with markets brushing off China PMI miss and Greek default news.
Key headlines in Asia
IMF announces Greece fails to pay, request for a delay
Japan: Massive CAPEX print in Tankan
Australia's May building approvals beat expectations
China HSBC Manufacturing PMI misses expectations in June
Dominating themes in Asia - centered on JPY, AUD, NZD
A data-heavy Asian session with markets unfazed by Greek missing IMF repayment headlines. A flurry of macro data kept the Asian traders busy with the yen remained supported versus the US dollar around 122.50 levels on the back of stronger than expected Tankan manufacturing data. While dismal final China PMI reading did little to hurt upbeat sentiment around the OZ currencies.
The Kiwi remained the biggest winner in Asia, rebounding sharply from fresh five year lows reached at 0.6745 and hovered around 0.68 barrier on profit-taking after the recent weakness. While traders now eye Fonterra’s dairy auction due today for further momentum. The Aussie too maintained a bid tone, mirroring gains from its OZ neighbor. More so, the pair also received fresh impetus from above estimates Aus building consents numbers.
Among the Asian indices, the Nikkei 225 in Tokyo extends gains for the second day in a row and trades at 20286, currently up 025%, while Australian benchmark the ASX 200 trades 0.40% higher at 5480.70.
Heading into Europe - centered on EUR, GBP
Bank of England (BOE) Financial Stability Report (FSR) followed by Governor Carney ‘s speech at a press conference FSR is expected to remain the main highlight during the European session ahead. While a raft of final manufacturing PMI reports across the Euro area economies followed by manufacturing PMI from the UK will also be closely watched.
The euro zone preliminary manufacturing PMI in June came in at 52.5 and the same result is expected in the final reading. The flash PMI for Germany's manufacturing sector activity recorded 51.9, with the indicator expected to hold in the final result.
The UK manufacturing PMI is seen heading higher to 52.4 from 52.0 recorded in May, while the services PMI in May is seen ticking up to 57.5 from the 56.5 booked in the previous cycle.
We also have a heavy US economic calendar with the crucial ADP Non-farm employment change to be report while a set of manufacturing PMIs from the US will also be eyed. Also GDT Price Index will be tracked for fresh cues on the New Zealand dollar.
EUR/USD Outlook
Emmanuel Ng, FX Strategist at OCBC Bank explains, “From a medium term perspective, note that the IMF’s latest COFER report showed the USD’s share of global allocated reserves rose to 64.1% in 1Q 15 from 63% the previous quarter. The EUR’s portion meanwhile fell to 20.7% from 22.1%.”
“We expect investors to remain antsy with respect to the EUR in the coming days with no resolution in sight and pending news flow about the weekend Greek referendum. Note that any ‘positive surprises from Thursday’s US NFP would also likely aid in pressuring the pair lower. With a EUR-USD spot ref at 1.1185, we target 1.0795 and place a stop at 1.1385.”
Key headlines in Asia
IMF announces Greece fails to pay, request for a delay
Japan: Massive CAPEX print in Tankan
Australia's May building approvals beat expectations
China HSBC Manufacturing PMI misses expectations in June
Dominating themes in Asia - centered on JPY, AUD, NZD
A data-heavy Asian session with markets unfazed by Greek missing IMF repayment headlines. A flurry of macro data kept the Asian traders busy with the yen remained supported versus the US dollar around 122.50 levels on the back of stronger than expected Tankan manufacturing data. While dismal final China PMI reading did little to hurt upbeat sentiment around the OZ currencies.
The Kiwi remained the biggest winner in Asia, rebounding sharply from fresh five year lows reached at 0.6745 and hovered around 0.68 barrier on profit-taking after the recent weakness. While traders now eye Fonterra’s dairy auction due today for further momentum. The Aussie too maintained a bid tone, mirroring gains from its OZ neighbor. More so, the pair also received fresh impetus from above estimates Aus building consents numbers.
Among the Asian indices, the Nikkei 225 in Tokyo extends gains for the second day in a row and trades at 20286, currently up 025%, while Australian benchmark the ASX 200 trades 0.40% higher at 5480.70.
Heading into Europe - centered on EUR, GBP
Bank of England (BOE) Financial Stability Report (FSR) followed by Governor Carney ‘s speech at a press conference FSR is expected to remain the main highlight during the European session ahead. While a raft of final manufacturing PMI reports across the Euro area economies followed by manufacturing PMI from the UK will also be closely watched.
The euro zone preliminary manufacturing PMI in June came in at 52.5 and the same result is expected in the final reading. The flash PMI for Germany's manufacturing sector activity recorded 51.9, with the indicator expected to hold in the final result.
The UK manufacturing PMI is seen heading higher to 52.4 from 52.0 recorded in May, while the services PMI in May is seen ticking up to 57.5 from the 56.5 booked in the previous cycle.
We also have a heavy US economic calendar with the crucial ADP Non-farm employment change to be report while a set of manufacturing PMIs from the US will also be eyed. Also GDT Price Index will be tracked for fresh cues on the New Zealand dollar.
EUR/USD Outlook
Emmanuel Ng, FX Strategist at OCBC Bank explains, “From a medium term perspective, note that the IMF’s latest COFER report showed the USD’s share of global allocated reserves rose to 64.1% in 1Q 15 from 63% the previous quarter. The EUR’s portion meanwhile fell to 20.7% from 22.1%.”
“We expect investors to remain antsy with respect to the EUR in the coming days with no resolution in sight and pending news flow about the weekend Greek referendum. Note that any ‘positive surprises from Thursday’s US NFP would also likely aid in pressuring the pair lower. With a EUR-USD spot ref at 1.1185, we target 1.0795 and place a stop at 1.1385.”