• Relatively high imports, exports and retail sales reported in Australia
  • Yen recovering nicely
  • CNY strengthens again

Forex volumes were relatively low in Asia this morning heading into the public US holiday, but they compensated for that with fairly wide ranges. Although the ranges cannot be defined as big, they were certainly greater than one would normally see in this time zone, especially on a morning when there was not much in the way of new data or news.

Data from Australia showed that exports and imports in the country increased by 4% and 3% respectively. Retail sales also did very well with growth of 0.4% m/m, compared to the 0.3% m/m that was generally expected. Nevertheless, this did not stop the trade balance from delivering a lower surplus than most observers had been expecting.

Other factors that influenced the markets in this region were Services PMIs for Japan, China and Australia, along with the terms of trade indications for New Zealand.

The early winner in this region was undoubtedly the Japanese Yen, which initially dropped from 110.55 against the USD to 110.30 before recovering to 110.40 at the time of this writing. Other currencies that showed improvement against the USD to some extent included the EUR, GBP, CAD, NZD, and CHF.

Meanwhile, the People’s Bank of China (PBOC), which is that country’s central bank, reduced the rate of the onshore Yuan (CNY) against the USD again at the mid-rate setting.

The PBOC intervention on Tuesday to boost the currency had a ripple effect on markets again on Wednesday morning, with the CNY strengthening once again. Many traders think that the PBOC’s actions are not transparent, and the market generally expects the USD/CNY rate to top out at about 6.7.

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