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    Asian Session – Market turmoil intensifies but dollar reclaims 112 yen level

    The sell-off in global equities continues with US stocks closing down for a fifth straight day on Thursday. European shares also fell sharply yesterday and stock markets across much of Asia were in negative territory today.

    The US dollar hit a 15-month low 110.97 yen yesterday but had clawed back just above 112 yen in late Asian trading today. The euro and the pound were also firmer against the yen at 126.68 and 162.60 yen respectively. Attempts by Japanese officials to talk down the yen had little impact on the currency.

    Bank of Japan Governor, Haruhiko Kuroda, said on Friday that the Bank will ease monetary policy further if necessary in order to achieve its inflation target at the earliest date possible. Meanwhile, Japan’s Finance Minister, Taro Aso, commented on the yen’s recent rise, saying they will take appropriate steps as necessary. However, he did not comment on speculation that the Bank of Japan may have intervened in the currency markets on Thursday to halt the yen’s appreciation.

    The Australian dollar rebounded from a low of 0.6983 versus the greenback on Thursday to climb to around 0.7090 today. There was little response to the RBA Governor’s testimony to parliament earlier in the day. Governor Glenn Stevens repeated the view that low inflation could provide scope for further rate cuts but that the Australian economy continues to grow at a moderate pace.

    Crude oil prices hit a fresh 12½-year low yesterday with US futures dropping to $26.05 a barrel. However, reports out today that OPEC members are ready to talk with non-OPEC countries on a coordinated production cut, helped prices rebound sharply. WTI futures were up 3.6% at $27.16 a barrel in late Asian trading.

    Gold futures fell back from yesterday’s highs when they peaked at a one-year high of $1260.60 an ounce. Prices had eased to $1238 in today’s Asian session.

    In European markets, the euro fell slightly following the release of preliminary German GDP data for the fourth quarter of last year. German quarter-on-quarter GDP growth was in line with estimates at 0.3% but the year-on-year rate came in at 2.1%, which was short of estimates of 2.3%. The euro dipped to 1.1270 dollars, having touched near 4-month highs of 1.1376 dollars yesterday.

    Looking ahead to the rest of the day, flash GDP data for the Eurozone will be eyed along with retail sales figures for the US.

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