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    Asian Session – Major currencies steadier but aussie under pressure from rating downgrade

    Major currencies were steadier in Asian trading on Thursday following some risk-off moves yesterday. The FOMC minutes of the Fed’s June meeting helped calm market nerves as they suggested that the Fed will likely stick to its cautious approach for the time being. The minutes, which were released yesterday, confirmed that Fed policymakers were concerned about the slowing pace of jobs growth as well as the uncertainty of the outcome of the UK’s referendum on membership of the EU.

    Speaking at an event in Washington, Fed Governor Daniel Tarullo reiterated the need for caution, adding that he would have to be more convinced that underlying inflation is around 2% before considering raising rates.

    The dollar came under pressure against the yen after the minutes and started to move back down again, having rebounded to 101.46 yen prior to the release, when it was boosted by strong non-manufacturing PMI. It was last trading at 100.75 yen in late Asian Session today.

    The euro and the pound were steadier against the dollar on Thursday as they moved away from yesterday’s lows. The euro stood at 1.1077 dollars after dipping slightly from worse-than-expected industrial output data out of Germany. German industrial production fell by 1.3% month-on-month in May, missing estimates that it would stay unchanged.

    Sterling made a fresh attempt to climb back above 1.30 dollars but stopped just shy of the level.

    The yen continued to rise against its peers as appetite for the safe-haven currency showed no sign of abating. The Bank of Japan’s Governor Haruhiko Kuroda maintained his optimistic outlook on Japan’s economy during a speech earlier today. Kuroda said the economy is expected to expand “moderately as a trend” but added that the Bank will “take additional easing steps if deemed necessary”.

    The euro and the pound were both slightly down in late Asian trading at 111.64 and 130.42 yen respectively.

    The Australian dollar had a volatile session as it fluctuated after the rating agency S&P cut the outlook for Australia’s credit rating from stable to negative. The aussie plunged from around 0.7530 to 0.7466 against the US dollar after the decision but had rebounded back above the 0.75 level in late Asian session. The cut in Australia’s credit outlook comes amid political deadlock in the country following a very tight election result.

    Crude oil prices made a strong rebound yesterday to end the day 2% higher after a poor start to the day. The commodity was boosted by strong US data and a drop in US crude stocks according to the latest weekly API data. WTI futures were slightly down though in Asian trading today at $47.76 a barrel.

    Looking ahead to the rest of the day, UK industrial and manufacturing output data will come in focus in the European session, while in the North American session, the weekly jobless claims and the ADP employment report out of the US will be watched in anticipation of tomorrow’s non-farm payrolls report.

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