EU Open - Risk-Off Following Weak Chinese Trade Data
Axi | Oct 14, 2016 11:01
Originally published by AxiTrader h2 Markets Overview:/h2
- Equities: Nikkei (-0.47 %), Hang Seng (-1.12 %), CSI 300 (-0.01 %), KOSPI (-0.49 %), ASX 200 (-0.71 %)
- Commodities: WTI Crude $49.80 (-0.76 %), Brent Crude $51.43 (-0.73 %), Natural Gas $3.22 (+0.19 %), Gold $1260.02 (+0.38 %), Copper $216.90 (-0.34 %)
Risk appetite suffered in Asia, following weaker than expected Chinese trade data. USD/JPY tumbled from 104.60 to 103.55 in Asia, and short-term techs look a bit stretched, with the negative RSI divergence on the hourlies also something that should worry longs. Immediate support is seen at 103.20, but the key level to watch now is 102.80.
AUD/USD broke below 0.7535 support, but there is still a lack of momentum. After the support level was cleared, it only declined to 0.7518, from where it managed to bounce off and get back to 0.7540. The Aussie certainly has been resilient, especially given the risk-off sentiment in markets, and now the disappointing Chinese econ data. However, short-term techs remain bearish and momentum could accelerate should 0.75 support give in as well.
USD/CAD is slowly approaching last week's high at 1.3312. It has been very well bid in the past few trading weeks, and that despite the rally in Oil post-OPEC. A clear break and daily close above the aforementioned would signal that further gains are ahead, with the next notable resistance then seen at 1.35.
It almost felt like EUR/USD had fallen into hibernation, but volatility has finally picked up and the currency pair is on the verge of breaking below the key 1.10 support level. While there is already decent support at 1.0950 (key support in July '16) and 1.0910, the 1.10 level is a psychological one, and a break below could accelerate downside momentum further.
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Meanwhile, GBP/USD continues to be sold on any larger rally and it plunged back to 1.2160 in Asia. While the move looks stretched in the near-term and record short positioning is something to keep in mind, selling interest remains strong so far. Expect key support at 1.21 and 1.20.
h3 Chinese trade data disappoints/h3The Chinese trade balance arrived at $42 billion vs. $53 billion expected and $52 billion previously. Exports declined 10 % year-on-year, much larger than expected by the market (-3.3 %) and down from -2.8 % previously. Imports also missed expectations, arriving at -1.9 % year-on-year vs. the +0.6 % forecast and +1.5 % previously. The weak data weighed on Asian equity indices, with most of them down on the day, and on commodity currencies as well.
h3 Plenty of NZ econ data/h3New Zealand released a fair number of data releases overnight, although all of them were tier-3.
- ANZ Consumer Confidence 1.6 % month-on-month vs 2.8 % previously
- REINZ House Sales -9.5 % year-on-year vs. 3.1 % previously
- Business NZ Manufacturing PMI 57.7 vs 55.1 previously
- ANZ Job Advertisements 0.3 % month-on-month vs 3.2 % previously
Meanwhile, the market has pretty much priced in a rate cut from the RBNZ in November, and the market has gained further conviction following the speech by RBNZ Assistant Governor McDermott on Tuesday, who said that further policy easing will be required.
h3 Australian consumer inflation expectations rise/h3The Melbourne Institute released its latest inflation expectations survey and it arrived at 3.7 % vs. 3.3 % previously.
h3 7th consecutive USD/CNY fix rise/h3China's central bank put today's USD/CNY reference rate at 6.7296, up from 6.7258 yesterday and the seventh consecutive increase of the rate. Meanwhile, the offshore Yuan continues to post fresh lows as well, as USD/CNH rallied to almost 6.74 overnight. The next major resistance level lies at 6.7615, which is the early 2016 high.
h3 Light economic calendar for today/h3There are not many data releases or events scheduled for today. In the European session, the focus will be on German inflation data, expected to arrive at 0.1 % month-on-month and 0.7 % year-on-year. In the US session, the focus will be on Initial Jobless Claims data, anticipated at 254k.
h2 Economic Calendar:/h2- 07:00 BST - German CPI
- 13:30 BST - US Initial Jobless Claims
- 17:15 BST - Federal Reserve Member Harker speaks
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