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Asia steadies as dust settles after FOMC, a quiet European session ahead

FXStreet (Mumbai) - The risk-off sentiment dominated Asia, as markets still remain cautious over the Fed’s decision and the extending uncertainty on the timing of the interest rate hike and the overall US economic prospects. The yen remained better bid while the Antipodeans saw a minor pullback from the post-FOMC lows.

Key headlines in Asia

RBA Stevens: Australian economy progressing, Aussie drop having effects

RBA Stevens: Confident Fed will hike rates this year

BoJ minutes: Sluggishness in key sectors only temporary

Dominating themes in Asia - centered on JPY, AUD, NZD

A low-key affair in Asia, with Central banks’ events having negligible impact on the Fx markets. The US dollar attempted a weak recovery against its major competitors following the Fed outcome-induced slump.

USD/JPY faded an impulsive spike to 120.40 levels and reverted to 119.80 as the US dollar remains undermined on the back of Fed’s decision to leave the interest rates unchanged on Thursday.

The Antipodean currencies managed to recover from the post-FOMC lows and consolidates to the upside as calm spreads after the massive volatility spurred by the Fed event. The Aussie is seen consolidating below 0.7200, with markets digesting RBA Stevens comments on the AUD levels. RBA Stevens told parliament, "More recently, the significant decline in the exchange rate is starting to have more discernible effects on the pattern of spending and production." While the Kiwi also remains strongly bid near 0.6370, despite risk-aversion widespread across the fx board.

On the equities front, the Asian markets extend the rally for the third straight session, with the Japan’s benchmark index, the Nikkei, bucking the trend and witnessed steep losses to now trade -1.42% at 18,174. While the Hong Kong's benchmark Hang Seng index gains nearly 0.36% to 21,933 and the Shanghai Composite defends gains, up 0.40% to 3,098. The benchmark Australian S&P/ASX 200 rallies 1% to 5,193 points.

Heading into Europe - centered on EUR, GBP

After a data-busy week so far for the EUR, GBP traders, Friday is expected to be calmer with nothing of relevance in terms of economic news to be reported in the session, except the Euro zone current account balance.

While, Bank of England’s (BOE) MPC Member Haldane is scheduled to speak at the Portadown Chambers of Commerce, in Northern Ireland.

Later in the NA session, the US macro calendar remains fairly quiet while the Canadian CPI figures from Canada will be closely eyed. Canada's consumer-price index is expected to rise 0.2% in August from a year earlier, against a muted print seen in July. While the annual core inflation rate, which excludes volatile components such as some food and energy prices, is expected to post zero growth, down from 0.1% rise recorded in July.

EUR/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet explained, “In the 4 hours chart, the price has found intraday support in a mild bullish 20 SMA, whilst the technical indicators have finally left neutral territory, with the Momentum indicator heading higher above 100 and the RSI consolidating around 65, pointing for additional gains on a break above the mentioned high, towards the 1.1460/70 region, a major static resistance area.”

Fed: Dovish stance, one more time – ANZ

Research Team at ANZ, suggest that the clear message from the FOMC seems to be a holding pattern, waiting for further labour market strength to bolster confidence that inflation will return to trend, and also likely some stability in the global economics and financial market picture.
Mehr darüber lesen Previous

Eurozone: Inflation to fall to 0.0% in September, pick up in Q4 – Nomura

Research Team at Nomura, expect Eurozone inflation to fall to zero percent levels in September before picking up in Q4 while the inflation over the rest of the year should be largely driven by energy price.
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