Risk currencies such as the Aussie and Kiwi were shelved overnight with Chinese money markets rates increasing, leading to a risk off session. The Yen gained across the board as demand for safe haven assets increased, the Japanese currency gained over 200 pips against the Australian dollar and gained 100 pips against the greenback to be trading at 97.3. These moves show just how sensitive the market is to any form of tightening, whether that’s from the FOMC or the PBOC.
In other news, the Central bank of Canada did change its statement overnight regarding its outlook on the Canadian economy. By removing all mentions of future interest rate rises traders took to selling the loonie as the central bank cited a greater amount of slack in the economy. With these changes traders took the chance to sell the Canadian dollar against most counterparts, it dropped around 90 pips against the greenback and looks set to follow this trend.
This morning we have already seen the release of trade balance data out of New Zealand. The figure came in better than expected at negative 200m. China will also remain in full focus today with flash manufacturing PMI expected to show the sector just held onto an expansionary figure of 50.5
Joel Murphy
www.pepperstone.com Joel Murphy is a currency analyst and market commentator for Forex Broker Pepperstone and he regularly features on Sky Business News Australia. He has worked in both retail and institutional Forex for last 8 years and completed a Bachelor of Commerce and a Bachelor of Arts from Monash University
