News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • #Oil prices saw a reprieve to the recent selling pressure but remain at risk while below downtrend resistance. Here are the levels that matter on the #WTI technical chart. Get your #commodities update from @MBForex here: https://t.co/CcXsF3JCMH https://t.co/RUmS1cX52v
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/boEI8RuQdC
  • The growth-linked New Zealand Dollar may rise on the upcoming #RBNZ rate decision following rosy economic data. However, downside potential in the S&P 500 could offset $NZDUSD gains. Get your #currencies update from @ddubrovskyFX here: https://t.co/LfCe6C6G3P https://t.co/kUeBxxeaEf
  • It was a quiet week in Aussie as $AUDUSD put in its second consecutive week of indecision. But taking a more granular look highlights the potential for a reversal scenario. Get your #currencies update from @JStanleyFX here: https://t.co/PPK20nubAf https://t.co/0nfmRRFNnz
  • The S&P 500 pushed the market's comfort with a head-and-shoulders pattern through Friday's close. What should we look for in technical patterns, overlapping fundamental tides and speculative positioning for the likes of $EURUSD next week? https://www.dailyfx.com/forex/video/daily_news_report/2020/09/19/EURUSD-Pressure-Building-while-Anxious-Traders-Weigh-Did-SP-500-Break.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/lgVJVwi8th
  • Sterling remains trapped by overarching fundamentals drivers and both $GBPUSD and $EURGBP are going to have to wait until the Brexit dust settles. Get your #currencies update from @nickcawley1 here: https://t.co/vF1K1cy0nd https://t.co/NSA7qiQihc
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/d9EmTOHyTv
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true.Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/xqbUxwWgTZ
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/Gi8LHCT5sB
  • The AB=CD pattern is simple once you know how to spot it and draw the proper Fibonacci retracements. Make your trading strategy as simple as ABCD here: https://t.co/AKmlmaAZBS https://t.co/FFmRYyx4ou
Asia Pacific Currencies Still Stymied By Their Own Central Banks

Asia Pacific Currencies Still Stymied By Their Own Central Banks

2017-11-24 03:00:00
David Cottle, Analyst
Share:

Talking Points:

  • The Japanese Yen, the Australian Dollar and the New Zealand Dollar have the same problem, just to varying degrees
  • Their central banks are unlikely to tighten policy in the near-term, even as peers do just that
  • Will this change in 2018? Not impossible, but unlikely

Join DailyFX analysts to trade the major economic data as they happen. We’d love to have you along.

Asia Pacific currency majors spent much of 2017 overwhelmingly driven by the “USD” side of their respective currency pairs. 2018 will probably offer more of the same, at least in its early months.

Part of this is due to the shifts in America’s political landscape engendered by Donald Trump’s 2016 ascent to the Oval Office. Financial markets gave him the benefit of considerable doubt early, resulting in the so-called "Trump trade" and broad based US Dollar gains. Then a degree of reality set in, a reality bordered by US legislative gridlock, North Korea’s rising nuclear intransigence and worries that America’s abrupt withdrawal from the Trans Pacific Partnership might be the shape of protectionist things to come.

Matters changed a little in September. Robust US economic data, the prospect of tighter monetary policy and, at last, some tax cuts, buoyed the greenback once more. Almost any foreign-exchange chart will show the year’s route in some detail, but here’s USD/JPY with a solid illustration.

Asia Pacific Currencies Still Stymied By Their Own Central Banks

The problem for Asia Pacific currencies, or at least their bulls, lies mainly in monetary policy differentials.

The economies of Japan, Australia and New Zealand are all performing well. But this performance is not yet of the order which seems likely to cause interest rates to rise from record lows even as they do elsewhere.

Japan’s case is perhaps the clearest.

Bank of Japan Governor Haruhiko Kuroda remains adamant that his ultra-loose monetary settings are going nowhere, and may even be loosened, until annual Consumer Price Index inflation sustainably skirts 2%. To be sure CPI is heading the way he’d like but, at just 0.7%, Japan faces months and perhaps years of miserly interest rates.

Meanwhile Australia’s consumers remain worryingly indebted to the Reserve Bank of Australia’s eyes, while wages and inflation remain too weak. The RBA is also at pains not to burnish the Australian Dollar’s attraction to investors by raising rates. Official worries about the problems a strong Aussie causes its home country are about the most frequently heard monetary lament in the world.

As for New Zealand, well, it’s new government seems quite keen on the idea of adding a ‘full-employment’ mandate to the Reserve Bank’s inflation-busting remit. If it comes, this may be quite a nebulous thing. We’re assured that no absolute unemployument rate will be targeted. All the same, a dual mandate may well suggest lower rates for longer than might otherwise have been the case.

So, here we see all three currencies to some extent rendered immune to their own economic data by central bank or government policy which will alter only very slowly or not at all. Will this backdrop change in 2018?

Well, in Japan’s case it must be unlikely. If Kuroda is reappointed and sticks to his monetary guns, then local economic data will remain all-but irrelevent to policy making with the exception of the monthly CPI release.

New Zealand and Australia are probably more likely to raise interest rates before Japan does, but markets don’t see a move from either as imminent, and record-low settings could well survivie 2018 unless their economies select an unarguably higher gear.

At least for the early part of 2018 then, those trading Asian majors are going to be mainly watching events on the other side of the Pacific.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES