Talking Points:

  • Aussie Dollar Outperforms as Risk Appetite Recovers Across FX Markets
  • Rumors Hint China May Extend Reserve Requirements to Offshore Deposits
  • Gauge Trends and Spot Reversals in Leading Currencies with DailyFX SSI

Currency and equity markets carved out divergent paths in overnight trade. Asian bourses traded broadly lower, seemingly taking their cues from Friday’s blood-letting on Wall Street. FX looked ahead however, with the majors seemingly taking their cues from US stock index futures and reflecting a “risk-on” tone. The sentiment-linked Australian Dollar is outperformed while funding currencies including the Swiss Franc, Euro and Yen faced selling pressure.

News-flow out of China seemingly helped lift investors’ spirits. The daily Yuan fix brought the largest daily appreciation in a month, helping to calm jittery traders that have come to associate devaluation with risk aversion in recent weeks. A story about the introduction of reserve requirements on offshore Yuan deposits as soon as next week also made the rounds. An official announcement is absent so far. If true, the move may raise overnight lending rates. This would presumably discourage traders from betting on Yuan weakness by making it more expensive to do so.

The economic calendar is relatively quiet over the coming 24 hours. US markets will be closed for the Martin Luther King Jr. Day holiday. On balance, this could offer a fertile environment for further corrective recovery on the risk appetite front as investors prepare for the week’s first bit of high-profile event risk: China’s fourth-quarter GDP data.

Losing Money Trading Forex? This Might Be Why.

Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

AUD

TD Securities Inflation (MoM) (DEC)

0.2%

-

0.1%

23:30

AUD

TD Securities Inflation (YoY) (DEC)

2.0%

-

1.8%

00:01

GBP

Rightmove House Prices (MoM) (JAN)

0.5%

-

-1.1%

00:01

GBP

Rightmove House Prices (YoY) (JAN)

6.5%

-

7.4%

00:30

AUD

New Motor Vehicle Sales (MoM) (DEC)

-0.5%

-

1.3%

00:30

AUD

New Motor Vehicle Sales (YoY) (DEC)

2.2%

-

6.0%

00:30

JPY

BOJ’s Kuroda Speaks at Branch Manager Meeting

-

-

-

01:30

CNY

China December Property Prices

-

-

-

02:00

NZD

Non-Resident Bond Holdings (DEC)

67.4%

-

67.9%

04:30

JPY

Industrial Production (MoM) (NOV F)

-0.9%

-

-1.0%

04:30

JPY

Industrial Production (YoY) (NOV F)

1.7%

-

1.6%

04:30

JPY

Capacity Utilization (MoM) (NOV)

-0.1%

-

1.3%

04:30

JPY

Tertiary Industry Index (MoM) (NOV)

-0.8%

-0.7%

0.7%

05:30

JPY

Nationwide Dept Sales (YoY) (DEC)

0.1%

-

-2.7%

05:30

JPY

Tokyo Dept Store Sales (YoY) (DEC)

2.2%

-

0.2%

European Session

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

08:00

CHF

Total Sight Deposits (JAN 15)

471.3B (A)

469.5B

Low

08:00

CHF

Domestic Sight Deposits (JAN 15)

403.8B (A)

404.0B

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.0659

1.0789

1.0852

1.0919

1.0982

1.1049

1.1179

GBP/USD

1.3961

1.4137

1.4197

1.4313

1.4373

1.4489

1.4665

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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