Forex news for Asia trading Monday 25 February 2019
A bit of a change in the format today to focus on the weekend and early-week news moving currencies. Firstly, to US-China trade talks (the chronological order of the headlines is from the bottom up):
China/US trade talks and the tariff delay:
- Stephen Roach argues China has the upper hand in trade talk negotiations
- China's 4 bottom lines on trade talks with the US
- Here are the ways China influences the yuan (and how to monitor them)
- Weekend news - State-backed borrower from western China missed bond payment
- China Xinhua says US-China trade talks disagreements are narrowing ... but ...
- US China trade talks - China delegation says great progress on specifics
- Trump says news on China will be coming in the next one or two weeks
- China official press reports Trump to delay tariffs on China
- 'Risk' gets a boost, yen lower, on Trump's delay of China tariffs
- Trump says will postpone tariff hike on China (helped 'risk higher, yen lower)
- Trump: US has made substantial progress in trade talks with China on important structural issues
- US - China trade talks, 'source' says progress has been across the board
The impact in early trade was a bid for 'risk' related currencies while the yen dropped. AUD/JPY was a notable early gainer on this. I don't want to overstate the impact, the moves were not large. And have shown pretty much a full retracement (see chart under). Chinese stocks, though ... the Shanghai Composite is higher on the session.
Brexit:
- UK press: Brexit will be delayed 2 months under plans being considered by PM May
- More on the EU consider Brexit extension until 2021
- Brexit - BBC reports UK PM May could signal taking no-deal off the table
- Brexit - EU is considering UK exit extension until 2021
- Brexit - UK PM May says 'meaningful vote will happen by March 12
As always, plenty of Brexit-related news and views over the weekend and in the early Monday hours. GBP had a 'gap' up in very, very early trade to briefly touch over 1.3075 (prior to many retail brokers starting for the week, so it may not be visible on your charts) but soon slid back towards late-Friday levels.
Other:
- World's largest energy trader says oil prices set to rally further (here's why)
- More on PM Abe's eco adviser Hamada's advice to ditch the BOJ inflation target
- PBOC sets USD/ CNY reference rate for today at 6.7131 (vs. yesterday at 6.7151)
- Japan eco adviser to PM Abe says BOJ can abandon 2% inflation target
- New Zealand finds a third Australian fruit fly
- FX option expiries Monday 25 February 2019 - 10am NY cut
- Japan Services PPI, January: 1.1% y/y (expected 1.1%)
- Weekend Japan press on what's making the BOJ begin to worry
- NZ data - Q4 retail sales (excl inflation) +1.7% q/q (expected 0.5%) (gave the NZD a few tics higher)
- Trade ideas thread - Monday 25 February 2019
The NZD had an early (small) move higher on the retail sales data beat. It benefitted further on the China tariff news. EUR/USD is net a gainer for the session also, but off its highs. USD/JPY traded toward 110.85 early but gave it back, the Hamada news (see bullets above) was a weight.
And, some bank currency views:
- Barclays on month end flows - weak USD selling
- More from MS: Bearish on AUD, how to play the weakness
- Goldman Sachs on AUD: Weaker domestic picture (excl jobs) a near term headwind
- Trade recommendation short EUR/USD, Fibonacci retracements cited
- 3 factors needed for the EUR to rally (and a 4th support as back up)
- Morgan Stanley on the current drivers of AUD/USD
- AUD/NZD trade recommendation - long citing data surprises, central bank pricing
- Goldman Sachs on the EUR: 'likely continue to struggle'
