China Reserve Data Boosts The USD

February 7, 2017 Share Print 0

After being on the back foot all day weaker German data, politics and China reserve data give the USD a boost into Europe trading.

The USD hadn’t had a great day in Asia generally, but a confluence of events seems to be for now taking attention away from the Trump put that has been hanging over it. No doubt a lot of USD long positioning has been unwound in general over the past couple of weeks, as disappointed bulls retreat to the sidelines to lick their wounds.

China reserve data recently released dropped below $3 Trillion pushing the USD and USD Index higher again.

16:02 *(CN) CHINA JAN FOREIGN RESERVES: $2.998T V $3.004TE (7th consecutive decline and falls below $3T for first time since Feb 2011) Components:- FX reserves (SDR-denominated): 2.21T v 2.24T m/m – Gold reserves: $71.29B v $67.89B m/m (59.24M v 59.24M troy oz prior) – Source TradeTheNews.com

EURO

Since trading near 1.0830 a few days ago, it has been steady downward spiral for the Euro. the single currency has been weighed down with the increasing political risk now being priced into the French elections. Greece to has played its part, finally making the news again as the IMF digs its heels in on debt relief for the Greeks as a sustainable path to the future. This has in fact been their official and most sensible position for quite a long time now but has been subsumed into louder “noise” in the past few months. With Dutch, French and German federal elections this year, event risk will be aplenty in 2017.

EUR/USD had the knife twisted into it late in Asia trading as German Industrial Production came in much lower than expected.

15:00 *(DE) GERMANY DEC INDUSTRIAL PRODUCTION M/M: -3.0% V +0.3%e; Y/Y: -0.7% V +2.5%E – Prior MoM revised higher from 0.4% to 0.5% – Prior YoY revised higher from 2.2% to 2.3% – Source TradeTheNews.com

In the short term, EUR/USD has support at 1.0660 on the hourly chart, followed by 1.0620 with resistance at 1.0705 and 1.0730.

EUR Hourly

USD/JPY

Gained 60 ticks in the Asia session but the rally still looks somewhat unconvincing here. Yen is benefiting from a lot of safe-haven flows at the moment and has the Trump “currency manipulator” threat hanging over its head. At present, USD/JPY is flirting with an hourly trendline resistance at 112.17. resistance behind this comes in at 112.67 the 100-hour moving average. Key support remains at the 111.60 level.

USDJPY Hourly

AUD/USD

The RBA left rates unchanged as expected this morning. The statement was more upbeat than in recent times citing higher China demand for all the things Australia digs out of the ground. AUD rallied to 7680 before falling in the face of a stronger USD generally to the lows around 7620. 7615 and then 7598, the 200-hour moving average are initial support. Resistance is at 7643 to 100 hour, and then the day’s highs at 7680.

NZD/USD

Should have been the star of the day and for a while it was. With the RBNZ having to deal with a high currency, increasing inflation expectations, a roaring economy and an on fire housing market. Making them the envy of just about every other central bank in the world I should think. Things aren’t that simple of course but inflation expectations this morning came in much higher then expected.

10:00 *(NZ) NEW ZEALAND Q1 INFLATION EXPECTATION SURVEY: 2-YEAR INFLATION EXPECTATION 1.92% V 1.68% PRIOR – 1-year inflation expectation 1.56% v 1.29% prior – Source TradeTheNews.com

NZD/USD jumped to 75 ticks to 7375, pushing higher on the crosses as well as the street repriced the RBNZ’s tightening cycle to come. The music only lasted a few hours though before it succumbed to USD strength like the other majors. We have major event risk tonight in the form of the Global Dairy Auction early tomorrow morning Asia time. Resistance is at 7375 with support at 7240 area.

NZD Hourly

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Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022

With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes.

He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays.

A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others.

He was born in New Zealand and holds an MBA from the Cass Business School.