A soft start

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USD: Today’s data of only modest interest for the currency, but as mentioned before, the dollar is now far more sensitive to stronger data, linked to the potential for the Fed to starting reigning back on its QE strategy later this year.

AUD: Note that the RBA minutes are released Tuesday and will be of particular interest given the possibility that rates may have bottomed out at the current 3.00%, although recent comments from the PM were suggesting scope for lower rates still remained in the bigger picture.

Idea of the Day

Friday turned out to be a busy one for may risk assets, with gold seeing the biggest once day fall for more than a year. The heavy tone is continuing at the start of this week, with the softer data in China supporting the more cautious tone.  This now raises the hurdle for FX markets to tackle the key levels that were in sight towards the end of last week, principally USDJPY moving above 100, AUDUSD above 1.06 and EURJPY seeing a sustained move above the 1.30 area.  The balance is between a market driven by trends and central bank actions (which still favours a weaker yen) and one that is more concerned with the momentum (or lack of) in the global economy.

Latest FX News

AUD: The Aussie was suffering in Friday’s generalised sell-off, a move continued during the Asia session on the back of the weaker data from China. Data on home loans was firmer than expected, showing a 2.0% MoM rise.  The 100d moving average on AUDUSD at 1.0416 has so far proved to be good support.

JPY:  The 100 level on USDJPY moved further out of sight during Friday as risk assets slumped, giving support to the yen.  BoJ governor Kuroda underlining determination to achieve 2.0% inflation target within next 2 years.

EUR: A very choppy session Friday, EURUSD trading a near 1-big figure range.  Asian trade has seen a more cautious tone prevail as the latest data from China has put risk assets in general on the defensive and handed a modest bid to the dollar.

CNY/CNH: Data out overnight showed GDP growth of 7.7% in Q1 (vs. 7.9% previously), with retail sales rising 6.6% and industrial production up 8.9% YoY.  Numbers generally disappointing expectations (GDP was seen holding up at 8.0%), leaving Asian equities softer.  CNH has held steady at 6.1855.

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