23 Jul 2015
Kiwi rallies as RBNZ talks up currency, UK Retails sales eyed
FXStreet (Mumbai) - The Kiwi extends its upbeat momentum and remains strongly bid as the Reserve Bank of New Zealand (RBNZ) dropped its harsh language on the exchange rate while announcing 0.25bp rate cut at its cash-rate decision in overnight trading. The Official Cash Rate (OCR) now stands at 3%. While the Greece parliament’s approval of the second package of reforms boosted EUR/USD beyond 1.09 handle.
Key headlines in Asia
Greece parliament approves prior actions bill, paves way to bailout
EUR/USD up: Greek lawmakers passing the reforms for bailout
RBNZ cuts interest rate by 25bp to 3%, further easing likely
Dominating themes in Asia - centered on JPY, AUD, NZD
The New Zealand dollar edged sharply higher against the greenback on Thursday after the RBNZ signaled that its comfort level for the currency was a great deal closer than where it was just a few months ago.
The central bank lowered interest rates for the second time since June on Thursday; policymakers did however drop the harsh language about the strength of the New Zealand dollar, and signaled that its depreciation was helping to support the economy and inflation.
While the Aussie was trading largely subdued, heading towards multi-year lows, as traders continued to digest RBA Stevens remarks and the upbeat US existing home sales data released on Wednesday.
The dollar-yen pair hovers around 124 handle awaiting fresh cues from US jobs data due for release later today. While the greenback is broadly lower as traders resorted to profit-booking on their ISD longs after the recent rally following stronger than expected US existing homes sales print reported on Wednesday.
Moreover, the yen was slightly supported versus the greenback after data showed that Japan's overseas trade balance improved last month as export growth accelerated and imports continued to decline.
Asian markets are trading mixed, with Chinese equities emerging the best performers. The Shanghai composite index now trades nearly 1.31% at 4078.90. The Australian benchmark the ASX 200 trades -0.21% lower around 5602. The Nikkei 225 in Tokyo rose 0.42% on weaker yen, while. South Korea’s Kospi trades flat at 2064.
Heading into Europe - centered on EUR, GBP
No significant macro events will be reported in the European session except for the key UK retail sales which will be the main market mover today.
The UK will publish results of its retail sales activities in June with estimates of a 0.4% gain on monthly basis in the sixth month of the year from 0.2% growth reported a month ago, while a 4.8% advance is seen annually compared to 4.6% registered in May.
ECB Governing Council member and Germany's Bundesbank President Jens Weidmann will speak at a conference on capital markets union.
Later in the North American session, we have Canadian retail sales and US weekly jobless claims report which may spur volatility in an otherwise calmer session. Retail trade in Canada is projected to rise 0.6% during May, after a downward surprise of a 0.1% decline in April, according to consensus.
EUR/USD Technicals
Valeria Bednarik, chief analyst at FXStreet explained, "Technically, however, the short term picture (for EUR/USD) continues to favor the downside, as the 1 hour chart shows that the price extended below a now bearish 20 SMA, after failing to break above the 200 SMA, whilst the technical indicators maintain their bearish slopes below their mid-lines."
"In the 4 hours chart, the pair bounced from a mild bullish 20 SMA, whilst the technical indicators regaining the upside after approaching their mid-lines, limiting chances of a stronger decline as long as buyers continue to surge in the 1.0850/60 region."
Key headlines in Asia
Greece parliament approves prior actions bill, paves way to bailout
EUR/USD up: Greek lawmakers passing the reforms for bailout
RBNZ cuts interest rate by 25bp to 3%, further easing likely
Dominating themes in Asia - centered on JPY, AUD, NZD
The New Zealand dollar edged sharply higher against the greenback on Thursday after the RBNZ signaled that its comfort level for the currency was a great deal closer than where it was just a few months ago.
The central bank lowered interest rates for the second time since June on Thursday; policymakers did however drop the harsh language about the strength of the New Zealand dollar, and signaled that its depreciation was helping to support the economy and inflation.
While the Aussie was trading largely subdued, heading towards multi-year lows, as traders continued to digest RBA Stevens remarks and the upbeat US existing home sales data released on Wednesday.
The dollar-yen pair hovers around 124 handle awaiting fresh cues from US jobs data due for release later today. While the greenback is broadly lower as traders resorted to profit-booking on their ISD longs after the recent rally following stronger than expected US existing homes sales print reported on Wednesday.
Moreover, the yen was slightly supported versus the greenback after data showed that Japan's overseas trade balance improved last month as export growth accelerated and imports continued to decline.
Asian markets are trading mixed, with Chinese equities emerging the best performers. The Shanghai composite index now trades nearly 1.31% at 4078.90. The Australian benchmark the ASX 200 trades -0.21% lower around 5602. The Nikkei 225 in Tokyo rose 0.42% on weaker yen, while. South Korea’s Kospi trades flat at 2064.
Heading into Europe - centered on EUR, GBP
No significant macro events will be reported in the European session except for the key UK retail sales which will be the main market mover today.
The UK will publish results of its retail sales activities in June with estimates of a 0.4% gain on monthly basis in the sixth month of the year from 0.2% growth reported a month ago, while a 4.8% advance is seen annually compared to 4.6% registered in May.
ECB Governing Council member and Germany's Bundesbank President Jens Weidmann will speak at a conference on capital markets union.
Later in the North American session, we have Canadian retail sales and US weekly jobless claims report which may spur volatility in an otherwise calmer session. Retail trade in Canada is projected to rise 0.6% during May, after a downward surprise of a 0.1% decline in April, according to consensus.
EUR/USD Technicals
Valeria Bednarik, chief analyst at FXStreet explained, "Technically, however, the short term picture (for EUR/USD) continues to favor the downside, as the 1 hour chart shows that the price extended below a now bearish 20 SMA, after failing to break above the 200 SMA, whilst the technical indicators maintain their bearish slopes below their mid-lines."
"In the 4 hours chart, the pair bounced from a mild bullish 20 SMA, whilst the technical indicators regaining the upside after approaching their mid-lines, limiting chances of a stronger decline as long as buyers continue to surge in the 1.0850/60 region."