Asian Session – Risk sentiment shifts to positive as aussie gains from Chinese stimulus hopes
March 26, 2014 7:37 am
Risk sentiment was turning positive once again as geopolitical concerns over Crimea receded and Chinese economic stimulus was anticipated in the coming months. Asian stock indices climbed to 2-month highs but the foreign exchange majors mostly remained within their recent ranges.
In the crisis over Ukraine, both Russia and the West signaled they would not escalate the situation further. President Obama described Russia as a “regional power” and that the issue was not top of the national security agenda for the United States. He held off from announcing further sanctions or steps against Russia. On the Russian side, there were conciliatory statements in that it still wanted to cooperate with the West and the Russian Foreign Minister met with his Ukrainian counterpart even though Moscow does not recognize the new government in Kiev.
Although one would expect a sell-off of the safe haven yen on these developments, the currency remained in a narrow range against the US dollar and the euro, trading at 102.31 and 141.27 respectively. Yen volatility was relatively low ahead of the end of the Japanese fiscal year on March 31.
The euro managed to recover off yesterday’s low of around 1.3750 after a weaker-than-expected German IFO business sentiment survey and comments by the German central bank chief that even QE was not out of the question for the ECB. There was some reassessment of Weidmann’s comments, as Draghi reiterated he did not see a threat of deflation in the Eurozone. The euro traded at 1.3808 against the dollar, slightly off during the Asian session.
The Australian dollar continued to benefit from hopes that the Chinese government will apply additional stimulus to boost the country’s slowing economic growth. The aussie hit a 4-month high of 0.9200 against the US dollar and was trading at 0.9190, up 0.38% during the session. Speaking out of Hong Kong, the RBA Governor expressed optimism about the economy, said he expected the aussie to drop over the long run but that he was also reluctant to draw lines in the sand in foreign exchange markets.
The Chinese yuan in the meantime was trading lower today around 6.2093, although it was off the previous week’s 6.22, 13-month lows.
Looking ahead the economic calendar is relatively light as German consumer confidence and Italian retail sales are expected during the European session and later on, durable goods orders for February out of the US as well as Markit Services flash PMI.
Risk sentiment was turning positive once again as geopolitical concerns over Crimea receded and Chinese economic stimulus was anticipated in the coming months. Asian stock indices climbed to 2-month highs but the foreign exchange majors mostly remained within their recent ranges.
In the crisis over Ukraine, both Russia and the West signaled they would not escalate the situation further. President Obama described Russia as a “regional power” and that the issue was not top of the national security agenda for the United States. He held off from announcing further sanctions or steps against Russia. On the Russian side, there were conciliatory statements in that it still wanted to cooperate with the West and the Russian Foreign Minister met with his Ukrainian counterpart even though Moscow does not recognize the new government in Kiev.
Although one would expect a sell-off of the safe haven yen on these developments, the currency remained in a narrow range against the US dollar and the euro, trading at 102.31 and 141.27 respectively. Yen volatility was relatively low ahead of the end of the Japanese fiscal year on March 31.
The euro managed to recover off yesterday’s low of around 1.3750 after a weaker-than-expected German IFO business sentiment survey and comments by the German central bank chief that even QE was not out of the question for the ECB. There was some reassessment of Weidmann’s comments, as Draghi reiterated he did not see a threat of deflation in the Eurozone. The euro traded at 1.3808 against the dollar, slightly off during the Asian session.
The Australian dollar continued to benefit from hopes that the Chinese government will apply additional stimulus to boost the country’s slowing economic growth. The aussie hit a 4-month high of 0.9200 against the US dollar and was trading at 0.9190, up 0.38% during the session. Speaking out of Hong Kong, the RBA Governor expressed optimism about the economy, said he expected the aussie to drop over the long run but that he was also reluctant to draw lines in the sand in foreign exchange markets.
The Chinese yuan in the meantime was trading lower today around 6.2093, although it was off the previous week’s 6.22, 13-month lows.
Looking ahead the economic calendar is relatively light as German consumer confidence and Italian retail sales are expected during the European session and later on, durable goods orders for February out of the US as well as Markit Services flash PMI.
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