Asian Currency Markets See Active Trading Session

Aussie traders are being bounced up and down after several days of disappointing data from China weighed on the currency, but hopes of stimulus from the PBOC helped support the Aussie well above the 0.76 level. Just days before the Reserve Bank of Australia surprised investors by dropping its prime lending rate 25bps. The currency fell below the 075 level which is the value that the RBA was hoping to see the currency maintaining.  These morning retail sales reported soared well above expectations coming in at 0.4% and there was an upward revision for the previous month. Also the Australia trade balance printed better than expected.  That deficit also beat market expectations of another big print of $2.9 billion. That lifted the AUDUSD back toward 75 cents with a current price of 0.7491.

 

For the first time in four months’ Australian retail sales have beaten expectations, increasing 0.4% to $24.946 billion in March according to data released by the Australian Bureau of Statistics (ABS). Sales in cafes, restaurants and takeaway food services was relatively unchanged while those in department stores fell 0.5%. From a year earlier sales of household goods and clothing, footwear and apparel rose by 5.8% and 5.2% respectively, the fastest growth of any category.

Department stores, after recording the fastest annual growth of all categories in the 12 months to February, decelerated sharply, rising just 1.7%, the slowest of any category.

The New Zealand dollar gained 15 points this morning in sympathy with the Aussie and on hopes of additional Chinese stimulus. Scoop reported that “Markets seem to be at something of a crossroads at present, waiting for clearer signals on whether US activity will bounce back in Q2, or whether the loss of momentum will extend further,” ANZ Bank New Zealand senior economist Sharon Zollner and senior foreign exchange strategist Sam Tuck said in a note. “Data releases overnight provided something for everyone. We suspect markets will be relatively quiet awaiting tomorrow’s US payrolls release.”

The US dollar dipped a bit in the morning session helping the Asian currency realize gains. The greenback eased to 93.24.

“The Caixin China General Manufacturing PMI for April came in at 49.4, down 0.3 points from March’s reading. All of the index’s categories indicated conditions worsened month-on-month, with output slipping back below the 50-point neutral level. The fluctuations indicate the economy lacks a solid foundation for recovery and is still in the process of bottoming out. The government needs to keep a close watch on the risk of a further economic downturn.” Asian markets wavered between positive and negative Thursday in the wake of a fresh reading on China’s economy showing growth in the services sector moderated.

That followed the release of the China Caixin services purchasing mangers’ index, which came in at 51.8 for April, continuing to show expansion, but marking a moderation from 52.2 in March. A reading above 50 indicates activity is growing, while one below that level suggests a contraction.

Markets in Japan, South Korea, Indonesia and Thailand will also be closed Thursday for public holidays. The Nikkei 225 finished down 3.1 percent on Monday, and has been closed since for public holidays. The yen showed signs of fatigue early on Thursday having taken a step back from recent peaks, while the greenback firmed broadly on some optimism the U.S. economy would bounce back after nearly stalling in the first quarter.  The dollar edged up to 107.11 yen, pulling away from an 18-month trough of 105.55 set on Tuesday. The euro was back at 123.00 yen, off a three-year low of 121.665 plumbed last Friday.