Summary:

  • Japanese yen loses steam amid concerns that authorities may want to limit the latest gains
  • Bitcoin (BITCOIN on xStation5) slumps after remarks from South Korean finance minister
  • Asian stocks continue their winning streak, fresh records in sight

The Asian session pushed the US dollar index lower, however it gained momentum against the Antipodean currencies and the Japanese yen. Notice that both AUD and NZD have made decent gains vs. the greenback of late hence a pullback is a natural thing. Nevertheless we got the two possible reason behind a slide. Namely, according to the New Zealand Institute of Economic Research business confidence in Q4 deteriorated from 5 to -12, the lowest point since the third quarter of 2015 which could illustrate lingering politics-related concerns. The group highlighted the continued weakening in profitability while businesses expect further aggravation in the next quarter. In this respect all NZD traders cannot forget about today’s GDT milk auction which as usual might exert a bit higher volatility. On the other hand the AUD got a blow following the newly released Citi’s research where the bank warned against an imminent sell-off in iron ore. Among reasons Citi singled out the winter restriction season on steel production which is expected to end soon, a record level of inventories in Chinese ports and anticipations that the Chinese economic growth will go off the boil. 

Although the Antipodean currencies performed quite mixed the Japanese yen turned out to be the largest loser as it slumped following rising expectations about FX interventions from the country’s authorities. Japanese economy minister Motegi said overnight that an impact from FX moves is closely monitored, though he does not see an issue with the dollar weakening to around 110.8 yen. Even as he played down the latest decrease in the USDJPY he also added that big swings in currencies would be problematic especially if they are sudden. Moreover, Japanese finance minister Taro Aso repeated almost the same comments claiming that abrupt moves in exchanges rates are a problem albeit he declined to comment on specific levels.

link do file download linkThe latest USDJPY’s slump could have been exaggerated give where the US 10Y yield hovers. Bulls could face a crucial resistance nearby a 111 handle as it coincides with a 50% retracement of the big rally taking place last year. Source: xStation5

While the US dollar is trying to lick its wounds the Bitcoin price made another sell-off over the course of the past hours. Traders decided to dump the cryptocurrency in the aftermath of fresh remarks from South Korean finance minister saying that speculation in cryptocurrencies is irrational and taxation, other regulations are needed. He also reiterated that a shutdown of digital currency exchanges remains still on the table while the country prepares some measures seeking to regulate cryptocurrency trading. Consequently, Bitcoin moved down roughly 6%, however a pivotal support zone remains in play.

link do file download linkBitcoin retreated after the newest comments coming from South Korean finance minister. Source: xStation5

Finally Asian equities kept on rallying during the session sticking to their best beginning to a year since 2006. The NIKKEI (JAP225) closed up 1% whereas the Shanghai Composite (CHNComp) is slated to gain as much as 2.2%. Notice that the US bond market reopened broadly unchanged meaning that the US 10Y yield is trading a notch lower below 2.55%.