Jan. 27: Asian session
USD/JPY tested 7-week low at 101.75, but then recovered to 102.50. Demand for yen as a safe haven increased because of a selloff in emerging-market assets. The MSCI Emerging Markets Index of shares fell 1.2%, extending last week’s 2.3% slump. Investors are worried that troubles in EM could lead to financial crisis. Turkey suffers from political turmoil, while Argentina abandoned support of its peso on the open market. The expectations of the Fed’s policy tightening and tightening credit conditions in China also encourage fears about the EM economic slowdown.
Commodity currencies met buyers in the Asian trade. AUD/USD opened the week slightly above the Friday’s minimum of $0.8660 and strengthened to $0.8740. Australian markets were closed for a holiday. NZD/USD still didn’t close the morning a bearish gap, trading below $0.8225. Kiwi remains well-supported by the $0.8200 mark. On Sunday Forbes published an article saying China halts cash transfers. However, the PBOC statement clarified the issue: the move only covers some Internet transfers and those for small amounts and is due to regular system maintenance.
EUR/USD is trading in the $1.3680 area after it spiked to $1.3740 on Friday. GBP/USD tested $1.6472, but then returned to the levels above $1.6500.