Currency Analyst since 2010

Jan. 31: Asian session

  • New wave of risk aversion
  • Lower expectations of BOJ easing
  • Lunar New Year holiday is coming

Asian stocks slipped as fears about the impact of the Fed’s stimulus withdrawal on emerging markets offset the reassurance of upbeat US growth data. MSCI index of Asia-Pacific shares outside Japan fell by 0.1% after earlier wavering between positive and negative territory. Japanese Nikkei reversed sharply losing 0.9%. With several countries, including Hong Kong and Singapore, observing the Lunar New Year holiday, volume across the region was lighter than usual.

USD/JPY met resistance in the 102.90 area and eased down to levels around 102.50. According to the data released today, Japan’s December core consumer prices rose by 1.3% from a year earlier (forecast: 1.2%). Accelerating inflation reduced the case for the Bank of Japan’s further monetary easing.

Commodity currencies weakened on a new wave of anti-risk sentiment. AUD/USD faced resistance at $0.8825 and dropped to $0.8750. NZD/USD extends the decline for a third day, hitting a fresh low of $0.8125. RBNZ’s Wheeller added pressure by saying the NZD is too high to support the economic growth. An increase of the NZ trade surplus was not enough to support the pair.

EUR/USD is trading in the $1.3550 area. GBP/USD is little changed in the $1.6480 area after yesterday’s decline.

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