Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Jul 28 08 04:19 GMT |

AUD shocked by more writedowns; Focus shifts to European data Forex: This week's U.S. data is as big as it gets, with GDP, non-farm payrolls, and manufacturing ISM slated for release. But some analysts argue that the most important data will be coming from Europe (weak U.S. data has already been priced in, they argue). EUR/USD started the week in a tight trading range, with sellers around 1.5702 and buyers ahead of 1.5670. The main near-term downside target for EUR/USD is seen at 1.5585 (61.8 fibo of 1.5305/1.6038 move). EUR/JPY failed to make any progress above 169.70, but traders expect the pair to test 170.00 over the coming sessions (a break above 170.00 will likely trigger massive stops, many from Japanese importer options). USD/JPY moved above 108, a one month high, but selling by Japanese exporters capped the upside. Another Aussie bank hit by credit troubles: Shares of ANZ Bank, Australia's third biggest lender, slumped about -13% after announcing plans to write down A$1.2B during 2H08. The bank guided 2008 cash EPS lower by -20% to -25% on a y/y basis, citing deterioration in global credit markets. The AUD/USD looks increasingly vulnerable after the ANZ announcement, news that comes only three days after bigger rival National Australia Bank shocked the market with an A$830M writedown. The AUD/USD dipped below 0.9540 support after ANZ's announcement, with the next support seen around 0.9525 (61.8 fibo of the 0.9327/0.9851 move). Traders point out that AUD/USD is now within striking distance of 0.9500, a pivot point since early this year. Daiwa Asset Management, which holds 4.0% of Australia's bonds, recently said that the AUD rally has ended. Daiwa isn't buying the AUD because cash flowing into Australia funds 'has stopped in recent days'. New Zealand's annual trade deficit narrows for the first time in four months in June: (NZ JUNE TRADE BALANCE: -223M V -350M expected, prior revised to -168M from -195.8M; Imports: 3.81B v 3.70B expected, prior revised to 3.91B from 3.92B; Exports: 3.59B v 3.35B expected, prior revised to 3.74B from 3.73B) New Zealand's slumping economy curbed demand for imports, while exports rose more than forecast. Analysts said the data provided reassurance of an improving trend in the trade deficit. Australia's business confidence deteriorates further: (AU National Australia Bank Business Confidence Expectations Index fall -4pts to a reading of -8pts for the September quarter) 'A triple whammy of reduced activity, lower customer confidence, rising costs - borrowing, oil and other key purchase costs - and volatile and lower equity markets continue to weigh on the business outlook,' NAB Head of Australian Economics Jeff Oughton said. The survey showed almost 30% of Australian businesses expect a minor deterioration in their industry conditions in the September quarter, in contrast to about 20% of firms that expect a minor improvement. Reserve Bank of Australia Assistant Governor Guy Debelle said he sees signs of improvement in the securitization market despite recent turmoil. 'Although the securitization market continues to be dislocated, there have recently been some signs of improvement, with a number of public issues taking place in recent weeks,' Debelle said. 'Some of these issues have been oversubscribed due to strong investor demand. A few securitizations of auto loans have also taken place.' Equities: At 23:58 EDT Japan's Nikkei is +0.09%, the S&P/ASX200 is -1.43%, South Korea's KOSPI is -0.13%, Hong Kong Hang Seng index is +0.32%, and the Shanghai composite index is +1.48%. The S&P500 futures contract lost -0.10% since Friday's close, last trading at 1,252.60. The Nikkei tracked Wall Street's positive lead, with trading houses and certain financials trading higher. Honda Motors traded sharply lower after the company lowered its FY operating profit forecast. The S&P/ASX200 traded sharply lower, with financials leading the downside. Until recently many expected the Australian banking sector to remain relatively insulated from the credit crunch, but recent news from National Australia Bank and ANZ Bank has shattered that view. Technology stocks dragged on the KOSPI index, while financials boosted sentiment in Shanghai. The Peoples Bank of China did not explicitly mention monetary tightening during its Q2 policy meeting, emboldening some bargain hunters. Commodities: Nymex crude oil prices gained +0.12% between 18:00 EDT and 23:56 EDT, last trading at $123.41/bbl. OPEC's president said he expects oil prices to trend towards $70-$80/bbl over the coming months, citing expected USD improvement and resolution of the Iranian conflict. Spot gold gained +0.42%, last trading at $940.80/oz. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. 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