Market Brief: Antipodeans Drive FX Volatility Again


A summary of news and snapshot of moves from today’s Asia session.

View our guide on how to interpret the FX Dashboard

FX Brief:

  • It was another volatile session courtesy of the Antipodeans, with Australian employment missing the mark and sending AUD broadly lower. Whilst unemployment rose to 5.3% as expected, it was employment growth contracting for the first time since September 2016 (with fulltime employment also falling) which made its presence known.
  • And that was before weak Chinese data. Retail sales fell to 7.2% YoY (7.8% prior and 7.9% expected), industrial output fell to 4.7% YoY (5.8% prior, 5.4% expected) and investments fell to 5.2% (5.4% prior and expected).
  • RBNZ’s deputy governor spoke earlier in the session, stating they made a call to “bide our time for now” on interest rates, but RBNZ could move rates in February if they needed to.
  • AUD and NZD are the weakest majors (in that order) and the yen was slightly bid on further trade doubts. NZD/CAD has retreated from yesterday’s high but we’re keeping a close eye on 0.8500 for a potential trend reversal. AUD/USD is below 68c after breaking out of its corrective channel, AUD/NZD fell to a 10-weel low.
  • Volatility was higher than usual in Asia today, with the average daily rage to ATR sitting at 69%. Yet six AUD pairs exceeded their AR following weak employment and Chinese data.

Equity Brief:

  • Cautious trading mood continue to reign in today’s Asian session where traders continue to monitor the on-going anti- government demonstrations in Hong Kong that are not showing at signs of abating at this juncture. Also, key economic data releases out from China, Japan and Australia have remined traders that the global economy remains fragile.
  • China’s retail sales and industrial output growth for Oct has slowed down more than expected (retail sales; 7.2% y/y vs consensus of 7.9% y/y & industrial output; 4.7% y/y vs consensus of 5.4% y/y) which indicates that the current piecemeal stimulus programmes from Chinese policy makers are not gaining much traction to boast economic activities.
  • Japan’s preliminary Q3 GDP came in at 0.2% y/y below consensus of 0.8% y/y, down sharply from a revised Q2 reading of 1.8% y/y. Meanwhile, Australia’s jobs data for Oct painted a sombre picture as it shed jobs for the first time in 17 months with employment change at -19K versus consensus of +15K.
  • Hong Kong’s Hang Seng Index has continued to be the  worst performer for the 4th consecutive session where it has dropped by around -0.70% so far reinforced by a plunge of -2.10% seen in Tencent Holdings, the 2nd largest component stock in the HSI after its Q3 earnings missed estimates with a -13% y/y decline in net profits (CNY 20.4 billion vs consensus of CNY 23.5 billion).
  • Australia’s ASX 200 has managed to shrug off the negative sentiment arising from the weak AU employment data to record a gain of 0.55% led by technology and healthcare related stocks where Afterpay Touch has soared by 7.5% after an announcement of A$200 million subscription by U.S. based Coatue Management and a 110% increase in its global sales for 4 months ended 31 Oct.  Another tech stock, Nearmap also posted a stellar gain of 14% after an upbeat outlook for 2020.   

Matt Simpson and Kelvin Wong both contributed to this article

Data from Refinitiv. Index names may not reflect tradable instruments and not all markets are available in all regions.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.