Week in FX: Asia October 16-21

The dollar plunged to record lows against the yen on Friday. Earlier this week, the BoJ and Japanese Government released a draft plan to tackle the currency’s strength. The measures included an expansion of the credit facility to help with “corporate M&A and resource acquisition overseas”. The draft stated that it does not rule out any steps on FX. Japan is unlikely to intervene before next Thursday. The last unilateral intervention exercise upset both the European and US leaders. Japanese officials have gone to great lengths to explain that the recent upswing in their own currency is due to the European fiscal and financial problems. There is too much event risk towards next Wednesday and any intervention could have a limited impact. The BoJ meets Thursday

Below are some other highlights of the week:


  • PBoC: Started the week by deciding to fix USDCNY lower for the first time in 4 session by 52 pips to 6.3710. Regional Cbanks remain behind the curve in smoothing the rally in their respective currencies as most currency pairs have yet to recover the sell-off last month.
  • SGD: Singapore’s exports remain sluggish. Non-oil export growth unexpectedly fell -4.5%, y/y, in September. Market was expecting a gain of +3.5%. The print was driven by the -8.1%, fall in petrochemical exports while electronics export growth improved to -13.6% from -19.4%, y/y, in August. Exports to neighboring countries held pat, while to the US, they fell -35.5%, y/y in September. Market remains bullish on the currency after the MAS’s clear announcement last week of keeping the currency on an appreciating path.
  • CNY: Q3 GDP growth was +9.1%, y/y, below the consensus forecast of +9.3%. Another way of looking at it, GDP rose a strong +2.3%, q/q, s.a (+9.5% annualized) in Q3 and it was revised up to +2.4% in Q2. September’s IP and retail sales were better than expected at +13.8%, y/y and +17.7% respectively. Analysts believe that with inflation and growth trending higher, the PBoC is able to keep CNY on a +5% appreciation track outright.
  • AUD: RBA minutes were neutral and mirrored the tone of their policy statement. The key sentence “an improved inflation outlook, if confirmed by further data, would increase the scope for monetary policy to provide some support to demand, should that prove necessary”, could end up being a possible teaser, as a weaker Q3 inflation report released next week would/could trigger a cut, however, EU holds the key, as the RBA is not expected to be pro-active ahead of the G20 Caen meeting.
  • THB: BoT kept its policy rate on hold at +3.5% as widely expected. Analysts note that policy makers are balancing their flood impact on GDP growth and if that impact is significantly more than the +1.7pp forecasted, the market should be expecting some future rate cuts.
  • CNY: PBoC continues to fix USDCNY lower. This in turn is pushing the CNY NEER higher. Are Chinese policy makers allowing CNY to appreciation ahead of the G20 meeting on 3-4 November? It would not be the first time.
  • PHP: The BSP kept rates on hold at +4.5% as widely expected. Policy makers remain comfortable with the inflation outlook. Their FX policy is one of reducing volatility.
  • JPY: The MoF announced measures to help companies cope with the strong yen (reached a post WWII high on Friday) and has approved a Â¥2t supplementary budget. The fund is to encourage investment in domestic plants and hire workers. Legislation announced last month to increase funds available for intervention was also approved.
  • KRW: Finance Minister Bahk stated that it would not be “easy” to contain inflation at the target of +4% this year. They may have to tolerate more won appreciation to help curb imported inflation.
  • MYR: CPI inflation had a print of +3.4%, y/y in September, in line with expectations. Has they inflation peaked?






  • Capital Market gets Monetary Policy statements and rate decisions from JPY, NZD and CAD
  • Consumer and Business confidence comes from CHF, USD and NZD
  • Inflation headlines and reports are released in NZD, AUD and GBP
  • CNY will gives us a flash manufacturing print
  • GBP has its Current account and Quarterly GDP numbers to divulge
  • USD not unaffected, it’s got core-durables, new and pending home sales, finishing with its Advance GDP print


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell