OANDA Trading Asia market wrap :: dazed and confused

Dazed and confused 

It was a hectic day in Asia as virtually everyone had a different read or take of yesterday’s FOMC. I guess we can assume that the extremely mixed trading session was a result of the markets extremely mixed view of yesterday FOMC

OANDA Trading Post FOMC podcast 938Now

Asia Oil

There was a complete unwinding of bearish oil sentiment after the market digested Energy Secretary Rick Perry comments suggesting there is little chance the Whitehouse will tap into SPR for the sole purpose of price intervention.

EURO
Just when you thought it was safe to buy the post FOMC EURO dip, Italian risk rears its ugly head making it difficult to hold an absolute bullish view at current levels and completely catching the market napping on this one!

The reason why Italy warrant a considerable amount of attention is that it’s big and as simple as that view is we could just as easily see a leak lower to the significant EURUSD 1.1660 support levels. But these politically inspired moves tend to have little legs so I would expect solid support on this dip.

However, the local German inflation data releases do warrant a bit of attention as this regional uptick supports the ECB view of rising inflation expectations.

Euro tumbles on talk Italy to delay budget meeting

EURO dips as Fed raises rates

Asia Markets

Asia market took the Fed hike in stride with equities mixed on China weakness, but Asian currencies were in demand despite the firmer G-10 backdrop

INR

The RBI remains in to defend the Rupee at all cost mode increase in SLR available to banks by 2% to 15% to ease funding pressures in the short term money market along with introducing tariffs on 19 non-essential imports to help stem the currency weakness.

KRW

$KRW dropped 6 won early in the session to 1110.00 as there was a holiday catch up in play as he Kospi reacted very favourably to the revised US-South Korea bilateral trade agreement signed Monday

Hong Kong Rate Hike

HKMA raised it’s benchmark rates by 25bp taking its lead from the Fed while local lender raised prime by 12.5 %. Keeping in mind that the Pboc announced they would tap into HK money market for funding, so this is not helping matter much. Until that point, the HSI was trading fluidly but took it on the chin after the rate hike announcement. Rising interest rate create a wall of worry for local property investors

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.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes