Forex Asia Review – Australian dollar rises after retail data, yen weakens

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AUDUSD bounced off a low 1.0658 to 1.0720 after better-than-expected retail spending and a strong outlook for Australian investments that gave investors optimism for more economic growth and cooled rate cut expectations which the RBA has recently hinted on. Retail sales rose 0.5 percent in July, after falling in June. The aussie surged to a one-month high of 82.63 against the yen. The HSBC final manufacturing PMI index on China rose more than expected, also helping loft the AUD since China is a major trading partner for Australia.

 

USDJPY opened Asia at 76.61 and surged to 77.23 after a major Japanese bank made large dollar purchases in what was said to be a specific transaction unrelated to fundamentals or particular positions, according to traders. Yen weakness was also underpinned by more risk sentiment as Asian stocks rallied for a sixth day and the HSBC China manufacturing index rose to indicate the world’s second largest economy is still growing, easing concerns of a global recession.

 

EURUSD opened the session at 1.4376 and settled in the Asian session after a huge drop yesterday due to disappointing euro zone unemployment and inflation data , which renewed concerns of sluggish euro zone growth and fuelled speculation of rate cuts by the ECB. The euro was supported from a further fall uncertainty on the dollar as many market players are looking ahead to U.S. manufacturing and jobs data due later today and tomorrow and EURUSD did not fall below 1.4354.

 

GBPUSD opened 1.6260 and had a quiet Asian session to consolidate after a huge drop from yesterday , in reacting to weak European data and general risk off sentiment.

 

The Swiss franc remained strong in Asia after Switzerland’s Economy Minister said Switzerland would have to live with a strong currency. The Swiss currency is a safe haven for investors worried about the euro zone’s debt crisis, and moved off a seven week low against euro that was hit on Monday to bring EURCHF down to a low of 1.1540 from the open of 1.1574. USDCHF dropped to 0.8030 from 0.8053 as investors mulled over whether the Fed will re-introduce QE3.

 

 

Gold was little changed during a quiet Asian session for the metal which opened the session at $1,823.48 and flattened out into a very tight range. Investors are waiting to see the possibility of further Fed quantitative easing are closely watching a key Fed policy meeting starting September 20.