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The Yen Hits ¥104, Apple and China Doing the Damage

Bob Mason
It’s risk off in the FX world, with the Kiwi Dollar and Aussie Dollar the victims of Apple’s sell-off and weak data out of China, as the Yen rallies.

Earlier in the Day:

There were no material stats released through the Asian session this morning, leaving direction through the day in the hands of sentiment towards the global economic outlook, Brexit and hopes of an end to the ongoing trade war between the U.S and China.

A slide in shares through the U.S session, combined with weaker than expected manufacturing PMI numbers out of the U.S and a contraction in China’s manufacturing sector weighed going into the Asian session.

The Yen rallied to a morning high ¥104.87 against the Dollar before easing back to ¥107.14 at the time of writing, up 1.6% for the session.

For the Aussie Dollar and Kiwi Dollar, the risk off sentiment weighed, with the Aussie Dollar back at sub-$0.70 levels, down 0.66% to $0.6939 at the time of writing, while the Kiwi Dollar was down 0.35% to $0.6632, the pair managing to recover from heavier losses hit at the start of the session. For the Aussie Dollar, alarm bells will have been ringing, the early sell-off seeing the Aussie Dollar lose as much as 3.49% to strike $0.67 levels before retracing some of the losses.

In spite of heightened volatility in the FX world, the equity markets reflected a different story, with the ASX200 rallying by 1.35% at the time of writing and the Hang Seng and CSI300 up 0.25% and by 0.29% respectively, the gains coming in spite of another sell-off in the U.S futures in the early hours.

The Day Ahead:

For the EUR, economic data out of the Eurozone is limited to unemployment numbers out of Spain that are unlikely to have a material impact on the EUR, the EUR expected to be in the hands of risk sentiment through the day.

While manufacturing PMI numbers avoided delivering a shock on Wednesday, China’s number certainly did, with the risk off sentiment pinning the EUR back on the day, the Eurozone economy is one step ahead of that of the U.S on the slowdown path.

At the time of writing, the EUR up 0.12% to $1.1358.

For the Pound, economic data will continue to be overshadowed by market sentiment towards Brexit and the ongoing concerns over the global economic outlook, the UK needing to go it alone should the Brexit deal get voted through on 14th December, the Pound struggling at the start of the year following comments from the U.S Administration on the prospects of a trade deal should the current Brexit deal get pushed through.

Economic data scheduled for release later this morning is limited to December’s construction PMI.

At the time of writing, the Pound was down 0.52% at $1.2542, with any Brexit chatter through the day likely to overshadow today’s PMI numbers.

Across the Pond, economic data is on the heavier side, with key stats scheduled for release through the day including December’s ADP nonfarm employment change and weekly jobless claims figures, which are released ahead of December’s ISM manufacturing PMI and November new home sales numbers.

We will expect focus to be on the ADP and ISM manufacturing PMI numbers, with anything weaker than forecasted likely to hit risk sentiment further.

Outside the numbers, the government shutdown and trade war chatter will also be of influence through the day.

At the time of writing, the Dollar Spot Index was down 0.26% to 96.565.

For the Loonie, it’s yet another quiet day ahead on the economic data front, leaving direction to come from crude oil prices and general sentiment towards demand over the near-term, with focus likely to begin shifting to tomorrow’s employment numbers and some key stats out of the U.S that could set the tone for the markets through the early part of the year..

The Loonie was down 0.40% to C$1.3633 against the U.S Dollar at the time of writing.

This article was originally posted on FX Empire