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Asia Recap: Feast of w/e headlines, Euro heaviness remains

FXStreet (Bali) - The first Asian session of the week was characterized, more than by price moves (Euro pressures continue though), by the bombardment of headlines over the weekend.

AUD/USD opened Asia with a down-gap at 0.9322, although it looked to be more an affair of seeking for liquidity lower rather than bears taking control. The rate traded higher ever since the open, despite not being assisted by Chinese nor Australian data. USD/JPY had a 15 pips gap to the upside, with 104.20-25 recent highs being tested but no conviction was seen to break into higher ground. EUR/USD printed a new 1-year low at 1.3117, AUD/JPY broke away from resistance 97.25, although no major impulsive move took place, setting the highest just a few pips above at 97.30.

On the fundamental front, a real feast of headlines we had. Out of Europe, we saw ECB's Benoît Cœuré noting that the ECB is ready to adjust monetary policy further if needed & boost bank liquidity. Polish President Komorowski said that Putin's intend is to build a new Russian empire, while Lithuania’s president Grybauskaite said Russia is at war with Ukraine and so effectively at war with Europe. EU is now preparing stronger sanctions against Russia, according to EU's President Barroso, with the US endorsing the proposal. European Union leaders also agreed to hold an emergency summit to promote growth and jobs on October 7.

Russia’s Putin was quoted in an interview over the weekend, saying that "they cannot stand aside when people are being shot at in Ukraine", adding that urgent discussion over the 'statehood' of eastern Ukraine should take place. A report from Der Spiegel over the weekend, also revealed that Merkel is increasingly worried over Draghi’s focus on fiscal stimulus instead of fiscal austerity. Meanwhile, SNB's Chief Jordan reassured those long EUR/CHF that the floor will be fiercefully defended, leaving the doors open to negative rates.

As per today's economic indicators, New Zealand Q2 terms of trade came way above expectations, with Australia's AIG Performance of Manufacturing index for August slipping into negative territory again at 47.3 vs 50.7 last. Australia's TD Securities/Melbourne Institute (MI) Inflation Gauge for August came flat at +0.0% m/m vs +0.2% last. Australia's Q2 Company Operating profit & inventories data also disappointed. In Japan, Q2 Capital Spending was +3.0% y/y vs +4.2% exp., with Japan Markit/JMMA Manufacturing PMI for August at 52.2 (preliminary was 52.4) vs 50.5. In China, Manufacturing Purchasing Managers Index (PMI) for August was weaker at 51.1 vs 51.7, reflecting the loss of growth momentum. Lastly, China's HSBC/Markit Manufacturing PMI for August was revised slightly lower to 50.2 vs 50.3.

Main headlines

SNB reiterates commitment for 1.20 floor, negative rates not ruled out

French PM calls for further ECB action to weaken Euro

Specs add USD longs, EUR shorts - Nomura

Draghi's new focus on fiscal policy raises concerns in Germany

EU summit on jobs, growth to be held Oct 7

EU, US to impose stronger Russia sanctions

NZ Terms of Trade Index (Q2) beats estimates

Australia's AiG Mfg index back to negative territory

Australia TD Securities Inflation (MoM) fell from previous 0.2% to 0% in August

China NBS Manufacturing PMI came in at 51.1 below forecasts (51.2) in August

Japan Capital Spending below forecasts (3.8%) in 2Q: Actual (3%)

Australia Company Gross Operating Profits (QoQ) came in at -6.9% below forecasts (-1.8%) in 2Q

Japan's manufacturing output growth at 5-month high

China HSBC PM: Final revision lower at 50.2 vs 50.3

South Africa Private Sector Credit climbed from previous 8.69% to 9.77% in July

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Indonesia Core Inflation (YoY) down to 4.47% in August from previous 4.64%

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