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Asia Recap: USD on a steady negative tone

FXStreet (Bali) - We had one of the liveliest Asian opens for some time, with weakness in the Greenback the main theme, with the Euro, Sterling and Yen the main beneficiaries.

AUD/USD started the session pressured towards 0.8650, before a vigorous rebound took the rate up towards next cluster of offers at 0.8740/45, in what was perceived as an impressive turnaround amid iron and steel futures posting big gains. NZD/USD saw a similar performance to that of a buoyant Aussie, with the Kiwi trading very much in sync with its Australian cousin. The rate ended the Asian session at 0.7870 after a 0.78 low printed. USD/JPY was the protagonist in the early going of Asia, breaking through 107.50/55 bids, mainly driven by EUR/JPY sales, finding its lowest at 107.07. Market sources reported that despite being a holiday, Japanese banks were actively on the bid. EUR/USD managed to print solid gains, as did GBP/USD, with rates reaching levels as high as 1.27 and 1.6120 respectively. Rises came as demerit of the USD rather than any particular merits from either Euro or Sterling.

In the fundamental front, there were plenty of headlines from central bankers over the weekend, as part of the G20 and IMF gatherings. SNB’s Jordan reminded the markets that they will defend the minimum exchange rate on EUR/CHF with unlimited intervention if necessary. BOJ’s Kuroda noted that there were "no gap in views between the government and the central bank that a weak yen was positive." ECB’s Nowotny said that the euro is very likely to keep weakening, adding that the ECB should only buy quality ABS instead of being involved in sovereign bond purchases. Meanwhile, ECB President Mario Draghi, noted that they expect the drag on growth from fiscal consolidation to considerably diminish in coming months. PBOC's chief economist Ma Jun, said that "China’s slowing economy does not need any big stimulus, because the jobs market continues to be strong." From the Fed side, Evans said that a "strong dollar and weak global inflation exerting downward price pressures in the US", while Fed vice Chairman Fischer said that if foreign growth is weaker than previously thought, it could lead to a slower accommodative policies removal. Bank of Canada’s Poloz mentioned that he still sees labor slack.

As per today's Asian calendar, New Zealand Food price index for the month of September came at -0.8% MoM vs +0.3% last, with the REINZ September house price at +0.2% MoM vs 1.1% last, with BNZ noting that while there is evidence of a slow, to slowing, housing market, it’s nothing too dramatic considering LVR restrictions. In China, trade balance for September was lower-than-expected at $ 31B vs $41.1B, despite the imports/exports components came quite solid, with growth in imports the main driver resulting in a lower trade balance adjustment.

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