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Asia Recap: AUD bid tone remains, USD recovers after false Ebola scare

FXStreet (Bali) - The Aussie and Kiwi were the best performers in Asia, while the US Dollar and Japanese Yen ended as the main laggards, with most losses for the former occurring in the early transition from NY 5pm to the Tokyo open, time when markets were especially illiquid due to public holidays in the United States.

AUD/USD and NZD/USD, for a second session in a row, performed very similar bullish activity, thus the indecision in AUD/NZD, with the Aussie rate being paid as high as $0.8810, with some weak stops above the whole number being taken out. NZD/USD, meanwhile, also absorbed some offers above the 0.79 mark to reach a high of 0.7915, before stabilizing near the round number. USD/JPY managed to recover above 107.00 after an early low of 106.75, with importers' demand and option-related activity attributed as main drivers. Some fast money accounts were also seen actively on the bid after the false Ebola case at the Boston international airport. EUR/USD and GBP/USD consolidated some 10/20 odd pips above 1.27 and 1.6050, after an early spike to 1.2765 and 1.6110 respectively. Zew data and UK inflation will be the key EUR, GBP movers in the next European session.

The early round of USD selling and SP 500 underperformance on Monday - largest 3-day losses for over 3 years -, and while mood was lifted significantly in Asia - S&P500 up over 0.6% - was attributed to new ebola cases being reported at the Boston International Airport, with a plane full of passengers quarantined after reports that five people on board a United Arab Emirates flight from Dubai were exhibiting flu-like symptoms. Eventually, it turned out to be an over-reaction led by fear and illiquidity, with the USD recouping more than half its losses against main rivals. The US CDC said that there was no Ebola threat reported at Boston’s Logan Airport.

We also saw Guy Debelle, Assistant Governor (Financial Markets) at the RBA, speaking at Citi’s 6th Annual Australian and New Zealand Investment Conference in Sydney, noting that the Australian dollar remains high vs fundamentals, adding that "diverging policies of major central banks challenging for FX markets, complicating environment for setting policy in other parts of the world including Australia." The AUD had a muted activity on these comments.

The key event in the Asian calendar - Australian NAB business series - resulted in disappointment, although judging by the AUD bullish performance, it certainly doesn't look like the market cared much, as the local currency carved out yet another counter-intuitive move, with quite a few of these patterns produced in recent Australian econ releases, which comes to prove how important is market positioning/order flow. The data showed Australia's NAB business confidence for the month of September at 5 vs 8 in August - lowest level since pre-election - , with NAB business conditions (Sep) at 1 vs 4 last, lowest level in 4 months.

In Singapore, the MAS (Monetary Authority of Singapore) maintained its policy stance of modest and gradual appreciation in their semi-annual meeting, with ANZ attributing the inaction to "sticky core inflation", adding that "MAS' growth forecast was maintained at 2.5-3.5% while core inflation is expected to remain above long term averages at 2.0-3.0% in 2015."

In other news out of Japan, money supply M2+CD (YoY) remained at 3% in September, while domestic corporate goods price index (MoM) met expectations (-0.1%) in September, with the yearly reading registering 3.5%, which was below expectations of 3.6%.

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