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Profit-taking spree hits Asia, Central banks’ events – In spotlight

FXStreet (Mumbai) - Asian traders resorted to profit-taking after the recent rally witnessed across the financial markets. While liquidity seeped back in Asia as the Chinese traders returned to markets after a week-long break. Amongst the G10 currencies, the yen, the euro and the Swiss franc were best performers amid a mild-risk-off seen this session.

Key headlines in Asia

RBA publishes paper on modelling the AUD

Silver drops on profit-taking after a 4-day rally

Dominating themes in Asia - centered on JPY, AUD, NZD

There was nothing much to report in Asia, except for the mixed Japanese datasets which had little influence on the USD/JPY pair. The major extended the slide into a third day today as the yen remains better bid amid a slight risk-aversion and lower Japanese stocks. While the USD edged lower versus its major peers, down -0.07% at 95.58.

Calendar-wise, Core machine orders dropped -5.7%, below expectations for an increase of 3.3%. While Japan’s Current account data came in above expectations at JPY1653.1B in August versus JPY1221B expectations.

While the Antipodeans slipped on profit-taking after recording fresh multi-week highs on Wednesday. The Aussie was the biggest loser and dropped -0.44% to 0.7174, unable to resist 0.72 barrier. While the Kiwi also consolidates after the recent bullish streak and might be gathering pace for further upside. The NZD/USD pair trades -0.22% at 0.6595, off six-week highs.

Among Asian indices, Japan’s Nikkei turned lower after a positive start and npw trades -0.88% lower at 18,168. Australia’s S&P ASX index pares gains to 5,207, up 0.18%. While the Chinese markets keep their upbeat momentum intact after re-opening on a firmer note and rallies 3.80% to 3,168. Hong Kong’s Hang Seng drops -0.74% to 22,349.

Heading into Europe - centered on EUR, GBP

A busy day for the EUR, GBP traders as the session ahead is packed with lots of action expected from the BOE’s Super Thursday and the ECB minutes, especially after the Fed left rates on hold.

On the data space, only German trade balance is lined up for release. The trade balance expected to post EUR20.2 billion in August, versus EUR22.80 billion seen in July.

BOE’s Super Thursday

The BOE Monetary Policy Committee (MPC) is expected to leave its key interest rate at a record-low 0.5%. It’s widely expected that no changes are expected in the bank’s policy decision; hence the main focus will be on the MPC voting record for any member’s shift in view towards a rate-hike.

Looking ahead, the usual weekly jobless claims are lined up for release in the New York session. Also, the much-awaited Fed 17 Sept meeting minutes will be published later in the session, which will throw fresh light on the Fed’s outlook on the interest rate as well as on the US economic prospects.

EUR/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet noted, “The 1 hour chart shows that the price is a few pips below a bearish 20 SMA, whilst the technical indicators head nowhere in negative territory."

"In the 4 hours chart, the price is stuck within its moving averages, whilst the technical indicators stand flat around their mid-lines. Additional gains beyond 1.1285 should lead to a test of 1.1335, a strong static resistance level, but it will take a clear break above this last to confirm a steadier upward continuation.”

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