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Improved risk sentiment in Asia post-NFP, German data – Up next

FXStreet (Mumbai) - A quiet start to the week after eventful last few days in terms of economic news, which created massive volatility across the financial markets. Yen extends its weakness into a new week, while rest of the Asian currencies embark upon recovery after falling to multi-week lows following the impressive US jobs data inspired USD rally.

Key headlines in Asia

China: October trade weaker than expected – Nomura

Fed's Williams: December rate hike sensible

USD/JPY: Options point to risk of further bullish moves

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

Broad based US dollar correction was the main theme in Asia, which boosted forex and other related markets. The USD bulls took a breather after rallying to the highest levels in seven months against its six major peers on Friday after the surprisingly positive US payrolls data almost confirmed a Dec Fed rate lift-off. The US non-farm payrolls rose by 271,000 in October, helping to bring the unemployment rate to 5.0%, the lowest since 2008, beating 182k expectations. However, the USD/JPY pair completely shrugged-off USD correction and remains firmer near three-month highs posted at 123.48 at Tokyo open.

Among the other Asia-pac currencies, the Aussie attempts an anaemic recovery on the 0.70 handle, as the weak Chinese trade data continue to weigh. Chinese imports tumbled 18.8% y/y in October, against a 15.2% drop expected. Exports fell 6.9% over the same period, more than double the pace expected. While the recent slump in commodity prices also keep the resource-linked Aussie undermined. Surprisingly, the NZD/USD pair staged a solid comeback as the NZD bulls appear to shrug-off dismal China data and fight its way back higher, after the impressive US jobs data led slump. The Kiwi now recovers to 0.6558, recording a 0.60% gain on the day.

The Asian stocks are trading mixed on Monday, with Japan’s benchmark, the Nikkei rallying +2% to 19,654 while mainland China’s benchmark, the Shanghai Composite rises 1.63% to 3,648 while Australia’s S&P ASX index ditched its Asian rivals and drops -1.65% to 5,129. Hong Kong’s Hang pares gains and trades modestly flat at 22,874.

Heading into Europe & the US

Stepping into the Eurozone Q3 GDP-week on Monday, the EUR calendar remains fairly light with the German trade balance data to be reported, followed by Euro zone Sentix investor confidence numbers.

Germany will report trade activities in September, with the trade balance expected to reach EUR21.0 billion, higher than the EUR15.3 billion seen in August.

The Euro group will gather in Brussels to discuss on Greece and banking union in Europe. While ECB board member Yves Mersch is scheduled to speak at a conference in Luxembourg.

EUR/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet noted, “Trading at levels not seen since late April this year, the daily chart shows that the 20 SMA has crossed below the 100 and 200 SMAs far above the current level, whilst the technical indicators present strong bearish slopes, despite being in oversold territory, all of which supports further declines. In the 4 hours chart, the Momentum indicator aims higher below its 100 level, whilst the RSI indicator remains flat around 24, maintaining the risk towards the downside, particularly on a break below 1.0700.”

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