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USD buoyed by risk-on rally in equities, German IP – Up next

FXStreet (Mumbai) - A quiet start to a new week, with the greenback extending gains into Asia, supported by the impressive US jobs data. Risk-on sentiment prevailed this session, although the Antipodes remained heavy amid lower commodity prices. While USD/JPY was well bid above 123 handle and looks to test Friday’s high.

Key headlines in Asia

Do not see financial imbalances caused by QQE – BOJ’s Kuroda

2% price outlook unlikely – BOJ’s Sato

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

A low-key affair in Asia, after a volatile and eventful last week with the ECB shocker and upbeat US jobs report emerging main market movers. Asian traders cheered stronger US NFP report (211k vs. 200k exp.), which signalled that the economic recovery in the world’s largest economy remains on the track and also that the Dec Fed rate hike remains well anchored. Therefore, risk-on market profile persisted in the Asian session, with the USD/JPY pair testing highs near 123.30. The dollar-yen pair also gains, as the yen ran through fresh offers after the BOJ Kuroda’s talk up on the QQE program.

However, the risk currencies such as the Aussie failed to benefit from the risk-on environment and remained heavy. The Kiwi was biggest loser in Asia amid growing expectations of a RBNZ rate cut this week. Markets are pricing in around a 50% possibility that the RBNZ will slash the cash rate to 2.50% on Thursday, on the back of softer inflation outlook and lower dairy prices. The Kiwi drops -0.73% to 0.6695 levels. The Aussie also dips in the red, tracking losses for its OZ neighbour, while falling oil prices continue to dent the resource-linked currency. Amid lower oil prices, USD/CAD also gains 0.27% to flirt with 1.34 handle.

On the equities space, Asian indices rebounded sharply supported by Friday’s Wall Street rally. Japan’s benchmark, the Nikkei rallies over 1% to 19,738 while Australia’s S&P ASX index closed +0.20%% to 5,165. The mainland China’s benchmark, the Shanghai Composite rises 0.40% to 3,539, while Hong Kong’s Hang Seng gains 0.25% to 22,292.

Heading into Europe & the US

Nothing of relevance to be reported on the EUR calendar today except for the German industrial production and Eurozone Sentix investor confidence data.

Germany will report the results of industrial production in October, with 0.7% growth seen month-on-month, compared to the 1.1% decline registered in September, and a 0.6% advance year-on-year, after 0.2% growth seen a month ago.

Besides, ECB Vice President Vitor Constâncio will deliver opening remarks at the ECB Workshop, "Money markets and central bank balance sheets" in Frankfurt, Germany.

Later in the North American session, BOE Governor Carney’s testimony before the European Parliament Committee on Economic and Monetary Affairs, in Brussels, will be closely monitored for fresh cues on the BOE interest rates outlook.

Data-wise, the labor market conditions index will fill in an otherwise dry US calendar.

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