asia fx update 884432014

The lower than expected Chinese numbers we saw at the weekend have so far set the tone in FX markets this week.  Traders still remain cautious amid tumbling iron ore prices when it comes to commodity currencies.

AUD came under pressure today as National Australia Bank (ASX NAB)’s business survey showed conditions deteriorated last month. Employment growth was cited as the most likely cause. Pressures on the unit continue to stack up and this week’s unemployment number should give us some more indication as to whether this boost above the 90 mark can really be held.

Elsewhere despite some good numbers coming out of the UK, sterling’s performance has been rather restrained; caught in the 1.66 to 1.68 range for some time now.  In Monday’s trade GBP remained very much offered among traders. BOE member Bean said sterling’s strength wouldn’t be particularly helpful for UK exports.

The weakness was also felt in the EUR/GBP cross which has been in a downward trend channel since August last year.  The pair broke and closed above a key resistance of 8300/8330. It’s hard to argue against a case for a higher pound, especially when rate increase forecasts look to 2015. But for the moment some of its momentum seems to be lost. Watch out for inflation report hearings tonight.

JPY saw little action as the BOJ kept policy unchanged. There was a more cautious tone when it came to exports but this wasn’t enough to get traders excited. USD/JPY remains well support above 102.80.