Asia preview: China on holiday, eyes on AUD and NZD
Markets are expected to stay in a relatively calm manner during the Asian session on Wednesday as no data of high importance will be released and China will be on a public holiday due to the Ching Ming Festival.
The only data that could potentially impact the market is the AiG Performance of Services Index to be released from Australia. Although this data generally doesn't create high volatility, a disappointing reading could allow the AUD/USD to extend its recent losses that were triggered by Tuesday's Reserve Bank of Australia (RBA) announcements.
On Tuesday, the RBA has decided to keep its interest rate unchanged at 1.5%. However, the official statement once again pointed out that an appreciating exchange rate would complicate the economic transition that started following the mining investment boom in 2013. Furthermore, the bank signaled that it's likely to refrain from hiking the interest rate anytime soon as it suggested that the outlook continues to be supported by the low level of interest rates.
- RBA: Hold rates steady, concerned about the labour market and emphasises risks around household leverage - Westpac
Another pair to pay attention to would be the NZD/USD as it's highly correlated with the AUD/USD. As of writing, the NZD/USD was down 0.56% on the day and the daily RSI for the pair is on a downward path towards 30, suggesting further losses in near-term.
Headlines on Asian currencies
- USD/JPY: awaiting turbulence from Trump-Xi meeting - Scotiabank
- Cyclone Debbie: Australia’s ports and damage to commodities trade - ANZ
- Japan: BOJ’s Tankan shows large manufacturer DI improves less than expected - Nomura
- AUD's appeal has been dented - Westpac
- NZ Treasury: GDP growth slowed in Q4 2016, but expected to recover over 2017