GBP & AUD Plunge, Risk Off Tone Sparks JPY Surge – US Market Open

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MARKET DEVELOPMENT – GBP & AUD PLUNGE, JPY SURGES

AUD: A new year, however, the same problems persist for the Australian Dollar which has broken below 0.7000 for the first time since 2016. Weakness in China growth as confirmed by the latest Mfg. PMI which moved into contraction territory sparked a bout of selling in the Aussie. Alongside this, on the domestic front, CoreLogic reported housing market conditions were at the weakest since the financial crisis with house prices dropping 5% throughout 2018. As the fundamental outlook for the AUD continues to ease, AUD selling looks to persist.

JPY: Safe haven demand sees the Japanese Yen outperform across the board. USDJPY briefly broke below 109.00 to trade at the lowest level since June 2018, which in turn increases scope for a test of the May low at 108.11. As global growth continues to slow, risks to the downside for USDJPY will gather momentum, particularly given current speculative positioning.

GBP: Despite today’s better than expected UK Mfg. PMI reading the GBP is on the backfoot as focus remains firmly on Brexit, in particular, the parliamentary vote, which will take place the week beginning January 14th. Much of the losses has stemmed from the bounce back in the USD as haven demand supports.

GBP & AUD Plunge, Risk Off Tone Sparks JPY Surge - US Market Open

Data as of 1255GMT

DailyFX Economic Calendar: Wednesday, January 02, 2019 – North American Releases

GBP & AUD Plunge, Risk Off Tone Sparks JPY Surge - US Market Open

DailyFX Webinar Calendar: Wednesday, January 02, 2019

GBP & AUD Plunge, Risk Off Tone Sparks JPY Surge - US Market Open

Four Things Traders are Reading

  1. “JPY Bulls Dominate Amid Growth Slowdown and Wrong-footed Speculators” by Justin McQueen, Market Analyst
  2. “Sterling (GBP) Slips Lower Despite Strong Manufacturing PMI Headline”by Nick Cawley, Market Analyst
  3. “AUDUSD Price Downtrend May Resume on Weak China Economy” by Martin Essex, MSTA, Analyst and Editor
  4. “Grey Swans: Low Probability Events to watch for in 2019” by Christopher Vecchio, CFA , Sr. Currency Strategist

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