FX News - May 22 2014: AUD/USD, USD/JPY Start Strong

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The AUD/USD pair has received a much-needed respite today after the release of the Chinese HSBC Manufacturing PMI in May. It came out better than the expected 48.1 at 49.7, a five-month high. This helped lift the pair, which has steadily dropped by about 140 pips this week alone.

According to HSBC’s Hongbin Qu, “the improvement was broad-based with both new orders and new export orders back in expansionary territory.” He added that “some tentative signs of stabilisation are emerging” partly due to the mini-stimulus measures by the government and the lower borrowing costs. On the other hand, risks remain, particularly the cooling property market in China. He suggested “more easing” is necessary “to put a floor under growth in the coming months.”

The pair opened today at 0.9234 before bottoming out at 0.9220 just prior to the release of the Chinese Manufacturing PMI data. However, its value rose sharply as soon as the data was released, bringing it to a high of 0.9267 so far in today’s Asian session. It is currently trading at 0.9266, with initial resistance seen at 0.9277, followed by 0.9301. Meanwhile, initial support is at 0.9229, followed by 0.9206.

Then there’s the USD/JPY pair, which has made a fairly good recovery after it dropped under the 101.00 area yesterday in reaction the Bank of Japan (BoJ) Governor Kuroda’s press conference. In his speech, the governor said that the recovery of the country’s economy is on track after the increase in sales tax. He also added that there won’t be any increase in QE anytime soon, but will continue with its current QE program.

Mr Kuroda’s press conference brought the pair to a low of 100.82 yesterday, before picking up again late in the European session. It opened today at 101.43, and has peaked so far at 101.58. It is currently trading at 101.53, with initial resistance seen at 101.90, followed by 102.16. Meanwhile, initial support is at 101.09, followed by 100.84.

By FX Strategy Team, Published on 22nd of May 2014
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