FX News - May 5 2014: Ukraine Conflict, Poor Chinese & Australian Data Drag Down USD/JPY, AUD/USD

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The growing tensions in Ukraine and China’s poor Manufacturing PMI led to a weaker USD/JPY pair in today’s Asian session. On Friday, pro- and anti-government protesters clashed in the city of Odessa in Ukraine which led to the deaths of about 42 people, over 30 of whom died in a fire inside the local government building where pro-Russian groups took refuge after being surrounded by a pro-government crowd. Meanwhile in China, the HSBC Manufacturing PMI in April failed to meet expectations as it came out at 48.1 instead of the 48.4 consensus.

These news led to a massive sell-off of the USD/JPY, which led it to drop to as low as 101.87 after opening the Asian session at 102.20. The pair tried to make a recovery at the opening of the European session as it peaked at 102.11, but failed to sustain it as it dropped again at 101.90. It is currently trading at 101.96, with initial resistance seen at 102.61, followed by 102.86. Meanwhile, initial support is at 101.71, followed by 101.45.

The AUS/USD pair was also affected by the Chinese PMI as well as Australia’s poor Building Permits data in March. Where the market expected a 1.0% growth compared to the previous month, the country’s Building Permits actually contracted by 3.5%, which followed a 5.4% contraction in the previous month. Over a 12-month period, however, Building Permits have grown by 20.0%.

The pair opened the Asian session at 0.9273 before quickly peaking at 0.9286. But with the soft local and Chinese data, the pair quickly went south from there, dropping to today’s low at 0.9252. It once again tried to recover prior to the opening of the European session as it peaked at 0.9285 before sliding down again, a trend that continues to persist at the moment. The AUD/USD pair is trading at 0.9259, with initial resistance seen at 0.9320, followed by 0.9343. Meanwhile, initial support is at 0.9239, followed by 0.9216.

By FX Strategy Team, Published on 5th of May 2014
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