Asian Session Recap – February 28, 2014

  • ANZ NZ business confidence at 70.8 vs. 64.1 previous
  • Japanese data dump paints rosy picture ahead of tax rate hike
  • Nikkei closes down by -0.55% at 14,841.07
  • GfK February consumer confidence at -7 as expected
  • Yuan posts record weekly loss vs USD (down by -0.7%)
  • Germany retail sales at 2.5% vs. 1.0% estimates
  • UK Nationwide house price index at 0.6% as expected

It’s a yen DOMINATION kind of day today! The low-yielding currency was king of pips during the Asian session as forex investors priced in Japan’s generally better-than-expected data and their concerns over the yuan’s weakness.

Earlier today we saw Japan’s retail household spending print at 1.1% vs 0.5% estimates, its annualized retail sales jump by 4.4% against 3.8% expectations, and its industrial production come in at 4% vs. 2.8% expected. Meanwhile, the Land of the Rising Sun’s inflation and unemployment rate came in as expected at 1.3% and 3.7% respectively. Overall these reports were good signs ahead of Japan’s sales-tax rate hike.

Another market mover for the session was the Chinese yuan, which not only reached its weakest level since July but also logged in its worst trading week…EVER. This highlighted concerns for the economy and took its toll on risk appetite.

But hey, more pips for the yen, right? Major yen pairs like USD/JPY, EUR/JPY, GBP/JPY, and AUD/JPY all dropped by around 50 pips while major pairs EUR/USD and GBP/USD stayed in their tight ranges. The comdolls showed mixed price action with AUD/USD only taking a small hit before fully recovering, USD/CAD not moving from its tight range, and NZD/USD popping slightly higher on better-than-expected New Zealand business confidence data.

Let’s see if the European currencies will top the Asian currencies in volatility today. A few minutes ago Germany printed its retail sales, which showed a 2.5% against 1.0% growth expectations. Incidentally, it’s also the fastest increase since February 2007. The UK also had good news with the Nationwide house price met the 0.6% expectations.

At 7:45 am GMT we’ll see France’s PPI and consumer spending numbers, followed by the euro zone’s unemployment reading at 10:00 am GMT. The reports have mixed expectations so watch your charts closely to see which of these reports actually move the currencies!

See also:

U.S. Session Recap

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