Asian Session Recap – May 20, 2014

  • Nikkei recovers with 0.49% gain
  • Martial law declared in Thailand as protests continue
  • RBA monetary policy meeting minutes show caution
  • Japanese all industries activity up by 1.5%
  • UK CPI to show increase in price pressures?
  • German PPI down by 0.1%

Risk aversion popped its head back in the forex market in today’s Asian trading session, as martial law was declared in Thailand and geopolitical risk weighed on sentiment once more. Despite that, the Nikkei managed to chalk up a 0.49% rebound for the day while other Asian equity indices logged in small gains. Japan’s all industries activity index printed a 1.5% increase for March as expected, enough to erase the 1.1% decline recorded for February.

The freshly released RBA monetary policy meeting minutes showed a hint of caution among policymakers, as they noted that the slowdown in China is likely to weigh on export activity in the coming quarters. RBA officials also pointed out that hiring and spending have moderated but that inflation remains below average. AUD/USD slipped below the .9300 major psychological handle after the release while AUD/JPY moved closer to the 94.00 mark.

In the next few hours, we’ll see the U.K. CPI reports which might show a recovery in consumer inflation. The annual reading is projected to climb from 1.6% to 1.7% in April, a few notches closer to the BOE’s 2% inflation target. Core CPI is estimated to improve from 1.6% to 1.8%. However, underlying reports might show weaker price pressures as producer input prices might print a flat reading. If the actual reports print lower than expected results, the pound might undergo stronger selling pressure.

U.S. Session Recap

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