Asian Session Recap – July 18, 2014

  • Geopolitical risk continues to weigh on higher-yielders
  • Nikkei down by 1.2% for the day
  • BOJ minutes: QE is taking effect and supporting inflation
  • BOJ policymakers agreed that economy is recovering moderately

Risk is still off, fellas! Higher-yielders continued to edge lower in today’s Asian trading session, as geopolitical risk weighed on the markets’ appetite for risk. The Nikkei chalked up a 1.2% loss for the day, with equities in other Asian markets also closing in the red.

The Japanese yen was able to take advantage of all this though, as the currency also drew support from upbeat BOJ minutes. The report showed that policymakers believed that their recent easing efforts are taking effect and supporting inflation, dashing hopes that the central bank might implement another round of stimulus. The policymakers also agreed with Kuroda in saying that the economy is recovering moderately and that the negative impact of the April sales tax hike will soon fade.

USD/JPY has retreated to the 101.20 support levels while EUR/JPY has plummeted to 137.00. AUD/JPY made a quick bounce from a low of 94.37 to the 94.80 area while AUD/USD has also recovered off its latest .9334 lows, indicating that a bit of profit-taking may have already taken place in the past few hours.

Data is light in the upcoming London trading session, with only the euro zone current account balance on tap. The surplus is expected to widen from 21.5 billion EUR to 24.3 billion EUR for May, and a stronger than expected reading might be enough to keep the euro supported.

As always, stay vigilant for any updates concerning MH17 or the conflict in Gaza, as these could have significant impact on market sentiment for the rest of the trading day. Be careful out there!

See also:

U.S. Session Recap

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