Asian Session Recap – Aug. 19, 2014

  • RBA minutes confirm low likelihood of rate hikes
  • New Zealand quarterly inflation expectations down from 2.4% to 2.2%
  • Nikkei up by 0.83% for the day
  • U.K. CPI reports to show slowdown in inflation?
  • Euro zone current account to reflect smaller surplus

The Kiwi got wiped out in today’s Asian trading session as the New Zealand Treasury’s pre-election fiscal update showed downgraded growth expectations. PPI figures were also weaker than expected, with input prices falling by 1% and output prices showing a 0.5% decline. To top it off, quarterly inflation expectations were revised down from 2.4% to 2.2%.

Meanwhile, the Australian dollar got a bit of a boost from the RBA minutes, which turned out less dovish than expected. The report showed a more or less balanced assessment, as policymakers highlighted the improvements in non-mining investment and resource exports while pointing out the potential risks to growth.

NZD/USD tumbled to a low of .8423, down from its session highs of .8483, while AUD/NZD broke out of consolidation and spiked to a high of 1.1076. AUD/USD popped up to the .9340 levels before retreating to .9325. With the exception of AUD/JPY and NZD/JPY, yen pairs saw minimal action for the day as GBP/JPY consolidated above 171.50 and EUR/JPY held on to 137.00.

In the next few hours, pound pairs might be in for extra volatility as the U.K. gears up to print its CPI reports. As Forex Gump mentioned in his article on economic events that could rock the pound this week, these inflation reports could be an early sign of whether or not the economic slack is taking its toll. The headline figure is projected to dip from 1.9% to 1.8% while the core CPI could drop from 2.0% to 1.9%. Watch out for weaker than expected data that might lead to pound selling!

See also:

U.S. Session Recap

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