Asian Session Recap – Aug. 26, 2014

  • Nikkei down by 0.59% for the day
  • New Zealand trade deficit at 692M NZD vs. estimated 475M NZD shortfall
  • New Zealand exports down by 11.5% in July
  • Chinese CB leading index posted another 1.3% gain
  • U.K. BBA mortgage approvals due today

Higher-yielding currencies are in recovery mode for now, forcing the dollar to return some of its recent gains. GBP/USD has bounced up to a high of 1.6594 while USD/JPY retreated below the 104.00 handle to a low of 103.74. Meanwhile, EUR/USD is still stuck in its short-term range and has been unable to close its weekend gap.

Dollar weakness must’ve been spurred by profit-taking in the past few hours, as risk appetite still remained weak, with the Nikkei closing down 0.59% for the day. New Zealand reported a larger than expected trade deficit of 692 million NZD versus the estimated 475 million NZD shortfall, spurred by an 11.5% drop in exports for July. NZD/USD dropped to a low of .8310 after the release, before recovering to the .8340 area.

Over in China, the CB leading index marked another 1.3% gain for July, adding to support for the Australian dollar. AUD/USD has retested the .9300 major psychological resistance while AUD/JPY is finding support at the 96.50 level.

The only economic report lined up for the London session is the U.K. BBA mortgage approvals data, which might show a climb from 43.3K to 44.2K in July. A higher than expected reading would reflect a strong pickup in housing demand, which might be positive for the British pound. On the other hand, bleak results could allow the pound selloff to resume.

See also:

U.S. Session Recap

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