Asian Session Recap – Sept. 4, 2014

  • BOJ maintained pace of easing as expected
  • Australia’s retail sales up by 0.4% in July
  • Australian trade balance better than expected at -1.36 billion AUD
  • BOE and ECB rate decisions lined up
  • German factory orders to show 1.6% rebound?

What a relief for the yen! The BOJ refrained from ramping up its stimulus program for the time being, allowing the Japanese currency to gain a bit of ground against its forex counterparts. The statement indicated that policymakers continue to see a moderate economic recovery in Japan while acknowledging that there has been a slight downturn in demand due to the sales tax hike and lower export activity.

USD/JPY retreated below the 105.00 mark to a low of 104.76 after the event. EUR/JPY dipped to a low of 137.75 while GBP/JPY struggled to hold on to 172.50. Meanwhile, AUD/JPY is also putting up a strong fight and keeping its head above the 98.00 level.

In Australia, retail sales climbed by 0.4% in July as expected, a slower pace compared to the previous 0.6% increase but a gain nonetheless. The trade balance printed stronger than expected results, with a narrower trade deficit of 1.36 billion AUD compared to the estimated 1.77 billion AUD shortfall and the previous 1.56 billion AUD deficit.

The upcoming London trading session could prove to be an exciting one, as a couple of interest rate statements are lined up. The BOE is expected to keep asset purchases and interest rates unchanged for now, despite a couple of votes to hike rates in the previous policy meeting. More dovish remarks are expected from ECB Governor Draghi, who already expressed his concern regarding deflation and his openness to further easing if necessary.

Also due today is the Germany factory orders report, which might show a 1.6% rebound from the previous 3.2% decline. However, any potential gains from a stronger than expected release might be short-lived, as traders sit tight ahead of the ECB statement. Be careful out there!

See also:

U.S. Session Recap

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