Asian Session Recap – Sept. 23, 2014

  • Japanese banks on holiday today
  • FOMC member Kocherlakota: Fed should let inflation exceed 2%
  • Chinese HSBC flash manu PMI up from 50.2 to 50.5 vs. 50.0 expected
  • German and French manufacturing and services PMIs due
  • U.K. BBA mortgage approvals and public sector net borrowing data due

Break time for dollar bulls! The Greenback gave up some of its recent gains to most of its forex counterparts, as traders reacted to remarks from FOMC member Kocherlakota. He said that the Fed should allow inflation to exceed 2% in order to put more downward pressure on the jobless rate.

USD/JPY retreated to a low of 108.60 before recovering back above 108.70 while GBP/USD climbed within 8 pips shy of the 1.6400 mark. AUD/USD got a boost past the .8900 mark, as China printed a stronger than expected HSBC flash manufacturing PMI of 50.5, up from the previous 50.2 reading and higher than the estimated 50.0 figure.

Japanese banks are on holiday today, leaving yen pairs sensitive to risk sentiment. It appears that risk appetite has weakened recently, as the U.S. and its allies just launched another round of airstrikes against ISIS. EUR/JPY continued to sink below the 140.00 mark and dipped to a low of 139.66 while GBP/JPY is fighting to hold on to the 178.00 handle.

Up ahead, the forex calendar shows that Germany and France are gearing up to release their manufacturing and services PMI readings. Both euro zone economies are expecting to see slower industry activity, which might bring the region’s manufacturing PMI down from 50.7 to 50.6 and the services PMI down from 53.5 to 53.2. Take note that most of the previous month’s readings have been downgraded and that the PMIs are hovering close to indicating industry contraction. Weaker than expected results could lead to another euro selloff, as these might confirm that the ECB needs to step up its easing efforts.

Over in the U.K., BBA mortgage approvals and public sector net borrowing data are due. Mortgage approvals could tick higher from 42.8K to 42.9K in August while the public deficit could reach 10.3 billion GBP. Stay on your toes for potential volatility among pound pairs during these releases!

U.S. Session Recap

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