Asian Session Forex Recap – Oct. 2, 2014

  • Australian building approvals up from 2.1% to 3.0% in August
  • Australian trade balance shows 0.79B AUD deficit, better than last month’s 1.08B figure
  • Chinese markets out on National Day holiday
  • U.K. construction PMI to slide from 64.0 to 63.5?

The dollar was the biggest loser during the Asian forex trading session, thanks to positive Australian data and short squeezes on Greenback pairs.

The Aussie led the pack after Australia’s building approvals jumped to 3% in August, faster than the 1% growth expected and the report’s highest figure since May. Australian trade data also fueled forex bulls with only a 787 million AUD deficit in August, lower than the estimated 800 million AUD deficit.

AUD/USD jumped by 68 pips to the .8800 area where it settled, while AUD/JPY also zoomed up by 53 pips to 95.75. Other Aussie crosses joined the bandwagon, with GBP/AUD touching the 1.8400 support and EUR/AUD just breaking its consolidation below 1.4370.

Meanwhile, yesterday’s U.S. equities selloff continued to influence forex price action today. Despite ongoing concerns over protests in Hong Kong, the dollar took hits against its counterparts.

Analysts are also looking at possible profit-taking ahead of today’s ECB decision and tomorrow’s NFP report. This is probably why EUR/USD rose to a session high of 1.2675 while USD/JPY fell to a low of 108.55 where it found intraday support. GBP/USD also hiked up to 1.6251 and USD/CHF visited session lows at the .9525 area.

The biggest benefactor was the Kiwi, which rocketed across the board on possible short squeeze activity and spillover effects of positive Australian data. NZD/USD shot up to a session high of .7927 before settling at .7870, while NZD/JPY saw a 109-pip move to 85.98 before coming down to 85.61.

Today’s European data will be led by the U.K.’s construction PMI numbers at 8:30 am GMT. Analysts expect the report to retrace to 63.5 after hitting a 7-month high last month. A weaker-than-expected figure could finally drag the pair firmly below 1.6200, while a positive read could inspire more profit-taking of Cable shorts.

At 11:45 am GMT we’ll get hold of the ECB’s monetary policy decision, followed by Draghi’s speech at 12:30 pm GMT. Remember that market players are already expecting the ECB to expand its stimulus program. If Draghi throws out vague statements or if investors aren’t satisfied with the size of the ECB’s ABS purchases, then we might see the euro drop lower across the board.

As if these reports aren’t enough for you, we’re also expecting the U.S. Challenger job cuts report at 11:30 am GMT and factory orders numbers at 2:00 pm GMT. These reports hold water against central bank events though, so keep your eyes on today’s tier 1 events!

U.S. Session Recap

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