Asian Session Forex Recap – Dec. 16, 2014

  • Chinese HSBC flash manufacturing PMI down from 50.0 to 49.5 in Dec
  • Japanese flash manufacturing PMI ticked up from 52.0 to 52.1
  • Nikkei down 2.01% for the day
  • RBA: Further fall in AUD needed to revive economy

Looks like the dollar needed to take a break from its recent forex rallies! EUR/USD is up 0.18% around the 1.2450 area and GBP/USD is holding on to a 0.29% gain so far. USD/JPY is down 0.5% at the 117.20 level and USD/CHF is looking at a 0.16% loss.

China’s HSBC flash manufacturing PMI for December showed a decline from 50.0 to 49.5, reflecting a return to industry contraction. This could lead to more selling pressure for the Australian dollar, as the RBA also indicated in the minutes of its latest meeting that further declines in the local currency are needed to revive the economy.

However, the Aussie appeared immune to these comments, as AUD/USD is able to hold on to a 0.25% gain as of this writing. AUD/JPY is down 0.23%, EUR/AUD is down 0.06%, and GBP/AUD is 0.07% in the red.

In Japan, the flash manufacturing PMI climbed from 52.0 to 52.1 in December, hinting at a stronger pace of expansion in the industry. Japanese equities were unimpressed though, as the Nikkei logged in a 2.01% loss for the day.

The forex calendar shows that the upcoming London trading session could prove to be an exciting one for the British pound and the euro with plenty of catalysts lined up. These include the release of the U.K. bank stress test results, BOE financial stability report, and U.K. CPI. Among these, the inflation readings might have the most impact on pound pairs, as this would allow traders to speculate on whether the BOE can afford to tighten next year or not.

Headline inflation is slated to drop from 1.3% to 1.2% while core inflation could hold steady at 1.5%, a few notches away from the central bank’s 2% inflation target. Weaker than expected results could lead to a massive pound selloff while strong data could allow the currency to stay afloat.

As for the euro, the German and French manufacturing and services PMIs are lined up, with small improvements expected in both sectors. These might be enough to lift the region’s manufacturing and services PMIs as well, which could lead to gains for the euro. The fun starts at 8:00 pm GMT so make sure you’re ready for some action then!

U.S. Session Recap

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