Asian Session Forex Recap – Feb. 27, 2015

  • Japan’s national core CPI down from 2.5% to 2.2% in Jan
  • Tokyo core CPI held steady at 2.2% as expected
  • Japanese jobless rate up from 3.4% to 3.6%
  • Japan’s household spending down by 5.1% y/y, retail sales down by 2.0%
  • Japan’s preliminary industrial production up by 4.0% vs. 2.9% forecast
  • Japanese housing starts down by 13% vs. estimated 11.1% drop
  • New Zealand ANZ business confidence index improved from 30.4 to 34.4
  • Australia’s private sector credit up by 0.6% this month

Today’s Asian trading session was all about the data dump from Japan, as forex traders got another glimpse of worsening inflation and spending conditions in the country. The national core CPI logged in yet another drop in price levels, as the reading fell from 2.5% to 2.2% in January, while the Tokyo core CPI managed to hold steady at 2.2% as expected.

Numbers from Japan’s consumer sector were all in the red, as the jobless rate ticked up from 3.4% to 3.6% even with a drop in labor force participation. Household spending showed a worse-than-expected 5.1% tumble while retail sales printed an annualized 2.0% decline. Even the housing industry started to feel the negative effects of reduced spending, as housing starts plummeted by 13% in January versus the projected 11.1% drop.

The only good news out of Japan was its preliminary industrial production report, which indicated a healthy 4.0% gain for January, higher than the projected 2.9% increase. This confirms that factory output is able to benefit from the pickup in Japanese exports.

The Japanese yen still managed to advance against its forex rivals after the reports were printed, with USD/JPY edging down 23 pips (-0.19%) and AUD/JPY falling by 15 pips (-0.15%). EUR/JPY is facing a 4-pip loss (-0.03%) while GBP/JPY has managed to keep its head above the 184.00 mark so far (+0.05%).

On a more upbeat note, New Zealand reported an improvement in business confidence, as the ANZ index climbed from 30.4 to 34.4. In Australia, private sector credit enjoyed a 0.6% gain for February, outpacing the consensus of a 0.5% uptick. AUD/USD is holding on to the .7800 support level for now (+0.09%) and NZD/USD is up 21 pips (+0.28%) to the .7550 minor psychological mark.

Market watchers can now turn their attention to inflation reports from the euro zone in the upcoming London trading session, with the region’s largest economies gearing up to print their CPI readings. Given yesterday’s sudden euro selloff though, not even stronger than expected inflation reports might be enough to keep the shared currency supported. Also lined up for today is the Swiss KOF economic barometer reading, which might fall from 97.0 to 89.1 and spur more weakness from the franc.

U.S. Session Recap

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