Asian Session Forex Recap – Mar. 3, 2015

  • RBA decided to keep interest rates on hold at 2.25%
  • Australia’s building approvals up by 7.9% in January vs. estimated 1.8% decline
  • Australian current account deficit narrowed from 12.1 billion AUD to 9.6 billion AUD
  • Japanese average cash earnings up by 1.3% y/y in January, higher than projected 0.6% uptick
  • German retail sales and Spanish unemployment change due
  • BOE Governor Carney set to give testimony today

Nope, no rate cut this time! RBA policymakers decided to sit on their hands for now, as they kept interest rates on hold at 2.25%. This allowed the Australian dollar to recover against its forex rivals, with AUD/USD bouncing off the .7750 minor psychological support and climbing 60 pips (+0.79%) after the announcement. AUD/JPY also regained ground after testing support at 93.00 and is up 41 pips (+0.43%) so far.

Stronger than expected economic data from Australia also fueled the Aussie’s rally, with the Land Down Under printing a 7.9% jump in building approvals for January versus the projected 1.8% decline. At the same time, the country’s current account deficit narrowed from 12.1 billion AUD to 9.6 billion AUD in the previous quarter, smaller than the estimated 10.9 billion AUD shortfall.

In Japan, average cash earnings boasted of a 1.3% annualized gain for January, which is more than twice as much as the projected 0.6% uptick. This reflects a decent pickup in wage growth, which might be enough to shore up consumer spending later on. With that, the Japanese yen advanced against some of its forex counterparts, except for the Aussie. USD/JPY is down 43 pips (-0.36%) after reaching a high of 120.24 while EUR/JPY is down 35 pips (-0.27%) and attempting to break below support at 134.00.

Will the euro be able to recover in the next few hours though? The forex calendar shows that the German retail sales and Spanish unemployment change figures are up for release starting 8:00 am GMT, with potential improvements likely to support the shared currency. Consumer spending in Germany, the euro zone’s largest and toughest economy, is slated to post a larger 0.5% increase for January compared to the previous 0.2% uptick. Meanwhile, Spain could show a 10.5K increase in joblessness for February, lower than the previous 78K rise.

As for the pound, BOE Governor Carney’s testimony might make some waves across the charts since he usually reiterates that the downturn in inflation might spur spending and overall economic growth later on. More reassuring comments from the central bank head could lead to a strong bounce for the British currency so make sure you stay tuned around 11:00 am GMT. Do watch out for the U.K.’s construction PMI release as well!

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

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