Asian Session Forex Recap – Mar. 4, 2015

  • Australian economy grew 0.5% in Q4 2014, lower than 0.7% estimate
  • China’s HSBC services PMI improved from 51.8 to 52.0 in Feb
  • Reserve Bank of India cut interest rates
  • U.K. services PMI and euro zone retail sales data due

The Aussie enjoyed a bit of volatility in today’s Asian trading session, as forex traders viewed Australia’s latest GDP report. The economy grew 0.5% during Q4 2014, weaker compared to the estimated 0.7% expansion, although the previous quarter’s reading was upgraded from 0.3% to 0.4%.

AUD/USD dipped briefly below the .7800 major psychological level after the release then recovered back to .7815 (0.01%) while AUD/JPY fell to a low of 93.28 before scrambling back above the 93.50 level (-0.05%). China reported that its HSBC services PMI improved from 51.8 to 52.0 in February, reflecting a stronger expansion in the industry and a potential pickup in demand.

The Reserve Bank of India (RBI) stole the show later on, as policymakers made a surprise interest rate cut announcement, following another unscheduled rate cut back in January. It looks like the RBI is taking a page out of the PBOC’s book in providing much needed economic stimulus!

With that, forex market watchers could start buzzing about a potential downturn in emerging economies now that central banks are scrambling to ease monetary policy. But before a potential risk-off environment takes hold, traders might turn their attention to the upcoming services PMI releases in today’s London trading session.

Among these, the U.K. services PMI due 10:30 am GMT might spark the largest price reaction, as the reading is slated to climb from 57.2 to 57.6 and reflect a stronger expansion in the industry. This is a pretty huge deal for the pound since the services sector contributes a huge chunk to overall U.K. economic growth.

Also lined up are services PMI readings from a couple of top euro zone economies, namely Spain and Italy, with both countries likely to show a pickup in their respective indices. Later on, the euro zone will print its retail sales report at 11:00 am GMT and probably show a 0.2% uptick in spending.

U.S. Session Recap

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