Asian Session Forex Recap – Mar. 5, 2015

  • Australian retail sales up by 0.4% in Jan as expected
  • Australia’s trade deficit widened from 0.50 billion AUD to 0.98 billion AUD
  • Chinese government lowered target growth rate to “around 7%”
  • BOE and ECB interest rate statements coming up

Dollar bulls continued to charge across the forex charts in the past few hours, as risk aversion extended its stay in the financial markets. Sitting on the biggest losers’ table are the Japanese yen and the European currencies, with USD/JPY up 23 pips (+0.19%), EUR/USD down 20 pips (-0.18%), and GBP/USD lower by 15 pips (-0.11%).

Australia’s retail sales release did very little to boost the Aussie in today’s Asian trading session, with the report simply coming in line with expectations of a 0.4% uptick for January. The country’s trade deficit widened from 0.50 billion AUD to 0.98 billion AUD in the same month, reflecting weakness in the export industry. AUD/USD is flat at the .7815 level while AUD/JPY managed to advance 13 pips (+0.12%) after these reports were printed.

What weighed mostly on risk-taking in the past few hours was the Chinese government’s decision to lower their target growth rate to “around 7%” from the previous 7.5% goal. This suggests that the world’s second largest economy is facing more dark clouds on the horizon and that the PBOC might need to follow up with another rate cut sooner or later.

With that, forex traders are pretty much on edge ahead of the BOE and ECB interest rate statements, as cautious comments are likely to be dished out. Bear in mind though that BOE Governor Carney usually emphasizes that the drop in price levels is likely to translate to stronger spending and growth, and market watchers are keen to see if he would maintain this optimistic outlook. Meanwhile, ECB Governor Draghi has been a tad upbeat about the green shoots in the euro zone economy but it seems that more Greek debt fears are still weighing on the euro’s price action for the time being.

If you’ve got any euro or pound trades open or if you’re planning on trading the news, better be on guard during the BOE statement at 1:00 pm GMT and the ECB press conference at 2:30 pm GMT.

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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