Asian Session Forex Recap – Mar. 27, 2015

  • Japanese national core CPI down from 2.2% to 2.0% in Feb
  • Tokyo national core CPI steady at 2.2%
  • Japanese retail sales fell by 1.8% year-over-year in Feb vs. estimated 1.4% drop
  • Japan’s household spending down by 2.9% vs. estimated 3.1% decline
  • Unemployment in Japan improved from 3.6% to 3.5%
  • Japanese PM Shinzo Abe: Economy can escape deflation
  • BOE Gov Carney and MPC members Haldane and Broadbent to testify

Konichiwa! Forex traders turned their attention to the data dump from Japan in today’s Asian session, as top-tier inflation and spending reports were printed. Weak inflation remains a huge concern in the country, as the national core CPI slumped from 2.0% to 2.0% in February, marking its seventh consecutive monthly decline. Despite that, Prime Minister Shinzo Abe reiterated that the economy can still be able to escape deflation. Seems like a glass half-full kind of guy!

Headline figures also reflected weakness in spending, with retail sales showing a larger than expected 1.8% drop compared to the estimated 1.4% decline. Household spending was down 2.9% year-over-year in February, a tad better than the estimated 3.1% drop and an improvement from the previous month’s 5.1% tumble. On a more upbeat note, the jobless rate dipped from 3.6% to 3.5% and the labor force participation rate also improved for February.

The yen didn’t seem to be too happy with these reports though, as the Japanese currency gave up ground against some of its forex counterparts. USD/JPY is up 5 pips (+0.05%) and holding steady above the 119.00 handle while EUR/JPY advanced by 11 pips (+0.09%) to 129.75. GBP/JPY is also higher by 14 pips (+0.07%) while commodity currencies lagged behind.

Risk appetite is still hurting lately due to the ongoing geopolitical tension between Saudi Arabia and Yemen. Not even the oil-related Loonie was immune from risk-off flows, as USD/CAD popped up to the 1.2500 handle (+0.20%) and CAD/JPY got rejected at the 95.50 minor psychological resistance (-0.16%).

The forex calendar shows that only a few medium-tier reports are lined up from the euro zone in the upcoming London trading session, with the German import prices data and Italian retail sales report lined up. Speeches from BOE Governor Carney and a couple of MPC members could spur more volatility among pound pairs in the next few hours, as they could give their two cents on how the U.K. economy has been faring so far. Better stay on your toes for any possible shift in policy bias!

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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