Asian Session Forex Recap – Apr. 2, 2015

  • Australia TD-MI Inflation Gauge m/m: 0.4% vs. 0.0% previous
  • New Zealand ANZ Commodity Prices: 4.6% vs. 4.2% previous
  • Australia Trade Balance: AUD -1.26B vs. AUD -1.3B forecast, AUD -0.98B previous

The forex market remained mostly quiet during Asia trade, but there was decent action in the Aussie after early data and credit rating speculation.  The Australia dollar felt pressure all morning long after the monthly trade balance data showed a widening of their trade deficit, but not as bad as forecast casted. The culprit for the widening is thanks to the fall of iron ore exports to their big trading partner, China, during the Lunar new year season.

There was also news that Australia’s triple-A credit is at risk due to its chronic deficit and rising public debt, potentially reducing the attractiveness of Australian assets down the road. Although the reaction is not big, the Aussie is feeling the pressure on the session with every attempt to rally an opportunity for more sellers to jump in:

AUD/NZD is down 42 pips (-0.42%) to 1.0150, AUD/CAD is down 23 pips (-0.24%) to .9563, and AUD/JPY is down 22 pips (-0.24%) to 90.75

And the New Zealand dollar is finding support on the session, likely on another tick higher in their commodity prices reading gathered by ANZ.  February prices were revised higher to 4.2% from an original 1.8% read, and dairy prices (one New Zealand’s biggest exports) rose 9.2%.  This underscores the strength in the economy that has likely lead to the RBNZ holding off any rate cuts, contrary to what their peers at the other major central banks have been doing. This has prompted a nice rally in the Kiwi with momentum still in its favor heading into London trade:

NZD/USD is up 30 pips (+0.41%) to .7478, NZD/JPY is up 21 pips (+0.24%) to 89.40, and GBP/NZD is down 40 pips (-0.20%) to 1.9839

The forex calendar for the upcoming London trading session looks promising for a pick up in volatility with the release of the monthly U.K. construction PMI data (59.8 forecast vs. 60.1 previous) at 8:30 am GMT and the minutes of the ECB’s most recent monetary policy meeting at 11:30 am GMT.

Both data points do have the juice to spark moves in their respective currencies, but the one to watch is the ECB meeting minutes. We won’t likely see new insights, especially since the ECB just launched their QE program so it needs time to take effect, but any surprise detail, no matter how small can spark a decent move and volatility as markets thin out going into the holiday.

U.S. Session Recap

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