Asian Session Forex Recap – Apr. 23, 2015

  • RBNZ Assistant Gov McDermott: Interest rate hikes not likely, inflation outlook subdued
  • Australia’s NAB quarterly business confidence index down from 2 to 0
  • Chinese HSBC flash manufacturing PMI dropped from 49.6 to 49.2 in April
  • Japanese flash manufacturing PMI slumped from 50.3 to 49.7 this month
  • German and French manufacturing and services PMIs due
  • U.K. retail sales to show 0.4% uptick for March

The Kiwi had its wings clipped early on in today’s Asian trading session when RBNZ Assistant Governor John McDermott declared that interest rate hikes are not likely to take place anytime soon. He added that their inflation outlook remains subdued and that they might even decide to lower borrowing costs if necessary.

Because of that, NZD/USD plummeted by 79 pips (-1.07%) after testing resistance at the .7700 handle and NZD/JPY crashed by more than a hundred pips (-1.18%), breaking below support at 91.00. The New Zealand dollar also retreated to its comdoll counterparts, with AUD/NZD jumping by 115 pips (+1.14%) and NZD/CAD looking at a 96-pip loss (-1.01%).

Other economic releases weren’t so upbeat, too. In Australia, the NAB quarterly business confidence index slumped from 2 to 0 in Q1, reflecting weaker optimism for the economy. HSBC reported a drop in the flash manufacturing PMI for April from 49.6 to 49.2, which indicates a sharper industry contraction. Despite these setbacks, AUD/USD managed to hold on to the .7750 handle (+0.05%) while AUD/JPY is fighting to stay above 93.00 (-0.08%).

Japan had its share of weak PMI readings, as the manufacturing sector saw its index tumble from 50.3 to 49.7 this month. This means that the industry returned to contraction after previously expanding in March, confirming that the worst isn’t over for the Japanese economy. The lower-yielding Japanese yen took advantage of this bleak report, allowing USD/JPY to drop by 13 pips (-0.12%) and EUR/JPY to trade lower by 37 pips (-0.29%).

Market watchers could turn their attention to the euro and the pound in the upcoming London trading session, as a bunch of top-tier releases are lined up. Germany and France are set to print their manufacturing and services sector PMI estimates for April starting 8:00 am GMT. Higher readings could spur more gains for the euro, as these could support Draghi’s claim that a sustained recovery is taking hold in the region.

As for the U.K., the March retail sales report is up for release at 9:30 am GMT and a 0.4% uptick is eyed. Stronger than expected data could also add support for the British currency, which is currently being kept afloat by the upbeat BOE minutes released yesterday. Also due from the U.K. is its public sector net borrowing report, which could show how the country’s finances are faring. Be on the lookout for disappointing readings that might force the pound to return its recent wins though!

U.S. Session Recap

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