Asian Session Forex Recap – May 5, 2015

  • RBA cut interest rates from 2.25% to 2.00%
  • Australia reported 1.32B AUD deficit in March, consensus at 0.98B AUD
  • Australia’s Feb trade deficit downgraded from 1.26B AUD to 1.61B AUD shortfall
  • Japanese banks closed for the holiday

As expected, the RBA cut interest rates from 2.25% to 2.00% during today’s monetary policy decision, citing that the economy could operate under a degree of spare capacity for some time. Forex traders had been anticipating a 0.25% rate cut from the Australian bank since the other week when Governor Stevens mentioned in his testimony that further easing of monetary policy might be appropriate.

Prior to this announcement, Australia printed a weaker than expected trade balance of -1.32 billion AUD for March versus the estimated -0.98 billion AUD figure, as the economy chalked up a 2% decline in exports for the month. Apart from that, the previous month’s reading was downgraded from the initially reported 1.26 billion AUD deficit to a larger shortfall of 1.61 billion AUD.

What’s surprising is that Aussie pairs are actually advancing against their forex counterparts so far since traders are already booking profits off their previous short positions. AUD/USD dipped to a low of .7787 after the RBA statement but is already closing in on the .7900 handle (+0.72%). AUD/JPY spiked down to 93.57 then popped right back up to 94.80 as of this writing (+0.71%).

Non-Aussie pairs barely saw any forex action in the past few hours, as the bank holiday in Japan dried up some of the liquidity in the financial markets. The upcoming London trading session could prove to be more exciting though, thanks to a bunch of top-tier reports lined up from the U.K. and the euro zone.

Spain is set to print its unemployment change report at 8:00 am GMT and possibly show a 64.8K drop in joblessness. EU economic forecasts are also up for release in the next few hours and any positive revisions to their estimates might allow the shared currency to extend its climb. Meanwhile, the U.K. will release its construction PMI at 9:30 am GMT and is expected to print a decline from 57.8 to 57.6 for April. Better watch those forex trades closely in case we see any surprises!

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis. Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!