Asian Session Forex Recap – May 13, 2015

  • RBNZ Governor Wheeler says NZD level is unjustifiable and unsustainable
  • RBNZ announced plans to have lending curbs in Auckland housing
  • Australia’s wage price index up by 0.5% in Q1, weaker than 0.6% forecast
  • Japanese current account surplus at 2.07T JPY vs. 1.34T JPY forecast
  • Chinese industrial production up by 5.9% y/y vs. 6.1% forecast
  • Chinese retail sales up by 10% y/y vs. 10.4% forecast, 10.2% previous
  • Euro zone flash GDP readings due today
  • BOE Inflation Report hearings and U.K. jobs data coming up

For the nth time, RBNZ Governor Wheeler attempted to talk down the Kiwi, saying that the current forex level of the currency is unjustifiable and unsustainable. The New Zealand dollar tossed and turned after his statements, yet NZD/USD still managed to advance by 30 pips (+0.40%) while NZD/JPY climbed by 35 pips (+0.41%).

Another factor that pushed Kiwi pairs around today was the RBNZ’s announcement regarding their plans to impose lending restrictions in the Auckland housing market. Recall that the central bank has been wary about easing monetary policy, fearing that it might stoke a property bubble in the country. Now that the RBNZ is putting some measures to keep housing inflation in check, does this mean that they can be able to cut interest rates whenever they want? Hmm… Now that’s something to keep in mind!

Over in China, data came in mostly weaker than expected, as industrial production and retail sales both missed forecasts. Industrial production was up 5.9% year-over-year in April versus expectations of a 6.1% increase while retail sales showed 10% annualized growth, lower than the estimated 10.4% gain and the previous 10.2% increase.

The Aussie is slightly lower after these Chinese reports were printed, as the slowdown in China could spell weaker demand for Australia’s commodity exports. AUD/USD is down 11 pips (-0.12%), AUD/JPY is also lower by 11 pips (-0.08%), and EUR/AUD is up 56 pips (+0.4%) so far.

Up ahead, forex traders could turn their attention to the much-awaited BOE Inflation Report hearings, during which Governor Carney is expected to give more details on his economic assessment and outlook. Now that the U.K. elections are out of the way and policymakers are done with their self-imposed blackout period on disclosing policy biases, central bank officials might be able to share more opinions on future interest rate adjustments.

Also lined up for today is the release the U.K. jobs report for April, which might indicate that the number of claimants dropped by 20.5K. This could be enough to bring the jobless rate down from 5.6% to 5.5% and allow the pound to carry on with its post-election rallies. Do stay tuned for the release of the preliminary GDP readings from the euro zone’s top economies as well!

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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