Asian Session Forex Recap – May 14, 2015

  • NZ headline retail sales up 2.7% in Q1 vs. 1.6% forecast, 1.9% previous
  • NZ core retail sales up 2.9% in Q1 vs. 1.5% forecast, 1.9% previous
  • Moody’s: PBOC rate cut could hurt bank profits by 22%
  • European banks closed for the holiday

Fly, Kiwi, fly! Thanks to stronger than expected quarterly retail sales data, the New Zealand dollar was able to soar against its forex counterparts in today’s Asian trading session. Headline retail sales jumped by 2.7% in the first quarter of the year, outpacing the market consensus of a 1.6% increase, while the core version of the report indicated a 2.9% gain versus estimates of a 1.5% rise.

NZD/USD is up 48 pips (+0.65%) and is trading safely above .7500 while NZD/JPY is higher by 61 pips (+0.68%) and closing in on the 90.00 handle. The Kiwi also managed to regain ground against its European forex rivals, with EUR/NZD facing a 70-pip loss (-0.46%) and GBP/NZD down by 114 pips (-0.54%).

No other top-tier reports were released in the past few hours, allowing traders to pay attention to other market updates. Credit rating agency Moody’s warned that the recent PBOC interest rate cut might wind up hurting bank profits by 22% this year. Number crunchers explained that raising the deposit ceiling while lowering borrowing costs would increase the pressure on lenders to pay more for deposits while charging lower rates on loans.

Could this mean that the latest easing move by the Chinese central bank would have a minimal effect and that they’d be forced to explore other stimulus options later on? While this could potentially hurt China’s growth prospects down the line, the Aussie seemed indifferent as AUD/USD is holding on to a 15-pip gain (+0.19%) and AUD/JPY is up 25 pips (+0.24%).

With European banks closed for the holiday and no major reports on tap, forex liquidity could be subdued in the upcoming London trading session. Do keep your eyes and ears peeled for any updates that could affect overall risk sentiment though!

U.S. Session Recap

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