Asian Session Forex Recap – May 27, 2015

  • RBA Deputy Gov Lowe: Housing market risks have increased
  • BOJ Deputy Gov Iwata: No need for further easing
  • FOMC member Lacker: Time to consider hiking rates in June?
  • Australia’s construction work done down 2.4% in Q1 vs. estimated 1.5% decline
  • Australia’s MI leading index climbed from -0.3% to 0.1% in April
  • Swiss UBS consumption indicator and German GfK consumer climate report due

Forex traders tuned in to central bankers’ speeches in today’s Asian trading session, hoping to get more clues on future policy decisions. However, the latest testimonies failed to push currency pairs in a particular direction, as officials lacked conviction with their biases.

According to RBA Deputy Governor Philip Lowe, the risks in Australia’s housing sector have increased, reviving speculations of a property price bubble in the country. In contrast to the RBA’s monetary policy statement that assured that the price surges were limited to Sydney and Melbourne, indicating that the central bank has room to cut interest rates again, Lowe downplayed the impact of the lending limits that have been put in place.

Data from Australia came in mixed, with the MI leading index climbing from -0.3% to 0.1% in April and the quarterly construction work done report showing a worse-than-expected 2.4% slide. The Aussie has managed to strengthen though, with AUD/USD enjoying a 20-pip gain (+0.27%) and AUD/JPY up by 22 pips (+0.22%).

The yen is still generally weaker across the board, especially since USD/JPY finally broke out of its long-term consolidation. The freshly released BOJ minutes didn’t do anything to keep the Japanese currency supported while Deputy Governor Iwata’s upbeat comments seemed to fall on deaf ears. USD/JPY is up 5 pips and testing the 123.00 handle (+0.05%), EUR/JPY is higher by 31 pips at 134.00 (+0.22%), and GBP/JPY is up 28 pips (+0.15%).

FOMC member Lacker’s testimony was also shrugged off by most forex market watchers, as he simply repeated his comments on how it might be a good idea to consider hiking interest rates in June. Of course he also tried to balance this hawkish tone by citing that he’s still crossing his fingers that the slowdown will just be transitory and that he continues to see weakness in spending data.

Only a couple of medium-tier reports, namely the Swiss UBS consumption indicator and the German GfK consumer climate index, are up for release in the upcoming London trading session. Take note that Switzerland’s UBS consumption index has been climbing since February so a reading higher than the previous month’s 1.35 figure might show that there’s strong momentum in the sector, possibly enough to help the franc erase some of its recent losses. Meanwhile, Germany could see a dip from 10.1 to 10.0 in its consumer sentiment report, reflecting a slight decline in optimism.

As always, do keep your eyes and ears peeled for any updates surrounding the Greek debt situation, as these tend to push euro pairs around during the London hours.

U.S. Session Recap

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