Asian Session Forex Recap – May 28, 2015

The comdolls got knocked out like the Houston Rockets during Game 5 of the NBA Western Conference Finals, thanks to a couple of misses from New Zealand and Australia. Right when the Asian forex trading session kicked off, Fonterra announced another downgrade in its milk payout forecast for this year, citing that global dairy prices had not increased as they expected.

NZD/USD lagged behind with a 21-pip deficit (-0.28%), EUR/NZD popped up by 67 pips (+0.44%), and GBP/NZD is higher by 70 pips (+0.33%). NZD/JPY managed to hold on to a 7-pip lead though, as the Japanese yen was weaker across the board.

The yen’s slump was spurred by a weaker than expected Japanese retail sales release, which indicated a 5.0% annualized gain for April versus the estimated 5.3% rebound. This still marks a decent improvement from the previous 9.7% year-over-year decline in March, but you have to remember that we’re already making comparisons against last year’s consumer spending numbers after the sales tax hike.

USD/JPY just tested the 124.00 major psychological resistance and is up 20 pips so far (+0.14%), EUR/JPY is up 35 pips (+0.25%) and is treading safely above the 135.00 handle, and GBP/JPY is up 41 pips (+0.22%) after hitting the 190.50 minor psychological mark.

In Australia, the quarterly private capital expenditures report turned out to be a huge disappointment, as it printed a 4.4% decline versus the estimated 2.3% slide. This means that businesses trimmed their investments for the period, possibly gearing up for an anticipated slowdown in both local and international demand. This had several forex analysts clamoring for another RBA interest rate cut, with Goldman Sachs predicting that this might occur in August.

AUD/USD sold off sharply after briefly touching the .7750 handle and is down nearly 30 pips (-0.38%), EUR/AUD surged by 75 pips (+0.53%), and GBP/AUD is up by 102 pips (+0.52%).

Over the next few hours, forex traders could focus their attention on the British pound, as the U.K. is set to release its second estimate of its Q1 2015 GDP reading at 9:30 am GMT. An upward revision from 0.3% to 0.4% is expected, which might be enough to allow the pound to regain ground against the dollar and extend its rallies against the commodity currencies. Also lined up is the BBA mortgage approvals report (39.2K consensus, 38.8K previous) and the quarterly business investment figure (1.2% consensus, -0.9% previous).

Other potential market-movers include the release of the Swiss trade balance, which is slated to show a wider surplus of 2.77 billion CHF compared to the previous 2.52 billion CHF, and the German import prices data. Note that FOMC member John Williams is scheduled to have a speech at the Banking Supervision and Regulation Joint Conference in Singapore so y’all better be alert for any remarks regarding the Fed’s future policy moves.

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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