Asian Session Forex Recap – May 29, 2015

  • Japan’s household spending down 1.3% y/y in April vs. estimated 3.1% gain
  • Tokyo April core CPI fell from 0.4% to 0.2% as expected
  • Japan’s national core CPI showed 0.3% gain vs. estimated 0.2% uptick
  • Japanese unemployment rate improved from 3.4% to 3.3% in April
  • Japanese preliminary industrial production report showed 1.0% rebound
  • New Zealand ANZ business confidence slumped from 30.2 to 15.7
  • Australia’s private sector credit up by 0.3% in May vs. projected 0.5% gain
  • Swiss GDP, German retail sales and French consumer spending data due

All eyes and ears were on Japan’s data dump today, as forex traders got a glimpse of the country’s latest spending and inflation reports. Starting off with the good news, Japan’s preliminary industrial production report showed a stronger than expected 1.0% rebound for April while the jobless rate improved from 3.4% to 3.3% – its lowest reading in 18 years. This was followed by a slightly better than expected national core CPI report, which printed a 0.3% gain versus the projected 0.2% uptick, but was still down from the previous 2.2% figure.

As for the not-so-good news, the core CPI reading in Tokyo slipped from 0.4% to 0.2% as expected while the nation’s household spending report showed a dismal 1.3% decline instead of the expected 3.1% increase. Ha! So much for the BOJ saying that the consumer sector is already recovering!

The yen managed to put up a good fight against its rivals despite the mixed data from Japan, as risk aversion seemed to gain the upper hand. USD/JPY is down 18 pips (-0.15%) and is treading carefully below the 124.00 mark, EUR/JPY is lower by 12 pips (-0.09%), and GBP/JPY is down 7 pips (-0.04%).

Meanwhile, the Aussie and Kiwi faced another set of disappointing reports from Australia and New Zealand. In the Land Down Under, private sector credit ticked up by only 0.3% this month, lower than the projected 0.5% gain. And in the Land of Mordor, the ANZ business confidence report was all about gloom and doom since the index slipped from 30.2 to 15.7 in May.

Interestingly enough, the Aussie managed to keep its head above water, partly due to the better than expected 0.6% increase in HIA new home sales for April. AUD/USD is up 20 pips (+0.25%), AUD/JPY is up 8 pips (+0.08%), NZD/USD is down 34 pips (-0.46%), and NZD/JPY is down 52 pips (-0.06%).

News that the Chinese government will reduce taxes on imports was also responsible for the Aussie’s resilience today since this could spur stronger demand for Australia’s commodity exports. According to the Ministry of Finance, they will cut tax duties on imports starting next month in order to spur stronger domestic consumption. Soon after, PBOC official Zeng Hui announced that the central bank will play a smaller role in forex intervention, which suggests that they’re willing to let good ol’ market supply and demand take control.

In the next few hours, euro pairs could be in for more volatility since a bunch of medium-tier reports are lined up from the region’s top economies. Germany will release its retail sales report at 7:00 am GMT and possibly show a 1.1% rebound from the previous 2.3% decline. France will also print its consumer spending data at 7:45 am GMT and is expected to show a 0.4% gain, erasing part of the earlier month’s 0.6% drop. After that, Spain and Italy are set to release their preliminary CPI readings.

The Swiss franc could also make its moves across the forex charts, as Switzerland is scheduled to release its Q1 2015 GDP reading at 6:45 am GMT. A flat reading is expected but a stronger than expected figure could still allow the franc to regain ground. Later on, the KOF economic barometer release might give the Swiss currency a boost if the actual reading meets or beats analysts’ expectations of an improvement from 89.5 to 90.1.

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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