Asian Session Forex Recap – July 3, 2015

  • Australia’s retail sales increased by 0.3% in May vs. 0.5% forecast
  • Australia’s April retail sales downgraded from 0.0% to -0.1%
  • Chinese HSBC June services PMI fell from 53.5 to 51.8 vs. 53.8 consensus
  • Chinese equity indices down more than 4% for the day
  • U.K. services PMI and euro zone retail sales data due

What a wipeout for the Aussie! A double-whammy of weak economic data from the Land Down Under and dismal news from China pushed the Australian currency lower against its forex rivals in today’s Asian session.

Australia reported a mere 0.3% uptick in retail sales for May versus expectations of a 0.5% gain while the previous month’s figure was downgraded to show a 0.1% decline. As my buddy Forex Gump mentioned in his recent blog post, consumer spending accounts for roughly 50% of Australia’s overall economic growth and also affects business activity and hiring trends. I wonder if these bleak retail sales readings would be enough to convince the RBA to cut interest rates soon…

Speaking of monetary policy easing, it appears that the PBoC’s recent stimulus efforts didn’t have their intended effect, as Chinese equity indices chalked up significant declines today. To make things worse, HSBC reported that its services PMI for June fell from 53.5 to 51.8 instead of rising to the projected 53.8 figure.

AUD/USD dipped to a low of .7564 after the retail sales figures were printed and is down 41 pips (-0.55%). AUD/JPY is down 48 pips (-0.52%), EUR/AUD is up 98 pips (+0.67%), and GBP/AUD is up 133 pips (+0.65%).

Yen pairs are holding steady, though, suggesting that overall risk sentiment hasn’t been hurt. USD/JPY is hovering around the 123.00 handle (+0.06%), EUR/JPY is up 21 pips (+0.16%), GBP/JPY is up 19 pips (+0.10%), and NZD/JPY is up 5 pips (+0.06%).

Can the pound hold on to its recent gains? Forex traders are likely to react to the U.K. services PMI release at 8:30 am GMT since the sector contributes a huge chunk to the economy’s GDP. The index is slated to climb from 56.5 to 57.4, which would reflect a stronger pace of industry expansion and possibly give the U.K. currency a boost. Also lined up today is the euro zone retail sales report, which could show a mere 0.1% uptick for May, along with the services PMI readings from some of the region’s top economies.

As in the past few days, Greek debt updates could continue to push euro pairs around leading up to the bailout referendum over the weekend. Opinion polls have been showing mixed results, although most are suggesting that the actual vote could be a close one. Be mindful of potential profit-taking scenarios towards the end of the London trading session, especially since U.S. forex traders are off enjoying their Fourth of July long weekend.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis. Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!