Asian Session Forex Recap – July 22, 2015

  • Australian CPI at 0.7% in Q2 2015 vs. 0.8% forecast, 0.2% previous
  • Australia’s MI leading index showed flat reading for June, -0.1% previous
  • RBA Gov Stevens: Further rate cuts “on the table”
  • Japanese all industries activity index down by 0.5% as expected
  • BOE MPC meeting minutes up for release

What a wipeout for the Aussie! Even though Australia’s CPI came close to expectations, rate cut hints from RBA Governor Stevens pushed the lower against its forex peers. The quarterly inflation reading landed at 0.7% versus the projected 0.8% figure, still higher than the previous 0.2% uptick.

Aussie pairs actually scored some gains after the CPI release but soon gave back their wins when Governor Stevens grabbed the mic. The central bank head said that further cuts to interest rates remain on the table since the economy has been improving slower than policymakers expected. He acknowledged that the Aussie’s weakness has been beneficial for the economy and added that a lower exchange rate could still be necessary.

After its brief stay above the .7400 handle a few hours back, AUD/USD is trading lower by 33 pips (-0.43%). AUD/JPY is down 57 pips (-0.58%), AUD/NZD, is down 23 pips (-0.20%), and AUD/CAD is down 28 pips (-0.28%). The Aussie is also weaker against its European rivals, with EUR/AUD up by 57 pips (+0.39%) and GBP/AUD up by 101 pips (+0.49%).

Yen pairs are in the red so far, as the selloff among some Asian equities kept risk appetite in check. As it turns out, some earnings figures from the U.S. set off a drop among its stocks in the previous session and spilled over to today’s Asian trading hours. Risk aversion also kept the lower-yielding yen supported after Japan reported a 0.5% decline in its all industries activity index as expected. USD/JPY is down 17 pips (-0.14%), EUR/JPY is down 23 pips (-0.18%), and GBP/JPY is down 19 pips (-0.10%).

Pound pairs could steal the forex show in the upcoming London trading session, as the BOE is gearing up to print the minutes of its latest monetary policy meeting. As my buddy Forex Gump mentioned in his article about the central bank events this week, the U.K. economy has been seeing stellar improvements so there’s a chance that the Dissenting Duo (McCafferty and Weale) might’ve voted to hike rates again. Keep in mind that BOE Governor Carney himself has been pretty optimistic about their tightening timeline so any kind of support from his fellow policymakers might spur stronger forex demand for the pound.

No other major reports are up for release in the next few hours so make sure you also keep an ear out for any updates on the Greek parliament’s discussions about the concrete austerity measures to be implemented. While Greece is moving closer to getting another set of bailout funds, they’re not completely out of the woods yet so any signs of conflict could still mean trouble for the euro.

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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