Asian Session Forex Recap – July 28, 2015

  • Chinese government and central bank injected new stimulus
  • Shanghai Composite index still in the red
  • U.K. preliminary GDP reading for Q2 2015 due

Chinese equities hogged the spotlight in today’s Asian trading session, as forex traders didn’t have any other economic reports to look at. Word through the grapevine is that another set of stimulus was doled out by both the Chinese government and central bank, with the PBOC pumping liquidity by 50 billion CNY – its largest injection of funds this month.

Apart from that, government-owned funds are reportedly stepping in to buy more blue chip stocks in order to prevent further bleeding. So far, the Shanghai Composite index is still in the red with a 1.3% tumble in the morning session while the Shenzhen Composite index is down 0.8%.

While Aussie pairs are still looking weak, AUD/USD managed to pop back up to the .7300 handle (+0.45%) and AUD/JPY advanced by 60 pips (+0.66%) upon hearing that Chinese officials are scrambling to keep a lid on stock market declines. With gold prices already heading south, the last thing the Aussie needs is a full-blown stock market crash in its biggest trade partner, right?

Risk appetite seems to be coming back into play, with most yen pairs chalking up strong gains in the past few hours. EUR/JPY is up 18 pips (+0.14%), GBP/JPY is up 54 pips (+0.28%), NZD/JPY is up 67 pips (+0.82%), and CAD/JPY is up 35 pips (+0.37%).

Will this upbeat vibe carry on in the upcoming London trading session? This could all come down to the results of the U.K. preliminary GDP reading report for Q2 2015, as forex analysts are expecting to see a 0.7% growth figure. This would be slightly stronger than the previous 0.4% reading, but it seems that pound bulls are waiting for a higher-than-expected read to confirm that the BOE is indeed moving closer to tightening monetary policy as Governor Carney suggested.

No other top-tier reports are lined up in the next few hours so make sure you keep close tabs on Chinese equity market action and commodity price movements as well. Be careful out there!

See also:

U.S. Session Recap

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