Asian Session Forex Recap – August 4, 2015

  • Australian retail sales up by 0.7% vs. 0.5% forecast in June
  • Australia’s May retail sales figure upgraded from 0.3% to 0.4%
  • Australian trade deficit widened from 2.68B AUD to 2.93B AUD
  • RBA decided to keep interest rates unchanged at 2.00%
  • RBA: AUD is adjusting to significant declines in commodity prices
  • New Zealand ANZ commodity prices down by 11.2% in July
  • Japanese average cash earnings down by 2.4% y/y in June

The Australian dollar was the star of today’s forex show, thanks to upbeat reports from the Land Down Under and a not-so-dovish statement from the RBA. AUD/USD popped up to .7350 (+0.99%) after the RBA statement, AUD/JPY is up 86 pips (+0.97%), and AUD/NZD is up 106 pips (+0.95%).

Retail sales picked up by 0.7% in June, stronger than the projected 0.5% gain, while the May figure was upgraded from 0.3% to 0.4%. This was followed by a better-than-expected trade balance, which indicated a 2.93 billion AUD deficit versus the estimated 3.06 billion AUD shortfall, still wider than the previous 2.68 billion AUD deficit. Components of the trade report showed that exports climbed by 3% while imports rose by 4%.

RBA Governor Stevens gave the Aussie an extra boost when he said that the currency is adjusting to declines in commodity prices, a significant change from his earlier statements saying that further AUD appreciation is both likely and necessary. Apart from that, the central bank still decided to keep interest rates on hold at 2.00% as expected.

In New Zealand, the ANZ commodity prices report showed an 11.2% drop for June, worse than the previous 3.1% decline. This marks the fourth consecutive month that the report has printed a negative figure, confirming that inflationary pressures are still weak in the country. Meanwhile, Japan reported a 2.4% drop in average cash earnings instead of the projected 0.9% increase, reflecting a decline in wage growth.

NZD/USD is up 18 pips (+0.27%) and NZD/JPY is up by 14 pips (+0.17%), as the Kiwi appeared to have drawn support from upbeat Australian data. Whether or not the Kiwi can hold on to its gains for much longer depends on the Global Dairy Trade auction later on and the release of New Zealand’s quarterly jobs report in the next Asian trading session.

For now, forex traders will have to turn their attention to a few medium-tier reports lined up in the London trading session. Spain will print its unemployment change data and possibly show a 45.6K reduction in joblessness, less than half as much as the previous month’s 94.7K drop. The U.K. is set to release its construction PMI, which might climb from 58.1 to 58.6, indicating a faster pace of growth in the industry. Better keep your eyes peeled for any surprises which could spur additional volatility for the euro and the pound!

See also:

U.S. Session Recap

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