Asian Session Forex Recap – August 7, 2015

  • RBA downgraded GDP forecast, upgraded employment and inflation estimates
  • RBA: Scope for AUD to decline once Fed hikes rates
  • Australia’s AIG construction index up from 46.4 to 47.1
  • Fonterra cut milk payout forecasts, announced support for farmers
  • BOJ kept monetary policy unchanged as expected
  • Swiss jobless rate and foreign currency reserves data due

Look at the Aussie go! Thanks to a relatively upbeat Statement on Monetary Policy from the RBA, the Australian currency managed to regain ground against its forex counterparts. The statement indicated that RBA officials upgraded their forecasts for inflation and employment while downgrading GDP estimates to account for slower population growth. Policymakers also noted that there’s scope for the Aussie to decline once the Fed hikes interest rates.

AUD/USD is up 20 pips and is back above the .7350 level (+0.27%), AUD/JPY is up 28 pips and closing in on 92.00 (+0.29%), AUD/CAD is up 36 pips (+0.37%), and AUD/NZD is up 22 pips (+0.18%).

The Kiwi seemed to shrug off the news that Fonterra announced another downgrade in its milk payout forecasts since forex traders have pretty much priced in this announcement after the Global Dairy Trade auction recorded its tenth consecutive decline in dairy prices. Apart from that, the Kiwi probably got a bit of a boost from Fonterra’s decision to provide support of an additional 50 cents/kg of milksolids to farmers this season, easing fears that some producers might be forced to scale down operations or close shop.

Over in Japan, the BOJ interest rate statement turned out to be a bit of a non-event since the central bank decided to keep monetary policy unchanged as expected. USD/JPY is up 6 pips (+0.05%), EUR/JPY is up 5 pips (+0.05%), and GBP/JPY is up 10 pips (+0.06%).

The British pound seems to be shaking off the negative vibes from yesterday’s Super Thursday (more like Super Disappointing Thursday!), as forex traders are realizing that the BOE is still on track to tighten monetary policy sooner or later (or much later). Market watchers could turn their attention to the U.K. trade balance release at 9:30 am GMT, which might offer more clues on how the economy’s exports are faring.

The Swiss franc could also enjoy a bit of volatility in the upcoming London trading session since Switzerland is set to report its unemployment rate and foreign currency reserves data. However, the lack of any jaw-dropping changes for both reports might keep the franc in consolidation. Also lined up from Europe today are the industrial production and trade balance figures from Germany and France.

Unless these medium-tier releases show any surprises, most major pairs could be in for range-bound action in the next few hours while forex junkies are biting their nails ahead of the U.S. NFP release. I’d use this time to read up on Forex Gump’s Trading Guide for the July NFP if I were you!

See also:

U.S. Session Recap

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