Asian Session Forex Recap – August 12, 2015

  • PBOC decided to devalue the yuan… again!
  • Australian Westpac consumer sentiment up by 7.8% in Aug, -3.2% previous
  • Australia’s quarterly wage price index up by 0.6% as expected
  • Japan’s June industrial production upgraded from 0.8% to 1.1% gain
  • Japanese June tertiary industry activity ticked up by 0.3% vs. 0.1% forecast
  • Chinese July industrial production up by 6.0% y/y vs. 6.7% forecast
  • Chinese July retail sales up by 10.5% y/y vs. 10.6% forecast
  • Chinese July fixed asset investment up by 11.2% vs. 11.5% forecast

So much for a one-time move! PBOC officials were at it again today, announcing further yuan forex devaluation against the U.S. dollar. After setting their yuan trading range 1.9% lower yesterday, the Chinese central bank changed its mind and set the range around 1.6% lower today. According to policymakers, they took the latest set of economic data into consideration and judged that further depreciation was necessary.

Today’s data dump from China supported this downbeat outlook, as industrial production, retail sales, and fixed asset investment missed expectations. Industrial production showed a 6.0% annualized gain in July, weaker compared to the projected 6.7% increase and the previous 6.8% gain. Retail sales showed a 10.5% year-over-year increase, slightly lower than the estimated 10.6% rise. Meanwhile, fixed asset investment was up 11.2% versus the consensus of an 11.5% increase.

Australia saw a couple of improvements in data, namely the Westpac consumer sentiment index which posted a 7.8% rebound from the previous 3.2% decline and the quarterly wage price index which showed a 0.6% gain, up from the earlier 0.5% increase.

Japan also had its fair share of upbeat economic readings, as the industrial production figure for June was upgraded from 0.8% to 1.1% while the tertiary industry activity index for the same month posted a higher than expected 0.3% gain versus the projected 0.1% uptick.

AUD/USD spiked to a low of .7218 (-0.50%) after the PBOC announcement then bounced back to the .7260 area upon seeing the Chinese reports. NZD/USD fell to a low of .6469 then recovered back to .6530 (-0.16%), as market watchers realized that the Chinese figures ain’t so bad… yet.

The euro continued to advance against most of its forex rivals in the past few hours, as bulls are probably still enjoying the post-bailout after party. EUR/USD is up 34 pips (+0.31%), EUR/JPY is up 24 pips (+0.17%), EUR/NZD is up 95 pips (+0.57%), and EUR/AUD is up 141 pips (+0.93%).

Up ahead, forex traders could turn their attention to the British pound since the U.K. is gearing up to print its jobs report for July. Analysts are expecting to see a 1.4K increase in unemployment claimants, which could still keep the jobless rate steady at 5.6%. The average earnings index is expected to fall back to 2.8% for the latest reporting period after hitting 3.2% in the three-month period ending in May. Stronger than expected readings could spur pound rallies while weak data could mean a sharp selloff so make sure you check out my buddy Forex Gump’s Trading Guide for the U.K. jobs release.

Other reports that are lined up in the London trading session include the Swiss ZEW economic expectations index due 9:00 am GMT and the euro zone industrial production report.

See also:

U.S. Session Recap

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