Asian Session Forex Recap – August 13, 2015

  • PBOC adjusted yuan reference rate for the third day in a row
  • Japanese core machinery orders down 7.9% in June vs. -5.3% forecast
  • Australia’s MI inflation expectations climbed from 3.4% to 3.7%
  • Swiss PPI and ECB minutes due today

It’s Day Three of the Chinese central bank’s yuan devaluation saga, and it seems like forex traders are getting tired of these announcements. Either that or market watchers have decided to play it safe, not really sure what the PBOC is up to these days.

AUD/USD barely reacted to today’s yuan reference rate adjustment of 1.1%, as the pair is moving sideways around .7380 (+0.01%). Ditto for NZD/USD which has managed to climb back above the .6600 handle (+0.04%).  Yen pairs saw a bit more action, with AUD/JPY popping up by 15 pips (+0.16%), USD/JPY advancing by 28 pips (+0.21%), and NZD/JPY climbing by 12 pips (+0.14%).

As it turns out, the yen suffered a selloff upon seeing Japan’s weaker than expected core machinery orders report for June. Orders were down 7.9% during the month, worse than the projected 5.3% slump and enough to erase the 0.6% gain seen in May. In Australia, MI inflation expectations improved from 3.4% to 3.7% in July, hinting at a bit of upward pressure in price levels down the line.

Only a few medium-tier reports are on today’s agenda for the London trading session, which suggests that forex market participants might continue to try interpreting the PBOC’s devaluation moves. Some say that this could delay the Fed’s liftoff since a weaker yuan would make U.S. exports more expensive and therefore weigh on demand and production. Just think about how much this would hurt iPhone sales in China!

In any case, be on the lookout for any surprises from the final CPI readings of Germany and France, as well as the Swiss PPI figure. Producer prices are slated to show a 0.4% decline in Switzerland, which might spur more franc weakness in the next few hours. Also due today is the transcript of the latest ECB monetary policy meeting, which could contain more details on the policymakers’ assessment and outlook for the economy.

See also:

U.S. Session Recap

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