Asian Session Forex Recap – August 26, 2015

  • Australia’s construction work done up by 1.6% for Q2 vs. expected 1.5% drop
  • Chinese equities slightly higher after PBOC rate cut
  • Nikkei closed with 3.20% gain for the day
  • PBOC chief economist: Rate cut doesn’t signal a shift in bias
  • Chinese exchange restricts margin requirements for index futures trading

Did the PBOC interest rate cut do the trick? Chinese equities are looking better in today’s Asian trading session, convincing some forex junkies to take on more risk. Chinese authorities still seem to be scrambling to breathe life back into the country’s stock market, with China Financial Futures Exchange announcing stricter margin requirements for index futures trading in order to keep doomsday speculations in check.

Even the Chinese central bank’s chief economist Ma Jun is trying to reassure market watchers in saying that the PBOC’s monetary policy changes don’t necessarily represent a shift to a dovish bias. He maintained that China’s “monetary policy remains prudent and neutral” but admitted that the stock market volatility could have repercussions on the economy.

The Australian dollar drew additional support from better than expected quarterly construction work done data, which showed a 1.6% gain instead of the projected 1.5% drop. Aside from that, RBA Governor Stevens’ testimony focusing on reform and economic growth restored a bit of confidence in the Australian economy.

AUD/USD is treading carefully at .7135 (+0.04%), NZD/USD is up 16 pips to .6500 (+0.27%), AUD/JPY is up 35 pips (+0.40%), and NZD/JPY is up 56 pips (+0.71%). The Japanese yen has been returning some of its recent gains to most of its forex peers, thanks to the pickup in risk appetite.

Up ahead, only a couple medium-tier reports are lined up from the UK, namely the BBA mortgage approvals and CBI realized sales figures. Mortgage approvals probably climbed from 44.5K to 46.0K in July, hinting at a possible pickup in spending related to home purchases, while the CBI realized sales index could dip from 21 to 19 this month. Swissy pairs could also be treated to an extra dose of forex volatility right around the release of the UBS consumption indicator at 7:00 am GMT.

Other than that, do keep close tabs on how European stock indices fare in the next few hours, as these could show whether investors could keep up with the rebound in risk or not. Be careful out there!

See also:

U.S. Session Recap

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