Asian Session Forex Recap – Sept. 4, 2015

  • Chinese banks still closed for the holiday
  • South Korea downgraded growth forecasts
  • Japanese July average cash earnings up by 0.6% y/y vs. 2.1% forecast
  • German factory orders and Swiss CPI due

Even though Chinese investors weren’t around to bring negative vibes in the financial markets today, risk appetite remained weak in the forex arena. It looks like the sour mood caused by yesterday’s dovish ECB monetary policy statement is affecting price action in today’s Asian trading session, and this was worsened by South Korea’s decision to downgrade their own growth forecasts as well.

Aside from that, Japan had its share of bleak data, as the average cash earnings report showed a meager 0.6% year-over-year gain in July versus the projected 2.1% increase. Still, this was enough to rebound from the previous 2.5% slide and enough to bring the inflation-adjusted wage gains to 0.3% – its first increase in more than two years.

With that, the Japanese yen was able to take advantage of the risk-off vibes and the small improvement in wages. USD/JPY is down 64 pips to 119.43 (-0.54%), EUR/JPY is down 65 pips to 132.88 (-0.49%), GBP/JPY is down 105 pips to the 182.00 handle (-0.58%), and AUD/JPY is down 93 pips to 83.32 (-1.01%).

Up ahead, forex traders could turn their attention to the release of German factory orders at 6:00 am GMT and the Swiss CPI at 7:15 am GMT. Germany is expected to show a 0.5% decline in factory orders for July after seeing a 2.0% gain in June, with worse than expected results likely to spur more euro losses. Meanwhile, Switzerland could show a 0.2% drop in price levels for August, following the previous month’s 0.6% slide. Keep in mind that franc traders are on edge, as the SNB might pull the intervention trigger before the ECB beats them to it.

Other than those potential short-term market catalysts, the coast is clear in terms of top-tier releases ahead of today’s NFP release. Because of that, a bit of forex consolidation is expected among dollar pairs in the next few hours so I suggest you use that time to read my buddy Forex Gump’s trading guides for the U.S. NFP and the Canadian jobs report.

See also:

U.S. Session Recap

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