Asian Session Forex Recap – Sept. 10, 2015

  • RBNZ cut interest rates from 3.00% to 2.75% as expected
  • RBNZ statement: “Some further easing in the OCR seems likely”
  • Australian economy added 17.4K jobs in August vs. 5.2K forecast
  • Australia’s jobless rate down from 6.3% to 6.2% in Aug
  • MI inflation expectations down from 3.7% to 3.2% in Australia
  • Chinese CPI climbed from 1.6% to 2.0% in Aug
  • Chinese PPI down by 5.9% y/y vs. -5.6% forecast
  • BOE policy statement and MPC minutes due

Comdolls got plenty of forex action in today’s Asian session, starting from the RBNZ interest rate statement during the wee hours of trading until the release of Australian jobs data and Chinese inflation figures. As expected, the RBNZ cut interest rates from 3.00% to 2.75% mostly due to falling commodity prices and financial risks from the Chinese equity slump.

To add insult to the Kiwi’s injury, RBNZ officials concluded that “some further easing in the OCR seems likely” which basically means they’re open to more rate cuts later on. In his press conference, Governor Wheeler added that drought-related risks might stem from the El Niño phenomenon in the country.

NZD/USD is down 117 pips (-1.82%) after trading around .6425 prior to the RBNZ announcement, NZD/JPY is down 131 pips to 75.70 (-1.72%), NZD/CAD is down 180 pips (-2.12%) at the .8300 support area.

On a more positive note, Australia printed a stronger than expected employment report, indicating that the economy added 17.4K jobs in August versus the projected 5.2K gain. This was enough to bring the jobless rate down from 6.3% to 6.2%, even as the participation rate improved from 64.9% to 65% in the same month. However, the Aussie’s gains were cut short after China printed its inflation reports, showing a rise to 2.0% for its headline CPI and a whopping 5.9% tumble in producer prices.

AUD/USD is down 10 pips (-0.16%) to the .7000 handle after dipping to a low of .6945, AUD/JPY is flat at the 84.50 minor psychological mark, and AUD/NZD is up 218 pips (+1.97%).

Forex traders are likely to pay close attention to the BOE interest rate statement, during which policymakers are expected to keep rates and asset purchases unchanged. The MPC minutes due to be released around the same time should be more interesting since it would show how many policymakers voted to keep interest rates on hold. Recall that the previous meeting had a lone wolf urging for a rate hike, disappointing pound bulls who had been hoping that two to three members would be in the hawkish camp.

U.S. Session Recap

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