Asian Session Forex Recap – Sept. 15, 2015

  • BOJ kept monetary policy unchanged as expected
  • BOJ member Kiuchi voted to taper asset purchases
  • Turnbull defeats Abbott in Australian PM leadership vote
  • RBA minutes: Will review upcoming data to see if rates are appropriate
  • RBA policymakers highlighted risks from China and Asian economies
  • U.K. CPI and German ZEW index coming up

And the central bank showdown has begun! The RBA and the BOJ got the ball rolling in today’s Asian trading session, spurring moves among Aussie and yen forex pairs. As my buddy Forex Gump predicted, RBA policymakers zoomed in on their concerns regarding the slowdown in China and among Asian economies. For now, central bank officials said that they’ll wait and see how upcoming data turns out before deciding if any rate changes are necessary.

In other Australian news, Malcolm Turnbull just defeated former Prime Minister Tony Abbott in his second leadership challenge in seven months. This was welcomed positively by the Australian dollar, as Mr. Turnbull is actually a former investment banker and is seen to be more aggressive when it comes to economic and foreign policies, but the currency erased its losses upon seeing the cautious RBA minutes.

AUD/USD moved up to a high of .7165 early on before retreating to the .7125 area (-0.16%), AUD/JPY popped briefly above the 86.00 handle then fell back to 85.56 (-0.28%), AUD/NZD managed to hold on to its lead and is up 11 pips (+0.10%), and AUD/CAD came within striking distance of .9500 before dropping to .9447 (-0.17%).

As for the BOJ, the central bank decided to keep monetary policy unchanged, with hawkish member Kiuchi still insisting on tapering asset purchases and adopting a more flexible inflation-targeting scheme. As expected, he was outvoted by his peers who focused more on the downturn in exports spurred by the slowdown in Japan’s trading partners.

The Japanese yen was able to breathe a sigh of relief when BOJ policymakers refrained from ramping up their easing efforts. USD/JPY is down 20 pips to the 120.00 handle (-0.16%), EUR/JPY is down 22 pips to 135.81 (-0.16%), GBP/JPY is down 29 pips to 185.20 (-0.14%), and NZD/JPY is down 27 pips to 75.79 (-0.37%).

That’s all the central bank action we’re getting today, as forex traders will now have to tune in to the release of the U.K. inflation numbers and the German ZEW economic sentiment index. Headline CPI could fall from 0.1% back to 0.0% in August for the U.K. while core inflation could slump from 1.2% to 1.0%. Producer input prices could post a nasty 2.3% decline, hinting at weaker consumer price pressures down the line.

As for the German ZEW, the index is slated to fall from 25.0 to 18.3 this month, chalking its sixth consecutive monthly decline in optimism. Meanwhile, the entire region is also expecting to see a drop in confidence, with the euro zone ZEW index projected to fall from 47.6 to 42.1.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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