Asian Session Forex Recap – Oct. 6, 2015

  • RBA kept rates on hold at 2.00% as expected
  • RBA Stevens: Monetary policy needs to be accommodative
  • RBA Stevens: Moderate expansion in economy continues
  • Australian trade deficit widened from 2.79B to 3.10B AUD in Aug
  • Chinese banks still closed for the holidays
  • German factory orders data and Swiss CPI coming up

Aussie forex traders can breathe easy now that the RBA decided to keep interest rates on hold at 2.00% for the time being. Policymakers acknowledged the slowdown in China and East Asia but cited that U.S. recovery has strengthened, keeping the global economy expanding at a moderate pace.

RBA Governor Stevens also pointed out that the Australian dollar is already adjusting to lower commodity prices, which suggests that they won’t be jawboning the currency again anytime soon. He reiterated that monetary policy needs to be accommodative and that Australia’s terms of trade are falling, as confirmed by the country’s latest trade balance release. The report showed a wider deficit of 3.10 billion AUD in August from the negatively revised 2.79 billion AUD shortfall in the previous month.

AUD/USD surged past the .7100 handle upon hearing the RBA’s decision to stand pat and is up 47 pips (+0.65%) so far. AUD/JPY is up 56 pips and is closing in on the 86.00 handle (+0.66%), EUR/AUD is down 91 pips (-0.59%), and GBP/AUD is down 93 pips (-0.44%).

The Kiwi also logged in gains against its forex rivals, as traders seem to be anticipating positive results from the upcoming Global Dairy Trade auction. Recall that dairy prices have been posting consecutive gains for the past few auctions while Fonterra has upgraded its milk payout forecasts, suggesting that the industry may have already bottomed out.

Before that though, European currencies might enjoy a bit more forex action with the release of Germany’s factory orders data at 7:00 am GMT and the Swiss CPI at 8:15 am GMT. The euro zone’s largest economy could indicate a 0.5% rebound in factory orders for August while Switzerland could post a 0.1% uptick in price levels for September, possibly reducing expectations for additional easing from both the ECB and SNB. However, weaker than expected results could revive talks of further stimulus, which might lead to a forex selloff for the euro or the franc.

U.S. Session Recap

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