Asian Session Forex Recap – Oct. 7, 2015

  • BOJ kept monetary policy unchanged as expected
  • Japanese PM Abe reshuffled cabinet, press conference at 9:30 am GMT
  • Chinese banks still closed for the holiday
  • U.K. manufacturing production, Swiss foreign currency reserves data due

Even though BOJ policymakers decided to keep monetary policy unchanged as expected, yen forex pairs still tossed and turned in today’s Asian session. As indicated in their official policy statement, the Japanese central bank will continue to conduct asset purchases to the tune of 80 trillion JPY annually, with one member voting to taper stimulus as usual.

BOJ Governor Kuroda also admitted that exports and production have taken a hit these days, mostly due to the slowdown in China and emerging economies. Despite that, the central bank maintained its outlook that the economy would carry on with its moderate recovery.

Traders still seem to be feeling uneasy ahead of Japanese Prime Minister Abe’s press conference at 9:30 am GMT. Earlier today, he decided to reshuffle the cabinet members, keeping his allies Chief Cabinet Secretary Yoshihide Suga, Finance Minister Taro Aso and Economics Minister Akira Amari in their current spots. Abe didn’t provide any additional deets on the shake-up, leaving forex junkies to speculate on its potential implications on economic policy.

USD/JPY slipped to a low of 119.78 but is now trading back at 120.00 (-0.15%), EUR/JPY dipped close to the 135.00 handle before recovering to 135.18 (-0.18%), GBP/JPY dropped from 183.34 to a low of 182.47 then rebounded to 183.00 (+0.02%), and AUD/JPY is still moving sideways at 86.20 (+0.07%).

Yen pairs could continue to bask in the volatility in today’s London trading session, as Abe’s remarks could contain clues on what the Japanese government has up its sleeve. More tax hikes? Or will it be tax cuts this time? Apart from that, the pound and the franc might also show off their moves during the release of the U.K. manufacturing production report and the Swiss foreign currency reserves data.

Data from the U.K. has been so-so recently, setting the stage for a potentially cautious BOE statement later this week. The manufacturing production report is slated to show a 0.4% rebound in August, following the previous month’s 0.8% decline. Meanwhile, the Swiss foreign currency reserves report could provide insight on whether or not the SNB is intervening in the forex market to keep the franc weak, with a large increase from the previous 540 billion CHF figure confirming that SNB policymakers were extra sneaky.

U.S. Session Recap

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