Asian Session Forex Recap – Oct. 8, 2015

  • Chinese investors return from week-long holiday
  • Japanese core machinery orders down by 5.7% vs. projected 3.3% gain
  • Japanese current account surplus widened from 1.32T to 1.59T JPY
  • Japan’s Economy Watchers Sentiment index down from 49.3 to 47.5
  • BOE statement, MPC minutes, and ECB minutes due

My, my! Chinese investors must’ve had a good vacation, as their return brought risk-on vibes in the equity market. The Shanghai Composite index is up more than 3.5% as of this writing, buoyed by the improvements in data and the pickup in commodity prices recently. However, this positivity didn’t seem to spill over to the forex arena.

AUD/USD is down 33 pips to .7174 (-0.45%), NZD/USD is down 20 pips to .6590 (-0.28%), and USD/CAD is up 15 pips to 1.3067 (+0.13%) as dollar traders appear to be booking forex profits ahead of the release of the FOMC minutes later on.

Higher-yielding currencies retreated upon seeing mostly weaker than expected data from Japan earlier today. The core machinery orders report showed a surprise 5.7% slump instead of the projected 3.3% rebound for August, marking its third consecutive monthly decline. This also suggests downbeat prospects for business production down the line, as acknowledged by the BOJ. Japan’s Economy Watchers Sentiment index fell from 49.3 to 47.5 in September, reflecting increased pessimism among workers.

USD/JPY is down 15 pips to 119.85 (-0.12%), EUR/JPY is up 12 pips and closing in on 135.00 (+0.09%), GBP/JPY is down 27 pips to 183.52 (-0.16%), and AUD/JPY is down 50 pips and testing the 86.00 handle (-0.59%).

European currencies might be eager to show off their moves in the upcoming London trading session, as there are several top-tier central bank events lined up. The BOE is set to announce its official monetary policy statement at 9:30 am GMT and publish the minutes of its meeting soon after. Forex junkies might be treated to a few cautious remarks from BOE Governor Carney and his gang of policymakers, although reassuring words are likely to be thrown in as well and might be enough to keep the pound supported.

The ECB will release its monetary policy meeting accounts, which should shed more light on why Governor Draghi admitted that they’re open to adding more stimulus during his press conference after their September rate statement. More dovish remarks from most of the policymakers could remind forex traders that the region is undergoing deflation and might actually need more aid.

U.S. Session Recap

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