Asian Session Forex Recap – Oct. 28, 2015

  • Australian CPI up by 0.5% in Q3 2015 vs. 0.7% forecast and previous
  • Australia’s trimmed mean CPI up by 0.3% vs. 0.5% forecast
  • Japanese retail sales fell by 0.2% year-over-year in Sept
  • German import prices and GfK consumer climate data due

What a wipeout for the Aussie! Weaker than expected inflation readings dragged the Australian currency down under, as forex junkies speculated that the RBA might soon revert to a very dovish stance. The headline CPI reading showed a 0.5% increase in price levels for Q3 2015, lower than the projected 0.7% gain and the previous 0.7% reading.

Meanwhile, the trimmed mean CPI posted a meager 0.3% uptick versus the estimated 0.5% increase. Components of the inflation report revealed that the decline was spurred by falling prices of communication services, clothing and footwear.

AUD/USD tumbled from the .7200 handle to a low of .7110 (-0.95%) after the numbers were printed, AUD/JPY is down 85 pips to 85.73 (-0.97%), AUD/NZD is down 33 pips to 1.0588 (-0.31%), and AUD/CAD is down 91 pips to .9450 (-0.95%). European currencies also took advantage of the Aussie’s weakness, with EUR/AUD up 141 pips to the 1.5500 handle (+0.92%) and GBP/AUD up 241 pips to 2.1493 (+1.13%).

Japan had its fair share of bleak data, as the country reported a 0.2% decline in retail sales year-over-year for September instead of the projected 0.4% uptick. However, the Japanese yen was still stuck in consolidation against most of its peers, as forex traders are probably holding out for the inflation readings and BOJ statement lined up on Friday.

Up ahead, traders could turn their attention to the release of Germany’s import prices data and the GfK consumer climate index. Import prices are expected to have dropped by 0.2% in the euro zone’s top economy, with a larger drop likely to trigger speculations of another negative headline CPI for the region. The GfK index is projected to dip from 9.6 to 9.5 for this month.

Unless any other market factors are able to push forex pairs around in the next few hours, tight consolidation might ensue ahead of the much-awaited FOMC statement and RBNZ monetary policy decision later on in the day. Better take a look at my buddy Forex Gump’s Trading Guide for these central bank events!

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U.S. Session Recap

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