Asian Session Forex Recap – Nov. 27, 2015

  • Japan’s household spending y/y: -2.4% vs. 0.0% expected, -0.4% previous
  • Japan’s national CPI y/y: 0.3% vs. 0.0% expected, 0.0% previous
  • Japan’s national core CPI y/y: -0.1% as expected, same as previous
  • Japan’s Tokyo core CPI y/y: 0.0% vs. -0.1% expected, -0.2% previous
  • Japan’s jobless rate: 3.1% vs. 3.4% expected, 3.4% previous
  • China’s industrial profits y/y: -4.6% vs. -0.1% previous
  • Second estimate for Q3 U.K. GDP coming up

Forex traders had their sights on the Japanese yen during today’s Asian forex session, thanks to a slew of Japanese economic indicators.  Although risk sentiment seems to have been in play as well.

Major Events:

Japanese economic data – Japan released a bunch of economic indicators earlier, but they were painting a mixed picture. To begin with, household spending in October printed a 2.4% decline when it was expected to flatten out, which is rather disappointing. The continuing decline in wages is probably to blame, with the income of worker’s households falling by 0.9% in October (-0.6% previous).

Moving on, the headline reading for Japan’s national CPI decreased by 0.1% month-on-month (+0.1% previous) in October, but increased by 0.3% year-on-year (0.0% previous). The core reading (headline less fresh food), meanwhile, was down by -0.1% on an annualized basis, same as last month.

As for October’s jobless rate it looked good on the surface since it unexpectedly dropped to 3.1%, which is the lowest ever since 1995. However, the details of the report shows that the labor force participation rate dropped to 59.9% from 60.2%, so it’s a good bet that the drop in the jobless rate was due to people just giving up on finding work altogether.

China’s industrial profits – The profits of Chinese industrial companies fell by 4.6% in October, marking the 5th consecutive month of declines. According to the National Bureau of Statistics of China’s (NBS) press release, the most recent decline was due to falling sales and rising costs, with the oil, steel, coal and other mining and raw materials industries getting hit the hardest.

It wasn’t all bad, however, since many industries in line with China’s restructuring policy saw growing profits. The high-tech manufacturing sector, for example, saw a 14.2% increase in profits while consumer-related industries grew by 4.3%.

Risk aversion came back – The poor data from Japan and China sparked another round of risk aversion during the Asian session, especially in Asian equities, with the Hang Seng down by 1.085 to 22,245.00 and the Shanghai Composite down by 4.57% to 3,469.51. As for the Nikkei 225, it closed 0.30% lower at 19,883.94.

Major Currency Movers:

JPY – The Japanese yen started the forex session by weakening. This was probably due to forex traders reacting to the worse-than-expected reading for Japanese household spending. The yen then slowly clawed its way back up, likely on the back of forex traders and other market players fleeing to the safe-haven yen amidst the return of risk aversion.

USD/JPY was down by 11 pips (-0.09%) to 122.53 with 122.72 as session high, CAD/JPY was down by 16 pips (-0.18%) to 92.07 with 92.28 as session high, CHF/JPY was down by 14 pips (-0.12%) to 119.65 with 119.85 as session high

USD & CHF – The Japanese yen wasn’t the only beneficiary of the prevailing risk-off sentiment – the other safe-haven currencies were getting a piece of the action as well. Among the safe-havens, the yen was the strongest while the Swiss franc was the weakest.

GBP/USD was down by 14 pips (-0.10%) to 1.5086, USD/CAD was up by 13 pips (+0.10%) to 1.3307

USD/CHF was up by 3 pips (+0.03%) to 1.0238, CAD/CHF was down by 5 pips (-0.07%) to 0.7693

AUD – The Aussie’s forex price action was bit of a mystery since it defied the safe-havens by grinding ever higher during the course of the forex session. Even the report on declining Chinese industrial profits failed to stop the Aussie’s rise. But if you consider the Aussie’s price action in the previous sessions, then you can probably see that most Aussie pairs are actually ranging, so I’m chalking the Aussie’s strength to technical trumping the fundamentals.

AUD/USD was up by 15 pips (+0.22%) to 0.7232, AUD/JPY was up by 8 pips (+0.09%) to 88.59, AUD/CHF was up by 18 pips (+0.25%) to 0.7405

Watch Out For:

  • Monthly (0.1% previous) and annualized (-2.6% previous) readings for French PPI at 7:45 am GMT
  • Spain’s annualized flash CPI (-0.5% expected, -0.7% previous) at 8;00 am GMT
  • Quarterly (no revision from 0.5% expected) and annualized (no revision from 2.3% expected) readings for the second estimate of UK Q3 GDP at 9:30 am GMT
  • Euro Zone consumer sentiment (-6.0 previous) and industrial sentiment (-2.1 expected, -2.0 previous) at 10:00 am GMT
  • German GfK consumer sentiment (9.2 expected, 9.4 previous) at 12:00 am GMT

See more:

U.S. Session Forex Recap

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