Asian Session Forex Recap – Jan. 8, 2016

  • AU AIG construction index: 46.8 vs. 50.7 previous
  • AU retail sales: 0.4% as expected vs. 0.5% previous
  • Japan leading indicators clocks in at 103.9 as expected vs. 104.2 previous
  • Japan labor cash earnings (y/y): 0.0% vs. 0.7% expected and previous
  • PBoC sets slightly lower USD/CNY fix

Price action was a mixed bag of nuts during the Asian session, as forex traders cooled down from their selling frenzy.

Major Events:

Stability (sort of) in China’s markets – Focus was on the People’s Bank of China (PBoC) again today, this time for its decision to NOT devalue the yuan further. If you recall, the central bank had been pressing the pedal to the metal for the past few days as it repeatedly set the USD/CNY mid-point fix higher.

This time the PBoC adjusted the fix from 6.5646 to 6.5636 (small joys!) and hinted that it’s done weakening the yuan…for now. Whether or not the move is a token gesture to calm the markets or a real sign that the PBoC won’t do any more devaluation in the near futures, it worked to stabilize risk sentiment in the equities markets. Shanghai capped with a 2.39% gain while Nikkei was up by 0.85% and Hang Seng closed for a break with +1.12%.

Mixed Australian data –The Land Down Under also caught some attention after it printed mixed data. Though the AIG construction index fell to contraction territory with a 46.8 reading, the retail sales data somewhat eased the sting with a 0.4% growth in November. Analysts had been expecting a similar growth rate after October’s 0.5% uptick. A closer look tells us that department stores and household goods retailing led the rally with 0.6% growth, followed by other retail (0.4%) and food retail (0.3%).

Preparation for today’s reports? – Volatility was relatively subdued today, probably also due to the tier 1 and 2 reports heading our way. Germany is set to print its industrial production and trade data, so keep an eye out for possible volatility in the euro over the next couple of hours. Of course, the main attraction is set during the U.S. session with the first non-farm payrolls report of the year out at 1:30 pm GMT together with Canada’s employment numbers.

Major Currency Movers:

AUD – The lack of further yuan weakening from the PBoC somewhat stabilized the markets today and ended up pushing high-yielding bets like the Aussie higher. AUD/USD capped the session 63 pips higher (+0.90%) while EUR/AUD slipped by 221 pips (-1.42%)

JPY and CHF – Low-yielding currencies like the yen and franc finally gave way to their higher-yielding counterparts today. AUD/JPY jumped by 91 pips (+1.11%), GBP/JPY inched 51 pips higher (+0.30%), USD/CHF climbed by 46 pips (+0.46%), and GBP/CHF popped up by 81 pips (+0.56%).

Watch Out For:

  • 6:45 am GMT: Swiss unemployment rate (expected to remain at 3.4%)
  • 7:00 am GMT: German industrial production (expected at 0.4% vs. 0.2% previous)
  • 7:00 am GMT: German trade balance (expected at 20.1B vs. 20.8B surplus last month)
  • 7:45 am GMT: French industrial production (-0.2% expected vs. 0.5% previous)
  • 7:45 am GMT: French trade balance (-4.0B EUR expected vs. -4.6B EUR previous)
  • 8:15 am GMT: Swiss CPI report (expected at -0.2% vs. 0.5% previous)

See more:

U.S. Session Forex Recap

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