Asian Session Forex Recap – Jan. 15, 2016

  • AU home loans up by 1.8% vs. 0.5% decline last month
  • China’s new yuan loans: 597.8B yuan in December vs. 700B yuan expected
  • BOJ’s Kuroda: No current plans for further easing

Major forex pairs tracked a V-pattern during the Asian session, as oil concerns shook the fragile recovery of risk appetite.

Major Events:

Overall risk aversion – The major currencies were set for a strong day before the bears woke up and took control in the markets. The biggest story of the hour is oil prices going back to its downtrend after a short rally to $31 yesterday.

The Black Crack took another trip down the charts as traders renewed their concerns over Iran’s oil soon hitting the world markets and flooding supply. The prospect of low oil (and low inflation) didn’t sit well with equities and forex traders, who took off their higher-yielding bets off the table.

Profit-taking ahead of more U.S. reports? – Another possible reason for the overall risk appetite is Uncle Sam’s impending release of more economic data. If you recall, traders weren’t impressed with yesterday’s turnout. And with the U.S. set to print a slew of economic reports including retail sales, PPI, industrial production, and consumer sentiment, a lot of traders thought it prudent end the week early and take off their higher-yielding investments ahead of uncertain data releases.

No imminent easing from the BOJ – Bank of Japan (BOJ) Governor Kuroda made it easier to buy the yen when he hinted that although they’re concerned over their inflation targets, the BOJ also isn’t thinking about further monetary easing at the moment. The central bank is pointing at low oil prices and is expected to adjust its inflation target schedule in its meeting in late January.

Major Currency Movers:

JPY – Between the overall risk appetite and Kuroda’s assurance that the BOJ won’t be easing anytime soon, the yen was one of the biggest gainers throughout the session.

USD/JPY dropped by 42 pips (-0.36%) while EUR/JPY slipped by 19 pips (-0.15%) and GBP/JPY fell by 55 pips (-0.32%). Heck, even CHF/JPY dropped by 28 pips (-0.24%)!

Comdolls – Commodity-related currencies took more hits across the board on back of falling oil prices and overall risk aversion.

AUD/USD saw a 47-pip decline throughout the session while NZD/USD also fell by 46 pips (-0.71%). The Loonie took harder hits with USD/CAD popping up by 35 pips (+0.24%), CAD/JPY falling by 47 pips (-0.57%), and EUR/CAD rocketing by 68 pips (+0.44%).

Watch Out For:

  • 9:30 am GMT: BOE credit conditions survey
  • 9:30 am GMT: UK construction output (y/y): 0.5% vs. 0.2% previous
  • 10:00 am GMT: Euro zone trade balance (21.1B EUR/ vs. 19.9B EUR)

See more:

U.S. Session Forex Recap

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