Asian Session Forex Recap – Feb. 16, 2016

  • RBA: weak inflation provides scope for further easing
  • NZ inflation expectations (y/y): 1.6% vs. 1.9% previous
  • China’s new loans shoots up to record highs
  • New Zealand’s PM is “surprised” NZD hasn’t fallen despite lower dairy prices

Risk-taking was the name of the game during the Asian session, as forex traders traded the increased possibilities of higher oil prices and central bank easing.

Major Events:

More easing from the major central banks? – Yesterday’s news continued to fuel risk appetite in the markets. As I mentioned in my U.S. session recap, Draghi talking about the ECB possibly easing a bit more and the BOE’s McCafferty hinting at negative rates was good for risk-taking. Add that to speculations that the BOJ and PBoC could also possibly step up their game too and you’ve got a beat that the bulls can’t help but dance to.

More gains for oil – A pending meeting between top officials from Saudi Arabia, Russia, and several OPEC members kept the oil afloat for another trading session. Hopes for a solution to the Black Crack’s supply glut pushed U.S. crude 1.27% higher to $30.72 and Brent crude by another 1.37% higher to $34.76.

China’s new loans data surges to record highs – Reports released a few hours earlier revealed that China’s broadest measure of new credit jumped by 2.51 trillion CNY in January, the highest since the record-keeping started in 2004. Analysts were only expecting 1.9 trillion CNY after December’s 598B CNY figure. Meanwhile, aggregate financing shot up to 3.42T CNY ($525B) and money supply expanded by 15.1% compared to January last year.

While most of the gains could be attributed to companies front loading their credit targets for the year, the surge is also a good sign that companies trust the government to counter the economic slowdown.

New Zealad John Key drags NZD – New Zealand’s Prime Minister John Key caused some ruckus among Kiwi pairs in early Asian trading when he expressed his concerns that the New Zealand dollar hasn’t fallen by as much as he had expected it to given the decline in dairy prices. Say what?!

Major Currency Movers:

NZD – Thanks to Prime Minister Key, the Kiwi lost pips across the board. NZD/USD dropped by 57 pips (-0.86%), NZD/JPY fell by 60 pips (-0.79%), and AUD/NZD jumped by a ridiculous 110 pips (+1.03%).

CAD – Can’t talk about oil without talking about the Loonie! Thanks to further oil price increases, USD/CAD dropped by 72 pips (-0.52%), CAD/JPY gained 48 pips (+0.58%), and GBP/CAD dropped by 107 pips (-0.54%).

JPY – The low-yielding yen lost battles against is higher-yielding counterparts amidst a risk-friendly trading environment. USD/JPY inched 8 pips higher while EUR/JPY popped up by 12 pips (+0.09%) and AUD/JPY shot 20 pips higher (+0.24%).

Watch Out For:

  • 9:00 am GMT: Italian trade balance (3.87B expected vs. 4.41B previous)
  • 9:30 am GMT: U.K. CPI, PPI, and RPI data. Read Forex Gump’s trading guide if you’re planning on trading this potential market-mover!
  • 10:00 am GMT: German ZEW economic sentiment (0.1 expected vs. 10.2 previous)
  • 10:00 am GMT: Euro Zone ZEW economic sentiment (10.3 expected vs. 22.7 previous)

See more:

U.S. Session Forex Recap

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