Asian Session Forex Recap – Feb. 23, 2016

  • Australia CB leading index down by 0.2% vs. 0.3% uptick last month
  • BOJ’s Kuroda points fingers at risk aversion, says increasing monetary base is not enough.

Forex bears came out to play today, as they priced in weaker commodity prices and a bit of risk aversion across the board.

Major Events:

Overall risk aversion – Unlike yesterday, the high-yielding currencies took a step back today, thanks to weaknesses in commodity prices spooking the Asian equities markets and fostering an overall risk-off vibe in the forex arena.

It also didn’t help that the International Energy Agency (IEA’s) report about oil prices stabilizing in 2017 hinted that the surplus would persist in the year ahead. U.S. oil dropped by 1.83% to $32.80 while Brent crude is down 1.56% to $34.16. Duhn hun hun.

BOJ’s Kuroda talks about monetary policy – In another speech in front of the Parliament, Bank of Japan (BOJ) Governor Haruhiko Kuroda hinted of a major shift in the central bank’s view of the effectiveness of its stimulus program.

In his speech, he pointed fingers at risk aversion and concerns over China, saying that increasing the monetary base is not enough to stimulate inflation and inflation outlook. This contrasts with his view when he started years ago when he said that increasing the monetary base is the best way to go in stimulating prices. This is probably one more reason why the yen gained across the board throughout the session.

Major Currency Movers:

JPY – Whether it’s the risk aversion or Kuroda’s comments, the low-yielding yen piled up its gains against its higher-yielding counterparts.

USD/JPY slipped by 46 pips (-0.41%), EUR/JPY dipped by 32 pips (-0.26%), and GBP/JPY plummeted by a whopping 101 pips (-0.63%).

Comdolls – Thanks to weaknesses in commodity prices, the Aussie, Loonie, and Kiwi took some hits against the low-yielders.

AUD/USD remained at .7231 but AUD/JPY saw a 33-pip decline (-0.40%). Meanwhile, USD/CAD popped up by a pip and NZD/USD slipped by 12 pips (-0.18%).

Watch Out For:

  • 8:00 am GMT: French flash manufacturing and services PMIs
  • 8:15 am GMT: Switzerland PPI expected to print at -0.2% vs. -0.4% previous
  • 8:30 am GMT: German flash manufacturing and services PMIs

See more:

U.S. Session Forex Recap

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