Asian Session Forex Recap – Feb. 25, 2016

  • Australia’s private capital expenditure up by 0.8% in Q4 2015 vs. 8.4% decline in Q3 and 3.1% decline expected

Forex trading was a mixed bag of beans, as Asian session traders priced in central banker statements and a bit of see-sawing of risk sentiment.

Major Events:

Australia’s capex numbers – Though the Land Down Under’s headline capital expenditure (capex) numbers surprised to the upside, Aussie traders weren’t comfortable with the capex outlook numbers that came with it. Details show that the first estimates of 2016/2017 capex clocked in at 82.6B AUD, 19.5% lower than last year’s first estimates. Duhn duhn duhn.

BOJ’s Kiuchi halts the yen’s gains – Bank of Japan (BOJ) board member Takahide Kiuchi, one of the four (out of 9) who voted against negative interest rates, boosted Japanese equities earlier when he reiterated that the BOJ’s easy policy alone is enough to boost inflation.

He also added that he didn’t see the need for further easing and that negative rates should be a tool that the BOJ should save for the future. The optimism, along with a bit of profit-taking on yen long trades, boosted Nikkei 1.41% higher and dragged the yen lower across the board.

Risk aversion back in play? – After a couple of hours of reprieve, it seems that the bears are rearing to take more shots today. Aside from oil prices erasing some of their gains from yesterday, a report on the PBoC once again injecting the markets with money was enough to spook some risk-takers. Both the Australian and Chinese equities markets are in the red, along with U.S. and Brent crude oil prices. Yipes!

Major Currency Movers:

JPY – The low-yielding yen gave up pips across the board with USD/JPY jumping by 89 pips (+0.80%), EUR/JPY rocketing by 119 pips (+0.97%), and GBP/JPY rising by a whopping 158 pips (+1.02%).

AUD – The high-yielding comdoll received a one-two punch from weak Australian capex outlook and overall risk aversion.

AUD/USD slipped by 29 pips (-0.40%), EUR/AUD popped up by 83 pips (+0.54%), and AUD/NZD dropped by 40 pips (-0.37%).

Watch Out For:

  • 7:00 am GMT: GfK German consumer climate (expected to dip from 9.4 to 9.2)
  • 9:30 am GMT: U.K. quarterly GDP second estimate (expected to retain 0.5% growth figure)
  • 9:30 am GMT: U.K. index of services expected to pop up by 0.7% against 0.6% gain three months ago
  • 9:30 am GMT: U.K. preliminary business investment estimated to rise by 0.6% vs. 2.2% uptick in Q3 2015.
  • 10:00 am GMT: Euro Zone final headline and core CPI (no changes expected from previous figures)

See more:

U.S. Session Forex Recap

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