Asian Session Forex Recap – Mar. 9, 2016

  • Australia Westpac consumer sentiment down by 2.2% vs. 4.2% uptick in February
  • Australia’s home loans down by 3.9% vs. 2.7% decline expected, 2.7% increase in December
  • Japan’s preliminary machine tools orders dropped by 22.6% in February vs. 17.2% decline in January

Risk aversion was the name of the game during the Asian session, as forex traders took off their bets ahead of major economic events this week.

Major Events:

Let’s take a look at four factors that contributed to risk aversion during the Asian session:

Weak Australian data – Consumer sentiment and home loans data from the Land Down Under printed weaker than market players had expected. The Westpac consumer sentiment report slipped back into negative territory with a 2.2% decline on the back of consumers not being as confident over their finances as they were in February. Meanwhile, home loans showed a 3.9% dip, thanks in part to rising house prices discouraging other potential homeowners from buying homes.

PBoC weakens yuan – The People’s Bank of China (PBoC) set the USD/CNY midpoint fix at 6.5106 vs. 6.5041 yesterday, marking the first in three days that the central bank has actively weakened its local currency. Not a good move especially after China’s weak trade data this week and the upcoming release of inflation numbers.

EUR weakens ahead of ECB decision – Euro traders lightened their load during the Asian session ahead of the European Central Bank (ECB’s) monetary policy decision tomorrow. If you recall, ECB head honcho Mario Draghi had all but announced more easing in his speech last month.

Oil slide aftermath – Though Black Crack prices recovered a bit from their U.S. session slide, Asian session traders were still a bit too cautious to initiate broad rallies. Brent crude is up by 0.58% to $39.88 while U.S. oil is up by 0.55% to $36.70.

Major Currency Movers:

USD – Low-yielders like the Greenback reigned supreme in risk-averse sessions like today. GBP/USD slipped by 32 pips (-0.23%), USD/CHF popped up by 16 pips (+0.16%), AUD/USD fell by 22 pips (-0.30%), and USD/CAD rocketed by 39 pips (+0.29%).

JPY – Like the dollar, the yen also gained higher across the board. GBP/JPY fell by 42 pips (-0.26%), AUD/JPY slid by 28 pips (-0.33%), and CAD/JPY inched 25 pips lower (-0.30%).

EUR – The euro, not normally active during the Asian session, saw weaknesses across the board ahead of the ECB’s policy statement. EUR/USD declined by 27 pips (-0.25%), EUR/JPY fell by 35 pips (-0.28%), and EUR/CHF inched 10 pips lower (-0.09%).

Watch Out For:

  • 9:30 am GMT: U.K. manufacturing production (0.2% expected, -0.2% previous)
  • 9:30 am GMT: U.K. industrial production (0.6% expected vs. -1.1% previous)

See more:

U.S. Session Forex Recap

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