Asian Session Forex Recap – Mar. 11, 2016

  • New Zealand manufacturing index down to 56.0 vs. 58.0 previous
  • New Zealand food price index down by 0.6% vs. 2.0% last month
  • Japan’s BSI manufacturing index down to -7.9 vs. 4.2 expected, 3.8 previous
  • PBoC raises USD/CNY midpoint fix to its highest in 2016

Forex trading was a mixed bag of nuts, as risk aversion got mixed in with end-of-week profit-taking. Which currencies showed the most movement?

Major Events:

PBoC boosts the yuan – The People’s Bank of China (PBoC) grabbed the headlines during the trading session when it weakened the yuan’s value by setting USD/CNY’s daily reference rate to its highest level in 2016 and the fastest daily increase since November last year.

Analysts point to the dollar’s weakness after the ECB’s decision as well as anticipation of weaknesses in other non-dollar major currencies as the reason for the move. It also doesn’t hurt to devalue the currency ahead of China’s data dump and the PBoC’s annual press conference this weekend. Equities traders didn’t care much for it though, as they dragged the bourses lower before showing some improvement.

Post-ECB profit-taking? – High-yielding currencies jumped across the board despite the mixed performances of Asian equities. One possible explanation is risk appetite after the ECB decided to add to its stimulus. Another one is profit-taking after days of anticipating dovish moves by several central banks.

Major Currency Movers:

USD – The Greenback gained a couple of pips on the European currencies but lost to the comdolls after yesterday’s volatility.

EUR/USD slipped by 30 pips (-0.27%), GBP/USD inched 13 pips lower (-0.09%), and USD/CHF popped up by 29 pips (+0.30%).

JPY – The yen lost pips across the board on the back of overall risk-taking and the Nikkei taking a hit when the yen popped up during the ECB’s decision.

USD/JPY jumped by 45 pips (+0.40%), EUR/JPY inched another 15 pips higher (+0.12%), and GBP/JPY popped up by 51 pips (+0.32%).

Comdolls – The commodity-related currencies got a few pips in against their lower-yielding counterparts on the back of higher gold and oil prices as well as overall risk appetite.

AUD/USD popped up by 33 pips (+0.44%), USD/CAD dropped by 57 pips (-0.4%), NZD/USD inched up by 24 pips (+0.36%), and AUD/JPY rocketed by 62 pips (+0.74%).

Watch Out For:

  • 7:00 am GMT: German final CPI expected to remain at 0.4%
  • 7:00 am GMT: German wholesale prices expected to rise by 0.2% vs. 0.4% decline last month
  • 9:00 am GMT: Italian industrial production expected to rise by 0.9% vs. previous 0.7% dip
  • 9:30 am GMT: U.K. trade balance expected to show 10.3B GBP deficit vs. 9.9B deficit previous
  • 9:30 am GMT: U.K. construction output to drop by 1.3%?
  • 9:30 am GMT: U.K. consumer inflation expectations

See more:

U.S. Session Forex Recap

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