Asian Session Forex Recap – Mar. 18, 2016

  • BOJ’s meeting minutes reveal 4 out of 9 members dissented from negative rates policy

Forex price action was as exciting as watching water boil, as a lack of catalysts kept the major currencies locked in tight ranges.

Major Events:

BOJ meeting minutes – The biggest story of the hour is the release of the Bank of Japan’s (BOJ) minutes from its January meeting. If you recall, this was the month when the central bank had decided to implement a negative interest rate policy (NIRP) for the first time in history.

The document revealed that BOJ Governor Kuroda and his gang were presented two options by their staff: more asset-buying or implement a negative interest rate policy. 5 out of 9 said “yay” to the option, citing that it would give them more policy tools to help combat a deflationary mindset.

Meanwhile, four board members doubted its impact and said “nay.” Apparently they were worried that it would communicate to the markets that the BOJ is running out of bullets.

More stimulus from China – The PBoC got some attention today for knocking down the USD/CNY midpoint fix from 6.4961 to 6.4628, 0.5% lower than yesterday’s fix, and injected another 110B CNY worth of 7-day reverse repos into the markets. Not much reaction from the major currencies though.

Slight risk appetite – With no major catalysts to price in, market players only had the slight rally in commodities to trade with. This translated to gains for most of the bourses save for Nikkei, which had the yen strength to worry about. Nikkei ended the first half of the day down by 1.45% while Shanghai was up 1.88%, Hang Seng was up 0.68%, and Australia’s ASX up by 0.37%.

Major Currency Movers:

JPY – The yen started the day with gains against its major counterparts before a slow day in the Nikkei and some rumors about the BOJ intervening inspired a V-track price action.

USD/JPY fell to a session low of 110.82 before settling back up to 111.37 while EUR/JPY dropped to 125.50 before climbing back to 125.99. Ditto for GBP/JPY, which slipped to 160.58 before rising to 161.07.

Comdolls – Commodity-related currencies snuck in some pips against the Greenback on slight rallies in commodities.

AUD/USD popped up to a high of .7680 before closing at .7646, USD/CAD stayed around its U.S. session highs, and NZDUSD reached .6874 before closing at .6837.

Watch Out For:

  • 3:00 am GMT: German PPI (expected at -0.2% vs. -0.7% previous)
  • 8:00 am GMT: BOE quarterly bulletin

See more:

U.S. Session Forex Recap

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