Asian Session Forex Recap – Apr. 1, 2016

  • Austraila’s AIG manufacturing index up to 58.1 vs. 53.5 in February
  • Japan’s manufacturing PMI unchanged at 49.1
  • Japan’s Tankan manufacturing PMI cut from 12 to 6 vs. 8 expected
  • Japan’s Tankan non-manufacturing PMI down from 25 to 22 vs. 24 expected
  • China’s official manufacturing PMI improves from 49.0 to 50.2
  • China’s non-manufacturing PMI up from 52.7 to 53.8
  • China’s Caixin manufacturing PMI up from 48.0 to 49.7

Risk aversion was the name of the game during the Asian session, as forex traders shrugged off China’s strong PMIs ahead of today’s NFP report.

Major Events:

China prints positive PMI numbers – The world’s second largest economy printed better-than-expected PMI reports today, with the official manufacturing PMI recovering to an expansionary reading of 50.2 from 49.0 and Caixin’s own PMI coming in at 49.7 (higher than last month’s 48.0 figure).

Even the non-manufacturing PMI exceeded expectations with its climb from 52.7 to 53.8. Investors took the numbers with a huge bucket of salt though, especially since concerns over the economy still continue to dominate the markets.

Weak Japanese PMIs – The last trading day of the week brought fresh pains to Japanese traders after the PMI reports revealed that sentiment among Japan’s largest manufacturers have dropped to their lowest levels since mid-2013 in Q1 2016. Not a good sign for the Bank of Japan (BOJ)’s fight against low inflation!

The non-manufacturing PMI also disappointed expectations while the official manufacturing PMI remained unchanged at a contractionary reading of 49.1.

Triple roundhouse kick for the comdolls – It was a bad day for high-yielding currencies like the comdolls after a bit of risk aversion in the equities markets translated to selling in the forex scene.

Of course, it also didn’t help that forex traders mostly ignored China’s better-than-expected PMI reports. The cherry on top of the bears’ sundae though, was a drop in oil prices following a surge in demand for the Greenback. Will today’s NFP report change the winds for the comdolls?

Major Currency Movers:

USD – The low-yielding Greenback took advantage of the overall risk aversion brought about by the bearish equities markets and uncertainty ahead of today’s monster NFP report.

EUR/USD dipped by 4 pips and GBP/USD dropped by 29 pips (-0.20%) while USD/CHF inched 9 pips lower.

JPY – Overall risk aversion boosted the yen across the board despite a bit of profit-taking before the Asian session break.

USD/JPY fell by 31 pips (-0.28%), EUR/JPY dropped by 40 pips (-0.30%), and GBP/JPY plummeted by 77 pips (-0.48%).

Comdolls – The Aussie, Loonie, and Kiwi failed to catch breaks against their lower-yielding counterparts, thanks to lower oil prices and forex traders shrugging off China’s better-than-expected PMI reports.

AUD/USD reached a session high of .7701 before closing at .7652, USD/CAD slipped to 1.2969 before closing at 1.3035, and NZD/USD popped up to .6936 before capping the session at .6898.

Watch Out For:

  • 6:00 am GMT: U.K. Nationwide house price index (0.5% expected vs. 0.3% previous)
  • 7:15 am GMT: Switzerland retail sales (0.5% expected vs. 0.2% previous)
  • 7:15 am GMT: Spain’s manufacturing PMI (53.8 expected vs. 54.1 previous)
  • 7:30 am GMT: Switzerland manufacturing PMI (51.3 expected vs. 51.6 previous)
  • 7:45 am GMT: Italy’s manufacturing PMI (52.6 expected vs. 52.2 previous)
  • 7:50 am GMT: France’s final manufacturing PMI expected to remain at 49.6
  • 7:55 am GMT: Germany’s final manufacturing PMI expected to remain at 50.4
  • 8:00 am GMT: Euro Zone’s final manufacturing PMI expected to remain at 51.4
  • 8:30 am GMT: U.K. manufacturing PMI (51.4 expected vs. 50.8 previous)
  • 9:00 am GMT: Euro Zone’s unemployment rate expected to remain at 10.3%

See more:

U.S. Session Forex Recap

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