Asian Session Forex Recap – May 12, 2016

  • Japan’s current account surplus rises to its highest since March 2007
  • Australia’s MI inflation expectations up by 3.2% vs. 3.6% growth in March
  • Japan’s bank lending pops up by 2.2% vs. 2.0% previous
  • Japan economy watchers’ sentiment index down from 45.4 to 43.5 vs. 44.9 expected

Forex price action was a mixed bag of nuts, as the dollar gained pips on the European currencies but lost to the comdoll gang. What’s up with that?!

Major Events:

Japan’s current account surplus – Japan’s current account report, a broad measure of trade, clocked in at 2.98 trillion JPY in March. This marks not only the 21st surplus in a row, but also the largest surplus in nine years.

A closer look points us to the 12.2% rise in exports, which underscores the importance of a weak currency for the export-dependent economy. It also helped that lower oil prices made imports cheaper and that there was a healthy return from the last fiscal year’s overseas investments.

Mixed corporate earnings reports – It’s earnings season and equities traders aren’t finding any good vibes so far. Growth concerns from the U.S. equities carried over to the Asian markets and weighed on overall appetite for risk. Luckily for the Nikkei traders, a weaker yen soon boosted the index higher in the charts.

Central bank intervention talks –Earlier today the Bank of Japan (BOJ) released its summary of opinions, which detailed the reasons why the central bank had kept its policies steady amid calls of more stimulus. Apparently, Kuroda and his gang thought it prudent to wait a couple more months to see the impact of their changes in March (remember the NIRP?). The BOJ didn’t miss a chance to jawbone though, as it also hinted that it would take “additional steps if necessary.”

The People’s Bank of China (PBoC) also made waves after it weakened the yuan by 0.2% today. The move prompted speculations of a currency intervention from the central bank and weighed on investor appetite for higher-yielding currencies like the Aussie and the Kiwi.

Major Market Movers:

JPY –The yen strengthened a bit at the release of Japan’s better-than-expected trade surplus, but soon backed off when talks of a possible BOJ intervention made market headlines.

USD/JPY is up by 37 pips (+0.34%), EUR/JPY is up by 43 pips (+0.35%), and GBP/JPY is up by 51 pips (+0.33%).

Watch Out For:

  • 6:00 am GMT: German wholesale price index (0.2% expected vs. 0.3% previous)
  • 6:45 am GMT: French final CPI expected to remain at 0.1%
  • 9:00 am GMT: Euro Zone industrial production (0.1% expected vs. -0.8% previous)
  • 11:00 am GMT: BOE monetary policy announcement. Read Forex Gump’s U.K. economy snapshot to get an idea on what to expect from the decision!

See more:

U.S. Session Forex Recap

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