Asian Session Forex Recap – May 16, 2016

  • U.K. Rightmove house price index (0.4% vs. 1.3% previous)
  • Japan’s PPI (-4.2% vs. -3.7% expected vs. -3.8% previous)
  • PBoC adjusts yuan to its weakest since March 3
  • Abe to announce a delay in Japan’s sales tax hike?

Forex price action was a mixed bag of beans, as risk sentiment see-sawed all over the place during the Asian session. How did the major currencies perform?

Major Events:

China’s data dump – As I mentioned in my U.S. session recap, traders weren’t impressed by China’s weak industrial production, retail sales, and fixed asset investment releases.

The weak reports set the tone for a weak Asian session open and that was BEFORE the People’s Bank of China (PBoC) weakened the yuan against the dollar to its lowest since March 3. In addition, the central bank had also dropped an additional 45 billion CNY in 7-day reverse repos. Not a good sign for the world’s second largest economy!

Abe to delay Japan’s sales tax hike? – Risk appetite improved for most of the Asian bourses when the market bees started buzzing about Abe possibly delaying Japan’s sales tax hike. For trading newbies out there, you should know that Japan’s Prime Minister had originally scheduled the hike for April 2017.

Unfortunately for the sales tax hike critics, Chief Cabinet Secretary Yoshihide Suga quickly denied the rumors, saying that the option is “utterly groundless.” The announcement came too late for the bulls though, as it had already pushed Nikkei 1.20% higher before the session break.

Oil price jump – The Black Crack started the week on strong footing, thanks to speculations that the oil markets would rebalance sooner than initially thought. More specifically, supply disruptions in Nigeria, Venezuela, China, and the U.S. are expected to dramatically improve the commodity’s supply glut. Brent oil is 1.38% higher to $48.49 while U.S. oil is up by 1.34% to $46.83.

Major Market Movers:

JPY – The low-yielding yen got clobbered across the board thanks to a pickup in risk appetite. USD/JPY inched 13 pips higher (+0.12%) while EUR/JPY bounced from the 123.00 handle. Ditto for GBP/JPY, which jumped by around 50 pips throughout the session.

AUD – The high-yielding currency took advantage of a risk-friendly environment and shot higher across the board. AUD/USD rose by 33 pips (+0.46%), AUD/JPY is up by 69 pips (+0.88%), and EUR/AUD is down by 62 pips (-0.40%).

Watch Out For:

  • 6:00 am GMT: Japan’s preliminary machine tools orders (-21.2% previous)
  • Swiss, German, and French markets out on Whit Monday holiday

See more:

U.S. Session Forex Recap

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