Asian Session Forex Recap – May 17, 2016

  • RBA meeting minutes show reluctance to cut for some members
  • AU new motor vehicle sales down by 2.5% in April vs. 2.2% uptick in March
  • New Zealand’s quarterly inflation expectation remains at 1.6% for Q2 2016
  • Japan’s revised industrial production up by 3.8% vs. 3.6% expected and previous

The pound and the comdolls had a good forex trading session, thanks to a less-dovish-than-expected RBA minutes and expectations of a strong U.K. CPI report.

Major Events:

RBA discussed keeping rates on hold – The biggest story of the hour was the Reserve Bank of Australia (RBA) meeting minutes, which revealed that the RBA members had discussed keeping their rates at 2.00%. If you recall, the central bank had recently cut its rates to a record low of 1.75%.

The meeting minutes showed some members had discussed leaving the rates steady but eventually decided that a rate cut would help return inflation to the central bank’s targets. Apparently, the soft prices and labor costs signalled less momentum in inflationary pressures and gave the central bank room to cut its rates.

The RBA also noted no material changes to its growth forecasts, adding that the economy continues to rebalance away from the mining sector. On the Aussie’s strength, the RBA noted that currency’s weakness since 2013 had been helping and that a rising Aussie could complicate its effects.

Overall risk appetite – With no other major report on tap, Asian session forex traders took their cues from the strong Wall Street close and the rise in oil prices.

The optimism was enough to propel Australia’s ASX 0.53% higher, the Hang Seng to rise by 0.28%, and the Nikkei to rise 0.76% higher. Meanwhile, Brent crude rose by another 0.43% to $49.17 while U.S. oil clocked in another 0.92% gain to $48.16.

U.K. inflation numbers on tap – The British pound found bids a few hours into the session, partly due to more anti-Brexit survey results popping up. Of course, it might have also helped that the U.K. is about to print its CPI report in a few hours. Market players are expecting a 0.50% growth in April, similar to its uptick in March. Watch your GBP trades closely, folks!

Major Market Movers:

AUD – Not surprisingly, the Aussie bulls took advantage of the RBA’s surprisingly less dovish meeting minutes.

AUD/USD is up by 61 pips (+0.84%), AUD/JPY is up by 67 pips (+0.84%), and EUR/AUD is down by a whopping 139 pips (-0.90%).

GBP – The pound extended its U.S. trading session gains and clocked in more pips against its counterparts ahead of the U.K. CPI release.

GBP/USD shot up by 85 pips (+0.59%), GBP/JPY is up by 97 pips (+0.62%), and EUR/GBP is down by 49 pips (-0.62%).

Watch Out For:

  • 7:15 am GMT: Switzerland’s PPI (0.1% expected vs. 0.0% previous)
  • 8:00 am GMT: Italy’s trade balance data (4.21B EUR expected vs. 3.86B EUR previous)
  • 8:30 am GMT: U.K. CPI expected to remain at 0.5% in April
  • 8:30 am GMT: U.K. PPI input, RPI, and core CPI generally expected to maintain last month’s figures
  • 9:00 am GMT: Euro Zone trade balance 23.1B EUR expected vs. 20.2B EUR previous
  • 10:00 am GMT: Germany’s Bundesbank monthly report

See more:

U.S. Session Forex Recap

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