Asian Session Forex Recap – May 26, 2016

  • G7 meetings in Japan starts today
  • AU private capital expenditure down by 5.2% in Q1 2016 vs. 3.2% decrease expected, 1.8% increase in Q4 2015

Forex price action was a mixed bag of nuts, as profit-taking got mixed in with a bit of risk appetite. Here’s what the traders are looking at.

Major Events:

Australia’s CAPEX report – The Aussie bears can now add the Australian capital expenditure report to the list of disappointing data this week. The headline figure showed a 5.2% decline in Q1 2016, missing expectations of a 3.5% decrease for the quarter.

Details reveal that the drop was led by a 7.9% decline in expenditure on building structures. Not all hope is lost though. The second estimate for spending in other industries for 2016/17 was revised 2.0% higher than the initial figure while the outlook for spending in the manufacturing sector was revised 13.9% higher than the initial estimates.

Fonterra maintains milk price forecasts – The world’s biggest dairy exporter released its less-than-expected forecasts of 4.25NZD/kg of milk solids for the season ending May 31, 2017 and maintained its 3.90 NZD/kg forecasts for this season.

Fonterra cited the “relatively high” exchange rate as well as demand risks in the global dairy markets as some of the reasons for the disappointing estimates. The move paved the way for the RBNZ to jawbone some more if not cut its rates further.

The Kiwi got smacked across the board before the government printed its annual budget release, where it estimated a gradual rise of the nation’s exports and forecasted a 2.6% GDP in 2016 and 3.2% growth in the fiscal year 2017/18.

Oil touches the $50 mark – Asian session forex traders extended the Black Crack’s rally following reports of less supply from the U.S. yesterday. Brent crude oil touched the $50 mark and is now trading with a 0.64% gain while U.S. oil is also 0.63% higher at $49.87.

Major Market Movers:

JPY – The low-yielding yen got a boost in early Asian session trading though there’s no practical explanation for the move.

In any case, USD/JPY is down by 41 pips (-0.37%), EUR/JPY is down by 15 pips (-0.12%), and GBP/JPY is down by 63 pips (-0.39%).

Comdolls – The commodity-related currencies could’ve had a mixed day if not for the market winds eventually blowing in their favor. The Aussie, for instance, turned around after traders saw the silver lining in Australia’s CAPEX report while the Kiwi bulls attacked as soon as the government printed its optimistic annual budget release.

AUD/USD recovered from a session low of .7163 to its .7210 close while NZD/USD also popped up from its .6697 low to trade at .6716. Meanwhile, USD/CAD, hit by stronger oil, just plain dropped by 42 pips (-0.32%).

Watch Out For:

  • 8:00 am GMT: Italy’s retail sales (0.2% expected vs. 0.3% previous)
  • 8:30 am GMT: U.K.’s second GDP estimate expected to remain at 0.4%
  • 8:30 am GMT: U.K. preliminary business investment (3.2% expected vs. -2.0% previous)
  • 8:30 am GMT: U.K. BBA mortgage approvals (44.8K expected vs. 45.1K previous)
  • 8:30 am GMT: U.K. index of services (0.6% expected vs. 0.7% previous)

See more:

U.S. Session Forex Recap

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