Asian Session Forex Recap – June 1, 2016

  • Australia’s AIG manufacturing index down from 53.4 to 51.0 in May
  • Australia’s quarterly GDP clocks in a 1.1% growth vs. 0.6% expected, 0.7% previous
  • New Zealand terms of trade rose by 4.4% in Q1 vs. 1.0% uptick expected
  • China’s official manufacturing PMI remain at 50.1 vs. 50.0 expected
  • China’s official non-manufacturing PMI down from 53.5 to 53.1 in May
  • China’s Caixin manufacturing PMI down from 49.4 to 49.2 vs. 49.3 reading expected
  • Japan’s capital spending (q/y) up by 4.2% vs. 1.9% expected, 8.5% previous
  • Japan’s final manufacturing PMI adjusted from 47.6 to 47.7

With tons of economic reports rocking the boat, the major currencies were all over the place during the Asian forex trading session. Here are the major catalysts today!

Major Events:

Australia’s GDP release – Australia’s growth left its estimates eating dust after it showed a 1.1% rise in Q1 2016, higher than the upwardly revised estimates of 0.8% and Q4 2015’s 0.6% figure. This put the annualized growth to 3.1% vs. Q4’s 3.0% increase and the estimated 2.8% growth.

As expected, it was exports that dragged the overall growth higher. The strong exports growth contributed 1.0% (up from Q4’s 0.0% contribution) to the GDP while household final consumption expenditure gave 0.4% to the cause.

A tale of 2 PMIs – China’s official manufacturing PMI showed a slow and steady expansion at 50.1. The better-than-expected read was a welcome sight to investors who worried that the government’s stimulus efforts in Q1 2016 are petering out.

On the other side of the 50.0 PMI line, the Caixin reading (a privately-run survey) printed a gloomier picture and showed further contraction from 49.4 to 49.2. This underscored the challenges that the manufacturing sector is facing. This includes declines in new orders and new export orders. For now though, it looks like the market players are generally cautiously optimistic on the releases.

Abe delays sales tax hike – It’s official! Japan’s Prime Minister just hit the newswires with the news that he will be delaying the increase in Japan’s sales tax until 2019. If you recall, a tax hike from 8% to 10% was supposed to take place in April 2017.

While the popular move could increase Abe’s chances in the July election, it would also complicate his government’s plans to contain the economy’s debt and risk credit rating downgrades from ratings agencies. For now though, Abe is hopeful that the delay would help stimulate consumer spending and inflation. Let’s see how that goes!

Major Market Movers:

JPY – The yen traded on tight ranges against its counterparts for most of the session until Abe officially announced a sales tax hike delay.

USD/JPY fell by more than 50 pips to test the 110.00 levels while EUR/JPY dropped by more than 100 pips to test the 122.00 area. Ditto for GBP/JPY, which fell by around 70-80 pips during the session.

Comdolls – Australia’s strong GDP, New Zealand’s better-than-expected terms of trade report, and China’s relatively positive PMIs all contributed to a stronger trading session for the commodity-related currencies.

AUD/USD is up by 49 pips (+0.68%), USD/CAD slipped by 47 pips (-0.36%), and NZD/USD popped up by 25 pips (+0.37%).

Watch Out For:

  • 5:45 am GMT: Switzerland’s quarterly GDP (0.3% expected, 0.4% previous)
  • 6:00 am GMT: U.K. Nationwide HPI (0.3% expected vs. 0.2% previous)
  • 7:15 am GMT: Switzerland’s retail sales (-0.8% expected vs. -1.3% previous)
  • 7:15 am GMT: Spanish manufacturing PMI (54.2 expected, 54.7 previous)
  • 7:45 am GMT: Italian manufacturing PMI (53.5 expected, 53.9 previous)
  • 7:50 am GMT: French final manufacturing PMI expected to remain at 48.3
  • 7:55 am GMT: German final manufacturing PMI (52.5 expected, 52.4 previous)
  • 8:00 am GMT: Euro Zone final manufacturing PMI expected to remain at 51.5
  • 8:30 am GMT: U.K. manufacturing PMI (49.6 expected, 49.2 previous)
  • 8:30 am GMT: U.K. individual lending 5.3B expected, 9.3B previous
  • 8:30 am GMT: U.K. mortgage approvals (68K expected vs. 71K previous)

See more:

U.S. Session Forex Recap

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