Asian Session Forex Recap – June 2, 2016

  • Japan’s monetary base (y/y) rises by 25.5% vs. 27.5% uptick expected, 26.8% previous
  • Japan’s consumer confidence index up from 40.8 to 40.9 vs. 40.4 figure expected
  • Australia’s retail sales up by 0.2% vs. 0.3% growth expected, 0.4% uptick in March
  • Australia’s trade balance shows 1.58B deficit vs. 2.11B deficit expected, 1.97B deficit previous

Forex price action was a mixed bag of nuts, as Asian session traders priced in economic reports and cautiousness ahead of today’s top-tier events.

Major Events:

Australia’s data releases – The Aussie failed to sustain its bullish momentum despite the better-than-expected releases of Australia’s retail sales and trade balance reports. Retail sales inched 0.2% higher in April, a bit lower than March’s 0.4% uptick but higher than the expected 0.3% increase. Compared to a year earlier, the pace is unchanged at 3.6%.

Details reveal that the 0.3% decline in food retail, the largest component of the report, dragged the overall figures. This also underscored the disinflationary challenges that the RBA is facing. Luckily, sales in cafes, restaurants, and takeaway food services (+1.0), footwear and personal accessory retailing (+0.5%), and department stores (+0.4%) all showed upticks.

Meanwhile Australia’s trade deficit narrowed down for a fourth month in a row in April. The deficit clocked in at 1.58B AUD, lower than March’s 1.97B AUD deficit and marks the lowest deficit since January 2015.

Both exports and imports contributed to the deficit’s decline. The 0.6% rise in exports was led by the increase in rural service and goods exports while the 0.8% slip in imports was led by the decrease in imports of intermediate and capital goods. Overall it looks like the low AUD, growth in exports volumes, and more stable commodity prices have all aided in tightening Australia’s trade deficit.

Buy the rumor, sell the news? – The yen continued to gain pips against its major counterparts after Abe officially announced a sales tax hike delay. One possible reason is that traders are now selling the news after buying on rumors. Then again, it could also be that the economic uncertainty surrounding Abe’s delay has weighed on risk sentiment in the local markets and pushed the low-yielding yen higher.

All eyes on today’s top-tier events – The dollar continued to slip across the board today. While some are pointing to Uncle Sam’s mixed reports, others are looking at traders possibly squaring off their long dollar positions ahead of today’s events.

In case you’ve been too busy reading up on Amber Heard and Johnny Depp, you should know that in a few hours the European Central Bank (ECB) will release its monetary policy decision around the same time that the OPEC leaders are having their meeting over possibly implementing production caps. Keep close tabs on your charts and be vigilant in hunting for trade opportunities!

Major Market Movers:

JPY – The yen made new notable highs against its counterparts before the yen bears controlled their momentum.

USD/JPY hit a session low at 108.83 before closing at 109.17, EUR/JPY slipped to 121.98 before recovering to 122.34, and GBP/JPY hit the 157.00 mark before recovering to 157.67.

USD – The dollar had a mixed trading day, as it lost pips against its European counterparts but gained a couple against the comdolls.

EUR/USD inched 13 pips higher (+0.12%) and GBP/USD popped up by 30 pips (+0.21%) while AUD/USD slipped by 19 pips (-0.26%) and NZD/USD and USD/CAD traded near their open prices.

Watch Out For:

  • Italian markets out on National Day holiday
  • OPEC meetings start today. Wanna know why it’s a big deal? Read Forex Gump’s Primer!
  • 8:30 am GMT: U.K. construction PMI (51.9 expected vs. 52.0 previous)
  • 9:00 am GMT: Euro Zone PPI (0.1% expected vs. 0.3% previous)

See more:

U.S. Session Forex Recap

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