Asian Session Forex Recap – June 7, 2016

  • U.K. BRC retail sales monitor (y/y) up by 0.5% vs. 0.9% dip in May
  • Australia’s AIG construction index down from 50.8 to 46.7
  • RBA keeps its interest rates at 1.75%

Gains, gains everywhere for the Aussie and the pound! Thanks to a not-so-dovish RBA and an anti-Brexit poll, the two currencies had a good forex trading session.

Major Events:

RBA keeps its rates at 1.75% – As expected, the Reserve Bank of Australia (RBA) kept its interest rates steady at 1.75% after cutting it by 25 basis points last month. What market players didn’t expect was the central bank’s not-so-dovish tone.

In the final paragraph of its statement the RBA emphasized that “holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and inflation returning to target over time.” For forex newbies, this suggests that the RBA is satisfied enough to expect to reach its targets with its current set of policies. Take that, rate cut junkies!

Overall the central bank is happy that the overall growth is continuing despite a “very large” decline in business investment. Low rates are supporting domestic demand and a low exchange rate is helping the trading sector.

Regarding inflation, the RBA said that it’s currently “quite low” and is expected to remain so for some time thanks to weak labor costs and low global cost pressures.

New Brexit poll boosts GBP – In the latest episode of the Brexit saga, a YouGov poll released in the late U.S. session trading showed that the “remain” camp has a one-point lead over the “leave” camp. 43% of its respondents voted for the U.K. to remain in the EU while 42% supported a Brexit.

The one-point lead in one poll might not be much in the greater scheme of things, but the idea was enough to energize the pound bulls today. If you recall, the U.K.’s currency lost pips across the board after the weekend polls published more support for a Brexit. And why not? Market players uncertainty, after all. Just ask Mark Carney.

Major Market Movers:

AUD – The Aussie popped up against its major counterparts after a less dovish-than-expected policy decision from the RBA.

AUD/USD rocketed by 53 pips (+0.72%), AUD/JPY shot up by 66 pips (+0.83%), AUD/NZD rose by 82 pips (+0.77%), and EUR/NZD fell by a whopping 119 pips (+0.77%).

GBP – The pound also had a good trading session following the release of an anti-Brexit poll.

GBP/USD spiked higher to 1.4663 before settling down to 1.4525, GBP/JPY rose to 157.88 before closing at 156.43, and EUR/GBP fell to a low of .7760 before rising to .7819.

Watch Out For:

  • 7:00 am GMT: German industrial production (0.8% expected vs. -1.3% previous)
  • 7:45 am GMT: French government budget balance and France’s trade balance
  • 8:00 am GMT: Switzerland’s foreign currency reserves. Look closely to see if the SNB had intervened in the currency markets!
  • 8:30 am GMT: U.K. Halifax HPI (0.3% expected vs. -0.8% previous)
  • 10:00 am GMT: Euro Zone revised GDP expected to remain at 0.5%

See more:

U.S. Session Forex Recap

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