Asian Session Forex Recap – June 9, 2016

  • RBNZ keeps rates at 2.25%
  • China’s markets closed for the Dragon Boat Festival
  • U.K.’s RICS house price balance up by 19% vs. 36% uptick expected, 39% previous
  • Japan’s core machinery orders down by 11.0% in April vs. 3.2% decline expected, 5.5% rise in March
  • China’s CPI (y/y): 2.0% vs. 2.3% expected and previous
  • China’s PPI (y/y): -2.8% vs. -3.1% expected, -3.4% previous

With China’s markets closed for a holiday, Asian session forex traders tracked Nikkei’s moves and the overall risk sentiment in the markets.

Major Events:

RBNZ keeps its rates at 2.25% – The Kiwi was the biggest winner during the trading session after the Reserve Bank of New Zealand (RBNZ) chose to keep its cash rates at 2.25% instead of cutting it by 25 basis points as some had expected.

RBNZ Governor Graeme Wheeler’s presser also helped, as he refrained from jawboning the New Zealand dollar (much) and generally hinted that the central bank isn’t in any rush to stimulate the economy some more.

Nikkei drops on overall risk aversion – The yen’s recent strength took its toll on Japan’s equities markets today with Nikkei falling by 0.75% as of writing. Aside from the impact of a strong domestic currency on Japan’s export-related businesses, analysts also point to cautiousness ahead of the Fed and BOJ events next week as the reason for the losses. The yen remained unfazed on its move higher across the board despite a slight jawboning by BOJ Deputy Governor Hiroshi Nakaso.

China’s CPI misses estimates – Consumer prices in the world’s second largest economy clocked in a 0.5% decline in May against a 0.2% dip in April. On an annualized basis, the CPI report showed a 2.0% growth compared to a year earlier, missing the estimated 2.3% increase.

Meanwhile, deflationary pressure for producer prices eased for the month, showing a 2.8% decline after April’s 3.4% downtick. Details reveal that the government’s investment as well as improving commodity prices helped bring down producer prices at its lowest rate since November 2014. Overall the numbers are just weak enough to keep the PBoC’s easing bias, but not weak enough to prompt another round of stimulus.

Major Market Movers:

NZD –The Kiwi gained the most pips during the Asian session as it got boosted by the RBNZ’s interest rate decision and then Wheeler’s not-so-dovish speech.

NZD/USD is up by 119 pips (+1.70%), NZD/JPY popped 97 pips (+1.29%) higher, AUD/NZD slid by 262 pips (-1.61%), and GBP/NZD plummeted by a whopping 350 pips (-1.69%).

JPY – Risk aversion made the yen unstoppable, as it gained pips despite a bit of jawboning from a BOJ official.

USD/JPY fell by another 43 pips (-0.40%), EUR/JPY slipped by 38 pips (-0.31%), and GBP/JPY dropped by 62 pips (-0.40%).

Watch Out For:

  • 6:30 am GMT: French final NFP (q/q) expected to remain at 0.2%
  • 6:45 am GMT: Switzerland’s unemployment rate expected to remain at 3.5%
  • 7:00 am GMT: German trade surplus to slip from 23.6B to 21.4B in April?
  • 8:00 am GMT: ECB’s Draghi to speak at the Brussels Economic Forum. Watch out for any signs of a dovish bias!
  • 9:00 am GMT: Italy’s quarterly unemployment rate (11.6% expected, 11.5% previous)
  • 9:30 am GMT: U.K. goods trade balance (-11.1B expected vs. -11.2B previous)

See more:

U.S. Session Forex Recap

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