Asian Session Forex Recap – June 13, 2016

  • Pro-Brexit polls weigh on GBP
  • Australia on Queen’s birthday holiday
  • Japan’s BSI manufacturing index down from -7.9 to -11.1 in Q2 2016
  • China’s industrial production (y/y) remains at 6.0% in May vs. 6.1% growth expected
  • China’s fixed asset investment (ytd/y) down from 10.5% to 9.6% vs. 10.5% growth expected
  • China’s retail sales (y/y) up by 10.0% vs. 10.1% expected and previous

Risk aversion was the name of the game during the Asian session, as forex traders priced in China’s not-so-awesome data dump and a couple of bearish reports over the weekend.

Major Events:

Brexit concerns continue to weigh on the pound – The British currency started the week on the red side of the charts after Brexit polls over the weekend highlighted the neck-and-neck fight between the “Leave” and “Remain” camps. Read Forex Gump’s update on just how much the Brexit issue has been affecting the pound!

An ORB poll was published on Friday and showed the Leave camp leading by 10 points ahead of the Remain camp. Then, last Saturday pollsters Opinium and YouGov brought their results to the table.

The Opinium poll for the Observer newspaper showed a 44-42 result in favor of the Remain camp while the YouGov poll for the Sunday Times newspaper showed support for Brexit with a tally of 43-42. Talk about being too close to call!

China’s data dump – Reports from the world’s second largest economy added to the pressure, as it mostly missed the market players’ expectations. Industrial production stagnated to a 6.0% growth against the 6.1% uptick expected and retail sales only grew by 10.0% from a year earlier when analysts had been expecting a 10.1% growth.

Meanwhile, fixed asset investment grew by 9.6% in the five months to the year, way lower than the previous and expected reading of 10.5%. Overall the reports suggest that business growth remains challenging despite the PBoC’s efforts to stimulate the economy.

Overall risk aversion – Aside from improved prospects for a Brexit and China’s weaker-than-expected reports, Asian session traders also priced in a bit of risk aversion over the shooting in Orlando, Florida where 50 people got killed. Add to that the jitters over the upcoming Fed and BOJ interest rate statements and we’ve got ourselves a cocktail of bearish reports that the bears couldn’t wait to drink up.

Nikkei is down a whopping 3.29%, Australia’s ASX 200 is down by 0.92%, The Shanghai index is down by 0.76%, and Hang Seng is down by 2.63%.

Major Market Movers:

USD and JPY – It was the low-yielding currencies that had the most to gain in the risk-averse environment.

USD/JPY is down by 94 pips (-0.88%), USD/CAD is up by 18 pips (-0.14%), and NZD/USD is down by 20 pips (-0.28%). Meanwhile, AUD/JPY is down by 70 pips (-0.89%) and NZD/JPY is down by 56 pips (-0.74%).

GBP – The pound started the week on a weak note thanks to weekend polls reflecting better chances of a Brexit.

GBP/USD is down by 46 pips (-0.32%), GBP/JPY is down by 177 pips (-1.16%), and EUR/GBP is up by 26 pips (-0.33%).

Watch Out For:

  • 8:00 am GMT: German BuBa President Weidmann to speak in a cash symposium in Frankfurt
  • 2:30 am GMT U.K. CB leading index

See more:

Check out Last Week’s Top Movers!

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