Asian Session Forex Recap – June 16, 2016

  • AU unemployment rate remains at 5.7%
  • AU employment change up by 17.9K vs. 149.K expected, 0.8K previous
  • AU MI inflation expectations up by 3.5% in June vs. 3.2% in May
  • AU new motor vehicle sales down by 1.1% vs. 2.8% decline in April
  • BOJ keeps its monetary policies unchanged

Risk aversion dominated the Asian forex trading session, as the Fed’s less-hawkish-than-expected decision and Brexit concerns weighed on investor appetite.

Major Events:

BOC’s Poloz warns of choppy growth – On the heels of the Fed downgrading its growth forecasts, Bank of Canada (BOC) Governor Stephen Poloz appealed for patience over Canada’s choppy growth.

Poloz’ presser was a mixed bag of nuts. On one hand he talked of the Loonie weakness helping its exports and the impact of the fires in Alberta not turning out to be as bad as they initially thought. On the other hand, he also said that oil prices won’t likely rebound anytime soon despite its recent gains. This is bad news for Canada, as it’s one of the world’s largest oil producers.

Australia’s jobs data – Data from the Land Down Under showed that a net of 17,900 workers had found jobs in May (vs. 15,000 net gain expected) while the unemployment rate remained at 5.7% for the month. Overall the numbers suggest that industries such as construction, education, and tourism are doing a decent job at absorbing the job losses in the mining sector.

Aussie traders weren’t that impressed though. See, the gains in employment were boosted by part-time jobs while full-time employment remained steady after falling by a net of 27,300 in the past two months.

BOJ keeps its policies unchanged – As expected, Bank of Japan (BOJ) Governor Haruhiko Kuroda and his gang have decided to keep their policies unchanged in June. Interest rates remain at -0.1% while the annual target for their asset purchases stays at 80 trillion JPY.

Market players attribute the lack of change to the members still waiting for the impact of their contentious negative rate policy to take effect. Of course, it also doesn’t help that Japan will be holding an election next month.

Officially though, the BOJ is pointing to growth uncertainties over the major economies like China, Euro Zone, and the U.S., saying that it has affected Japan’s exports and production numbers. It also said that while the underlying inflation is steadily rising, its short-term inflation estimates have recently weakened.

Major Market Movers:

JPY – The lack of additional stimulus from the BOJ pushed the yen higher across the board.

USD/JPY was hit with a double whammy with both the Fed and the BOJ not making any changes this week. The pair dropped by a whopping 176 pips (-1.66%) while EUR/JPY declined by 174 pips (-1.46%) and GBP/JPY fell by another 263 pips (-1.75%).

Comdolls – The Aussie and the Loonie both lost pips on the back of Australia’s lacklustre employment data and further declines in oil prices. Meanwhile, the Kiwi got a small boost from New Zealand’s better-than-expected GDP report.

AUD/USD slipped by 16 pips (-0.22%), USD/CAD inched back to 1.2931 after falling to 1.2896, and NZD/USD shot up by 47 pips (+0.67%).

Watch Out For:

  • 6:30 am GMT: BOJ’s Kuroda to give a press conference
  • 6:45 am GMT: SECO economic forecasts
  • 8:30 am GMT: SNB monetary policy decision. Read Forex Gump’s trading guide to know what traders are expecting!
  • 9:00 am GMT: ECB economic bulletin
  • 9:30 am GMT: U.K. retail sales (0.3% expected vs. 1.3% previous)
  • 10:00 am GMT: Euro Zone final CPI expected to remain at -0.1%
  • 12:00 pm GMT: BOE monetary policy decision. No policy changes are expected, but keep close tabs on Carney’s speech during the U.S. session!

See more:

U.S. Session Forex Recap

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