Asian Session Forex Recap – June 21, 2016

  • Australia’s CB leading index up by 0.5% vs. 0.1% uptick expected
  • BOJ’s meeting minutes warns of risks from overseas economies
  • RBA’s meeting minutes shows no rush to cut rates further
  • Australia’s quarterly house price index down by 0.2% vs. 0.8% increase expected, 0.2% uptick previous

Forex trading was a mixed bag of nuts during the Asian session, as the optimism from more anti-Brexit poll results got mixed it with cautiousness ahead of Yellen’s testimony.

Major Events:

BOJ meeting minutes – In its minutes release the Bank of Japan (BOJ) members reiterated the need to wait for the impact of their negative interest rate and asset purchases policies to take effect. If you recall, the BOJ had kept its policies steady last week despite threats of lower consumption, strong yen, and growth risks from its largest trading partners (e.g. China, U.S., Euro Zone).

The central bank members also cut their inflation forecasts. They pushed the timing for hitting their 2.0% CPI target by another six months to March 2018. However, they also remained confident that households and the corporate sector would continue to spend more and boost wages and inflation.

Overall the minutes communicated that the members are still chill with their current policies but are ready to fire their remaining bullets if needed. Check out Forex Gump’s central bank roundup to see what the other central banks decided on this month!

RBA meeting minutes – Much like in its policy statement, the Reserve Bank of Australia (RBA) hinted that it’s in no hurry to cut its rates further. Remember that back in May the central bank had surprisingly cut its rates by 0.25% on the back of low inflation.

It seems like low inflation is a sticky point with Glenn Stevens and his gang. In their meeting minutes they said that both their short and long-term estimates from market players “had remained below average.”

On the labor market, the RBA stated that employment growth has lost some momentum following a strong growth in late 2015. Last but not the least, the RBA warned against the recent strength of the Aussie, saying that it could “complicate” the adjustment of the economy to lower terms of trade.

Not all hope is lost though. The RBA lauded the pickup of growth in March while non-mining activities reflected stronger expansion than they expected. Overall the RBA seems content to stay on the sidelines until they see more data supporting a rate cut.

All eyes on Yellen’s testimony – The optimism from the release of fresh anti-Brexit poll results waned during the Asian session, likely due to Janet Yellen being scheduled for a speech during the U.S. session. The last time she went under the spotlight she shrugged off Uncle Sam’s weak employment data and boosted the Greenback with her cautious optimism. Will her testimony today and tomorrow lead to more gains for the Greenback this week?

Major Market Movers:

JPY – Whether it’s the extension of risk appetite from the U.S. session or the lack of currency intervention threats from the BOJ, the yen gave up pips after the BOJ’s meeting minutes release.

USD/JPY jumped by 23 pips (+0.22%), GBP/JPY inched 4 pips higher (+0.03%), and CHF/JPY rose by 40 pips (+0.37%).

AUD – The Aussie also had a good trading session on the back of overall risk appetite and the RBA’s meeting minute release.

AUD/USD is up by 21 pips (+0.28%), AUD/JPY is up by 38 pips (+0.49%), and AUD/NZD is up by 22 pips (+0.21%).

EUR – The euro surprisingly gained against most of its counterparts during the session. One possible reason is profit-taking ahead of the Brexit vote on Thursday. Hey, the euro would be affected by Britain’s exit too, right?

EUR/USD shot up by 26 pips (+0.23%), EUR/JPY rose by 55 pips (+0.47%), and EUR/GBP popped up by 34 pips (+0.44%).

Watch Out For:

  • 7:00 am GMT: Swiss trade balance (2.88B expected vs. 2.50B previous)
  • 9:30 am GMT: U.K. public sector borrowing (9.5B expected vs. 6.6B previous)
  • 10:00 am GMT: German ZEW economic sentiment (5.1 expected vs. 6.4 previous)
  • 10:00 am GMT: Euro Zone ZEW economic sentiment (15.3 expected vs. 16.8 previous)
  • 11:00 am GMT: U.K. CBI industrial order expectations (-10 expected vs. -8 previous)

See more:

U.S. Session Forex Recap

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