Asian Session Forex Recap – June 28, 2016

  • Oil rebounds on potential labor strikes in Norway
  • Risk sentiment improves on the back of profit-taking
  • Comments from Japan’s officials weigh on the yen

Risk aversion took a step back during the Asian forex trading session, as supply threats in Norway boosted oil prices and fueled the profit-taking among the higher-yielding currencies.

Major Events:

More comments from Japan’s officials – Instead of the usual bazooka of strongly-worded comments hinting at a currency intervention, Prime Minster Shinzo Abe and his gang are choosing to spray bullets instead. Here are the sound bites from different government officials today:

PM Shinzo Abe: “…continuing to watch forex, stock moves as uncertainty remains in the markets…effect of Brexit on Japan’s economy may be felt in the medium to long-term.”

BOJ Governor Kuroda: “…central banks are ready to take steps to assist proper market functioning…”

Chief Cabinet Secretary Suga: “…government would continue to carefully watch currency markets, where “extremely nervous moves” are seen.”

Finance Minister Aso: “…watching currency moves with a sense of urgency and will take action as needed.”

Economy Minister Isahara: “Ensuring liquidity for SMEs could be important part of economic stimulus.”

Looks like the teamwork worked, as it helped calm the markets enough to bring Nikkei in the green and drag the yen slightly lower across the board.

Oil rebounds on supply threats – Brent and U.S. oil prices rose by at least 1% today thanks to the possibility of labor strikes in Norway. About 755 Norwegian workers on 7 oil and gas fields are threatening to go on a strike from Saturday, which could weigh on production for Western Europe’s biggest oil producer. Brent I sup by 1.42% at $48.45 while U.S. oil is up by 1.62% to $47.08.

Profit-taking in the works? – The high-yielding currencies saw a respite from heavy selling today. One possible reason is the lack of major economic catalyst though a bit of profit-taking might have also factored in. In any case, the European currencies as well as the comdolls all saw slight recoveries against their lower-yielding counterparts.

Major Market Movers:

USD – The Greenback took a hit on the back of profit-taking and a bit of risk appetite.

EUR/USD is up by 44 pips (+0.40%) and GBP/USD is up by a nice 80 pips (+0.61%). The comdolls also had a good day with AUD/USD rising by 37 pips (+0.50%), USD/CAD slipping by 63 pips (-0.48%), and NZD/USD rising by 38 pips (+0.54%).

JPY – Much like the dollar, the low-yielding yen also gave up pips amidst the overall risk appetite during the session.

USD/JPY inched 13 pips higher (+0.13%), EUR/JPY climbed by 34 pips (+0.30%), GBP/JPY shot up by 73 pips (+0.54%), and AUD/JPY rose by 31 pips (+0.41%).

Watch Out For:

  • Day 1 of the EU economic summit (No Yellen, Draghi, and Carney though!)
  • 7:00 am GMT: German import prices (0.6% expected, -0.1% previous)
  • 11:00 am GMT: CBI realized sales (9 expected vs. 7 previous)

See more:

U.S. Session Forex Recap

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