Asian Session Forex Recap – June 29, 2016

  • Japan’s retail sales down by 1.9% in May vs. 1.6% decline expected, 0.9% slip in April
  • Australia HIA new home sales down by 4.4% in May vs. 4.7% decline in April
  • Japan’s small business confidence up from 45.6 to 46.5 vs. 46.0 expected

Forex trading was a mixed bag of nuts, as traders take profits and wait for the next catalyst for the major currencies.

Major Events:

Overall risk appetite – Thanks to a lack of major economic releases, Asian session forex traders simply tracked the gains in equities during the U.S. session. If you recall, sentiment for risk had improved as market players got more confident on the authorities’ responses to Brexit.

It also didn’t hurt that oil prices continued to climb on concerns that workers in Norway could organize a strike and affect production from the North Sea’s largest oil producer. The American Petroleum Institute (API) report printed during the U.S. session also reflected lower inventories, which helped push Black Crack prices higher.

Japan’s retail sales data + BOJ meeting
– The yen remained resilient despite the risk-friendly environment and a weaker-than-expected retail sales release from Japan. The report revealed a 1.9% decline in May from a year earlier, faster than the 1.6% slip expected for the month. It also marks the third consecutive month of annualized declines for the report.

For forex newbies out there, you should know that this is bad news for the Bank of Japan (BOJ), which has all but thrown the kitchen sink at the economy to boost consumer prices. The latest retail sales report underscores the reluctance of consumers to loosen their purse strings amidst Japan’s uncertain economic conditions.

Meanwhile it was PM Shinzo Abe’s turn to deliver the daily dose of assurances for the markets. Fresh from a meeting with the BOJ Abe repeated that the BOJ has enough funds to secure liquidity and that he and his team are ready to use “all available policy measures” to support the economy.

Major Market Movers:

JPY – The yen continued to climb across the board despite the overall risk appetite and more reassurances from Japan’s officials.

USD/JPY is down 35 pips (-0.34%), EUR/JPY is down by 49 pips (-0.43%), and GBP/JPY is down by 67 pips (-0.49%).

Comdolls – High-yielding currencies like the comdolls took advantage of the overall risk appetite and increases in commodity prices.

AUD/USD is up by 22 pips (+0.29%), USD/CAD is down by 20 pips (-0.15%), and NZD/USD is up by 38 pips (+0.54%).

Watch Out For:

  • Italy on a bank holiday
  • 7:00 am GMT: Swiss UBS consumption indicator
  • 7:00 am GMT: GfK German consumer climate expected to remain at 9.8
  • 7:00 am GMT: U.K. Nationwide HPI (0.1% expected vs. 0.2% previous)
  • 9:30 am GMT: U.K. net consumer credit (1.5B expected vs. 1.3B previous)
  • 9:30 am GMT: U.K. mortgage approvals (65.3K expected vs. 66.3K previous)

See more:

U.S. Session Forex Recap

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