Asian Session Forex Recap – July 4, 2016

  • Japan’s monetary base slips from 25.5% to 25.4% in June
  • Australia’s MI inflation gauge up by 0.6% vs. 0.2% decline in May
  • Australia’s building approvals down by 5.2% in May vs. 3.6% drop expected, 3.3% increase in April
  • Australia’s ANZ job ads up by 0.5% in June vs. 2.2% increase in May

It was a good day to be a comdoll bull, as the currencies were boosted by increases in commodity prices. Here’s what’s up in the forex scene.

Major Events:

Hung Parliament in Australia? – The Aussie started the week with a downward weekend gap after last Saturday’s elections failed to form a majority government.

Back in early May Prime Minister Malcolm Turnbull advised the Governor-General to call for a double dissolution after the Senate failed to pass at least three key bills. The elections were held in July 2 and, with 78.7% of the votes counted and more to come tomorrow, no party has claimed the 76 seats required to reach a majority.

So far the Malcolm-led Liberal/National coalition has 67 seats while the Australian Labor Party has 71. Minor parties grabbed 5 seats while 7 spots have yet to be determined.

A hung Parliament (or even a weak majority) is bad news for Australia because market players are looking for strong, decisive policies regarding Australia’s ballooning public debt. Credit ratings agencies S&P and Fitch have already warned that Australia’s AAA rating could be in trouble if the elections continue to pose risks to Australia’s fiscal policies.

Australia’s data dump – As if the election drama wasn’t enough, the Land Down Under had also printed economic reports. The Melbourne Institute inflation gauge clocked in a 0.6% growth in June after seeing a 0.2% decline in May. This is good news for the RBA who’s closely tracking Australia’s inflation numbers.

The rest of the reports didn’t turn out as well as the inflation numbers did. Building approvals fell by a whopping 5.2% in May when traders were only expecting a 3.6% slip after April’s 3.3% increase. Meanwhile, the ANZ job ads showed a 0.5% pop, lower than the 2.2% growth in May.

Commodities rally – Whether it’s start-of-quarter buying or post-Brexit moves, the high-yielding commodities had a good Asian session trading. Gold prices extended its rally to a 4-day streak while silver popped up above $20 per ounce for the first time in almost two years and copper gained for a sixth day in a row. Heck, even oil prices gained across the board despite renewed oversupply concerns!

Major Market Movers:

AUD – The Aussie started the week on the wrong side of the charts before the overall risk appetite in the markets boosted the high-yielding currencies higher.

AUD/USD gapped lower from .7493 to .7450 before closing at .7489 while AUD/JPY gapped from 76.85 to 76.44 before reaching 76.94. Even AUD/NZD gapped down from 1.0459 to 1.0399 before popping back up to 1.0430.

Comdolls – A good day for commodities is a good day for the comdolls. Thanks to rallies in gold, oil, copper, and nickel prices, the Loonie and Kiwi also rose higher in the charts.

USD/CAD is down by 26 pips (-0.20%) and CAD/JPY is up by 29 pips. Meanwhile, NZD/USD is up by 14 pips (+20%) and NZD/JPY is up by 26 pips (+0.35%).

JPY – The risk-friendly environment took its toll on the low-yielding yen. USD/JPY is up by 16 pips (+0.16%), EUR/JPY is up by 15 pips (+0.13%), and GBP/JPY is up by a whopping 62 pips (+0.48%).

Watch Out For:

  • 8:00 am GMT: Spanish unemployment change (-99.3K expected, -119.8K previous)
  • 9:30 am GMT: Euro Zone Sentix investor confidence (8.1 expected vs. 9.9 previous)
  • 9:30 am GMT: U.K. construction PMI (50.6 expected, 51.2 previous)
  • 10:00 am GMT: Euro Zone PPI (0.3% expected, -0.3% previous)

See more:

Check out Last Week’s Top Movers!

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