Asian Session Forex Recap – July 7, 2016

  • Australia’s AIG construction index rises from 46.7 to 53.2 in June
  • BOJ’s Kuroda talks about Japan’s inflation
  • Japan’s leading indicators remains at 100.0% vs. 100.1% growth expected
  • S&P downgrades Australia’s outlook from stable to negative

Forex trading was a mixed bag of nuts, as traders priced in the Fed’s cautious stance as well as some bearish news from the Asian economies. Here’s what’s up!

Major Events:

S&P downgrades Australia’s outlook – The biggest story of the hour is S&P downgrading Australia’s growth outlook from stable to negative.

The credit ratings agency kept Australia’s AAA rating but warned that the gridlock in politics is likely to hold up the strong fiscal policies that the Land Down Under needs to bring its budget in order. If you recall, a lack of majority in the latest election could make it harder for policymakers to address Australia’s government debts.

Kuroda’s testimony –Looks like it was Bank of Japan (BOJ) head honcho Haruhiko Kuroda’s turn to reassure the markets! In a speech before a branch managers’ meeting, he said that inflation is expected to remain at 0.0% or slightly negative for the time being but that the BOJ is ready and willing to extend its QQE program for as long as necessary to achieve the 2.0% inflation target.

Kuroda also refrained from directly talking about the Brexit vote, though he reassured that “Japan’s financial system is stable and financial conditions remain very accommodative.” The yen lost pips for a while before the lack of fireworks in his speeches eventually lured the yen bulls back into the markets.

Oil prices inch higher – Black Crack prices rose in the Asian session after the American Petroleum Institute (API) report reflected a bigger decline in inventories than analysts had expected.

Inventories fell by 6.7 million barrels in the week to July 1, which is more than the 2.3 million-barrel decline expected. Not surprisingly, U.S. crude oil is currently up by 0.36% to $47.60 while Brent crude also popped up by 0.29% to $48.94.

Major Market Movers:

AUD – The Aussie saw volatility spikes across the board after S&P downgraded Australia’s growth outlook.

AUD/USD hit a high of .7539 before falling back to the .7500 area, AUD/JPY is down by 19 pips (-0.25%), and AUD/NZD fell by 24 pips (-0.23%).

JPY – The yen lost some pips when Kuroda’s bearish inflation outlook hinted at more BOJ stimulus. The low-yielding currency went back up though, when the BOJ Governor refrained from jawboning and only supported the central bank’s current programs.

Watch Out For:

  • 7:00 am GMT: German industrial production (0.1% expected, 0.8% previous)
  • 7:45 am GMT: French trade deficit expected at 4.9B EUR vs. 5.2B EUR deficit in April
  • 8:00 am GMT: Switzerland’s currency reserves
  • 8:15 am GMT: Switzerland’s CPI (0.0% expected vs. 0.1% previous)
  • 8:30 am GMT: U.K. Halifax house price index (0.4% expected vs. 0.6% previous)
  • 9:30 am GMT: U.K. manufacturing production (-1.2% expected vs. 2.3% previous)
  • 9:30 am GMT: U.K. industrial production (-1.0% expected vs. 2.0% previous)

See more:

U.S. Session Forex Recap

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