Asian Session Forex Recap – July 11, 2016

  • China’s annualized CPI slips from 2.0% to 1.9% as expected
  • Japan’s core machinery orders down by 1.4% vs. 3.1% expected, 11.0% decline previous
  • Australia’s home loans down by 1.0% in May vs. 1.9% slip expected, 1.4% uptick in April
  • BOJ to announce more stimulus?

Risk appetite was the name of the game during the Asian session as Asian session forex traders caught up to the NFP-related volatility from last week.

Major Events:

NFP-related optimism – Asian equities took its cues from last Friday’s U.S. session trading. If you recall, NFP data from Uncle Sam, the world’s largest economy, came in much better than expected for the month of June. Forex Gump has a more detailed account of the NFP report so read up if you want to know more about it!

Oil remains at 2-month lows – Fresh oversupply concerns trumped Khalid-al-Falih’s comments about the oil markets rebalancing. See, over the weekend the Saudi Arabia Oil Minister repeated his confidence over the oil oversupply “rebalancing.” Guess oil traders would need to see more proof than a couple of statements!

The Black Crack was the only loser among the major commodities with Brent oil falling by another 0.36% to $46.59 while U.S. oil also slipped by 0.48% to $45.19.

BOJ to announce more stimulus? – In case you missed it, Shinzo Abe and his gang are expected to win as much as 2/3 of the seats in the Upper House following last weekend’s elections. This is good news because the Prime Minister also gained majority in the Lower House and is expected to have an easier time pushing bills with both the Lower and Upper house in his team.

Is this why Japan’s market officials are now pushing for more stimulus? A few hours ago Chief Cabinet Secretary Yoshihide Suga said that the government is expected to discuss the content and timing of a package while other Nikkei reports are saying that Abe is set to order a stimulus package on July 12. Remember that the current plan under “Abenomics” involves a three-pronged approach of more BOJ stimulus, less government spending, and structural reforms. Watch the news wires closely for more updates on this one!

Major Market Movers:

JPY – The yen fell sharply across the board as soon as Japan’s officials hinted at more stimulus for the economy.

USD/JPY is 63 pips higher than its open price (+0.64%), EUR/JPY is up by 68 pips (+0.61%), and GBP/JPY is up by a nice 86 pips (+0.66%).

Comdolls– The high-yielding comdolls saw some gains after last Friday’s NFP report boosted risk sentiment.

AUD/USD had recovered from a low of .7541 to .7568 and USD/CAD slipped by 11 pips (-0.08%).

Watch Out For:

  • 7:00 am GMT: Japan’s preliminary machine tool orders (-24.7% previous)
  • 9:00 am GMT: Italian industrial production (0.1% expected, 0.5% previous)

See more:

Check out Last Week’s Top Movers!

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