Asian Session Forex Recap – July 13, 2016

  • Australia’s Westpac consumer sentiment down by 3.0% in July vs. 1.0% decline in June
  • Japan’s industrial production revised lower from -2.3% to -2.6% in May

A lack of major economic releases and a cooldown of “helicopter money” prospects for Japan weighed on risk sentiment today and knocked the higher-yielding currencies lower across the board.

Major Events:

Japan’s officials rule out helicopter money – Two Japanese officials became the Asian session’s party-poopers, as they basically nixed the idea of Abe employing “helicopter money” tactics to restore growth in Japan.

If you’ve just tuned in, you should know that Shinzo Abe and his party recently won the Upper House elections and the Japanese PM celebrated by hinting that a new stimulus package is in the works. He also recently met with former Fed Governor Ben Bernanke, who is known for flooding Uncle Sam’s markets with money to stimulate growth. Naturally, market players assumed that Abe’s plans include similar strategies.

Unfortunately, the option of using “helicopter money” may be as real as Santa, Bigfoot, and Donald Trump’s hair. A few hours ago Chief Cabinet Secretary Yoshihide Suga said that the government is NOT considering the option despite the rumors. Koichi Hamada, a key economic adviser to Abe, also downplayed the option, saying that the BOJ directly funding government spending would be a “very risky gamble.”

The statements, together with a bit of profit-taking ahead of China’s trade balance release, weighed on the overall risk sentiment and produced mixed results in the markets. Nikkei still ended the first half of the day 0.84% higher while Hang Seng is up by 0.29%, Australia’s ASX is up by 0.66%, and the Shanghai index is down by 0.30%.

Slip in oil prices – The Black Crack slipped (heh) across the board after a report by the American Petroleum Institute (API) reflected a surprise build-up in U.S. stocks last week. The API’s inventory rose by 2.2 million barrels in the week of July 8 against expectations of only a 3-million barrel increase.

Brent crude is down by 1.55% to $47.71 while U.S. crude oil is down by 1.41% to $46.14.

Major Market Movers:

JPY – The yen gained back some of the pips it lost earlier this week thanks to easing speculations of helicopter money coming into Japan.

USD/JPY is down by 69 pips (-0.66%), EUR/JPY is down by 70 pips (-0.60%), and AUD/JPY is down by 76 pips (-0.95%).

GBP – The pound extended its weekly gains, as more traders priced in an aggressive policy changes from the BOE this week. Word around the hood is that Mark Carney and his gang could cut their interest rates and possibly announce plans for more stimulus after Britain has voted to leave the EU.

GBP/USD rose by another 54 pips (+0.41%), EUR/GBP fell by another 30 pips (-0.36%), and GBP/AUD popped up by 127 pips (+0.73%).

Comdolls – A not-so-risk-friendly trading environment, jitters over China’s trade balance report, and a decline in oil prices pushed the commodity-related currencies against the Greenback.

AUD/USD is down by 23 pips (-0.30%), USD/CAD is up by 36 pips (+0.28%), and NZD/USD is down by 42 pips (-0.58%).

Watch Out For:

  • China’s trade numbers on tap in the late Asian session
  • 9:30 am GMT: BOE credit conditions survey
  • 10:00 am GMT: Euro Zone industrial production (-0.8% expected, 1.1% previous)

See more:

U.S. Session Forex Recap

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