Asian Session Forex Recap – July 21, 2016

  • Australia’s NAB quarterly business confidence data down from 4 to 2 in Q2 2016
  • New Zealand’s credit card spending up by 4.1% in June vs. 6.0% growth in May
  • Japan preparing 190B USD worth of stimulus?

Risk appetite was the name of the game during the Asian session, as details of Japan’s stimulus started circulating in the forex grapevine.

Major Events:

Japan’s 2 trillion JPY stimulus? – Earlier today Reuters cited its sources suggesting that Shinzo Abe’s latest economic package could be as big as 2 trillion JPY ($190B), with direct spending from local and national governments likely to add up to 3 trillion JPY.

If you recall, PM Abe has promised a new set of stimulus measures to help boost growth and inflation in Japan. The sources cited are expecting the package to expand further before Abe cabinet approves the measures on August 2.

The 2 trillion JPY figure is at the upper scale of the market’s expectations. The surprise helped push the Nikkei 0.68% higher to 16,794 while the low-yielding yen lost pips across the board.

Australia’s quarterly business survey – The Land Down Under received mixed news, as a quarterly business survey reflected weaker headline numbers than in Q1 2016. Digging deeper into the report, however, shows that the non-mining sector remains on track to recovery despite a slowdown in its pace. Overall, firms are still showing strong investment intentions for the next 12 months.

Oil price recovery – The Black Crack received a boost from an earlier report reflecting a decrease in Uncle Sam’s oil inventories. Brent crude oil is down by 0.42% to $47.37 while U.S. crude is also down by 0.35% to $45.91.

Market Movers:

JPY – The yen got slammed down across the board following rumors that Abe’s stimulus could be as large as 20 trillion JPY.

USD/JPY popped up to a high of 107.51 before settling down to 107.14, 14 pips (+0.13%) above its session open price. Ditto for EUR/JPY, which rose to 118.41 before ending the session with a 34-pip gain (+0.29%) to 118.22 and GBP/JPY, which popped up by 27 pips (+0.19%) to 141.62 after hitting a high of 141.42.

NZD – The Kiwi continued to feel the burn from the RBNZ’s dovish economic estimates. As I mentioned in my U.S. session recap, the central bank called for a lower local currency and hinted that further easing is on the table.

NZD/USD is down by 30 pips (-0.43%) to .6990 after dipping to a session low of .6954 while NZD/JPY dropped 23 pips lower (-0.31%) to 74.88 after reaching a 74.54 low.

USD – The low-yielding Greenback got collateral damage from the overall risk appetite during the Asian session.

EUR/USD rose by 19 pips (+0.17%) to 1.1037, GBP/USD inched 11 pips higher to 1.3222 (+0.08%), and USD/CHF fell by 26 pips (-0.26%) to .9846.

Watch out for:

  • 5:30 am GMT: Japan’s all industries activity index
  • 7:00 am GMT: Swiss trade balance (3.49B CHF expected vs. 3.78B CHF previous)
  • 9:30 am GMT: U.K. retail sales (-0.4% expected vs. 0.9% previous)
  • 9:30 am GMT: U.K. public sector borrowing (9.3B GBP expected vs. 9.1B GBP previous)
  • 12:45 pm GMT: ECB’s monetary policy decision followed by Draghi’s press conference at 1:30 pm GMT. Read Forex Gump’s trading guide if you’re trading the event!

See also:

U.S. Session Recap

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