Asian Session Forex Recap – July 22, 2016

  • Japan’s flash manufacturing PMI clocks in at 49.0 vs. 48.3 expected, 48.1 previous
  • China’s MNI business indicator up from 54.5 to 55.5

Risk appetite took a step back, as yesterday’s mixed economic reports and updates caught up to the Asian session forex traders.

Major Events:

“Helicopter money” prospects shot down – Early in the Asian session there were rumors that the Japanese government was cooking up as much as 30 trillion JPY worth of stimulus to be presented to Shinzo Abe’s Cabinet in August. This is a step up from the 20 trillion JPY rumors that first circulated the markets earlier this week. Rationality prevailed though, and the yen eventually gained back its legs when no one from the government backed up today’s speculations.

Overall risk aversion – The lack of economic data today sent forex traders looking into yesterday’s reports. The ECB’s decision was almost a non-event, the U.K. printed weak consumption data, Uncle Sam clocked in mixed economic reports, and the U.S. equities ended the day in the red. Add to that the decreased prospects of helicopter money in Japan and you’ve got a cocktail of events that made it easy for risk-takers to take profits ahead of the weekend.

Market Movers:

JPY – The yen continued to feel the love from the forex bulls despite a remark from BOJ’s Kuroda shooting down the helicopter (pun intended) money theory yesterday.

USD/JPY popped up to a high of 106.28 before falling back down and closing only 4 pips (-0.04%) lower than its open price. EUR/JPY also closed at 116.71, 43 pips (-0.37%) below its session high, while AUD/USD fell by 49 pips (-0.62%) from its 79.64 high to 79.15

Comdolls – The low-yielding Greenback took advantage of the overall risk aversion and gained a few pips on its higher-yielding comdolls.

AUD/USD fell by 17 pips (-0.23%), USD/CAD popped up by 20 pips (+0.15%), while NZD/USD fell to a low of .6974 before ending the session only 2 pips (-0.03%) lower than its open price.

Watch out for:

  • 8:00 am GMT: French flash manufacturing PMI (48.1 expected, 48.3 previous)
  • 8:00 am GMT: French flash services PMI (49.6 expected, 49.9 previous)
  • 8:30 am GMT: German flash manufacturing PMI (53.6 expected, 54.5 previous)
  • 8:30 am GMT: German flash services PMI (53.3 expected, 53.7 previous)
  • 9:00 am GMT: Euro Zone flash manufacturing PMI (52.1 expected, 52.8 previous)
  • 9:00 am GMT: Euro Zone flash services PMI (52.3 expected, 52.8 previous)
  • 9:30 am GMT: U.K. manufacturing PMI (47.8 expected, 52.1 previous)
  • 9:30 am GMT: U.K. services PMI (48.9 expected, 52.3 previous)
  • 10:00 am GMT: Italian retail sales (0.2% expected, 0.1% previous)

See also:

U.S. Session Recap

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