Asian Session Forex Recap – July 25, 2016

  • Japan’s trade balance shows 692.84B JPY surplus in June vs. 494.70B JPY expected
  • No fireworks from G20 weekend meeting in China

Asian session forex traders saw choppy price action today, thanks to a lack of economic reports and a bit of positioning for the days ahead.

Major Events:

Japan’s trade data – Trade reports released earlier showed Japan posting a trade surplus for the first half of the year, a first since the earthquakes and tsunami in 2011. The surplus clocked in at 1.81T JPY, much better than the 1.70T JPY deficit a year earlier.

The monthly figures painted a mixed picture though. The Land of the Rising Sun recorded a 694.84B JPY surplus in June, sharply higher than last year’s 60.90B JPY surplus and the expected 494.80B JPY figure. A quick look at the details tells us that the surplus is largely due to imports falling faster than exports.

Exports fell by 7.4% from a year earlier and recorded its NINTH consecutive monthly decline. Apparently, shipments of cars and steel took hits while food, medicine, and finished metal exports rebounded for the month. Meanwhile, imports fell by a whopping 18.8% from a year earlier, marking its 18TH consecutive monthly decline. Purchases fell for ALL import categories and from most of the country’s trading partners.

Explosion in Germany – Germany grabbed the headlines for another day, this time thanks to a Syrian national blowing himself up in a music festival in Ansbach, Germany. Local media outlets are reporting that the 27-year old man’s backpack contained screws and nails in an attempt to inflict further damage. The unnamed suspect killed only himself but injured at least 12 others. No details yet as to whether the explosion was a terrorist attack.

Mixed equities trading – Asian session traders initially took their cues from last Friday’s strong U.S. equities performance, but soon buckled under the wave of risk aversion. The explosion in Germany didn’t help, of course, but speculations of a hawkish FOMC statement later this week also outweighed optimism from the prospect of easier policies from the RBA, RBNZ, and the BOJ.

Major Market Movers:

JPY – Yen crosses started the day on strong footing, as speculations of more BOJ stimulus kept the yen bulls in the sidelines. The tides turned, however, when a bit of risk aversion got mixed in with speculations of a hawkish FOMC statement this week.

USD/JPY rose to an intraday high of 106.75 before closing at 106.28, only 3 pips higher (+0.03%) than its session open price. EUR/JPY also shot up to 116.97 before capping the session with a 6-pip loss (-0.05%), and GBP/JPY saw a weekend gap from 139.06 to 139.62 before closing with an 11-pip loss (-0.08%) to 139.51.

AUD – The Aussie got a bit of a boost at the start of the week despite speculations of further easing by the RBA.

AUD/USD is 8 pips higher (+0.12%) to .7474 while AUD/JPY is up by 9 pips (+0.11%) to 79.41 and AUD/NZD is up by 36 pips (+0.34%) to 1.0706.

Watch Out For:

  • 8:30 am GMT: RBNZ Governor Wheeler to give a speech
  • 9:00 am GMT: German IfO business climate
  • 11:00 am GMT: U.K. CBI industrial order expectations

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