Asian Session Forex Recap – July 27, 2016

  • AU quarterly CPI report rises by 0.4% as expected vs. -0.2% previous
  • AU annualized quarterly CPI up by 1.0% vs. 1.3% in Q1 2016
  • AU trimmed mean CPI up by 0.5% vs. 0.4% expected, 0.2% previous
  • Japan’s stimulus to reach 27 trillion JPY?

It was a topsy-turvy day for Asian session forex traders, as speculations on Japan’s new economic stimulus sent the yen (and other major currencies) all over the charts.

Major Events:

Australia’s inflation numbers – Consumer price data from the Land Down Under showed mixed numbers for Q2 2016. Not a good sign especially since CPI is one of the more closely-watched data by the RBA.

The headline CPI is in line with expectations at 0.4% and is higher than Q1 2016’s 0.2% decline. The annualized figure came in at 1.0%, higher than the 1.1% growth expected and 1.3% uptick in Q1 2016. It’s the “trimmed mean” or “core” numbers that the RBA is more interested in though. Quarterly growth hit 0.5% in Q2 2016, higher than the expected 0.4% uptick and 0.2% increase while the annualized figure remained at 1.7% against expectations of a 1.5% uptick.

The Aussie spiked higher at the release of the reports, but soon lost ground when analysts figured that the latest numbers don’t completely take August rate cut bets off the table. For one thing, the annualized “core” inflation is still at its lowest on record while the headline inflation remains near its 17-year lows.

Japan’s stimulus rumors – If you think that USD/JPY won’t see any volatility until the FOMC and BOJ statements, then you probably didn’t see the speculation train coming. Earlier today the yen spiked lower across the board when a report by Fuji TV hinted that PM Shinzo Abe could unleash as much as 27 trillion JPY in fiscal stimulus as well as issue 50-year bonds as part of the package.

USD/JPY popped up above the 106.00 handle before Japan’s Ministry of Finance denied considering using 50-year bonds. The denial sent USD/JPY back to the 105.50 levels. Abe is scheduled to give a speech on 1:20 pm local time, though it’s not quite clear if he will talk about the size and scope of the stimulus.

Major Market Movers:

JPY – The yen was all over the charts today, thanks to speculations over the size of Abe’s economic stimulus.

USD/JPY jumped to a session high of 106.57 before settling down to 105.99, 132 pips higher (+1.26%) than its open price. Ditto for EUR/JPY, which reached 117.15 before settling down with a 159-pip gain (+1.38%) to 116.57 and GBP/JPY, which shot up to 139.92 before finishing with a 164-pip gain (+1.19%) to 139.02.

AUD – The Aussie didn’t escape the forex trading seesaw, as it reversed its initial reaction to a relatively upbeat Australian inflation report.

AUD/USD popped up to .7566 before settling down with a 38-pip loss (-0.51%) at .7470, while AUD/JPY shot up to 79.57 before calming down to 79.20, 63 pips (+0.80%) above its session open price. Even AUD/NZD hit a high of 1.0726 before settling with an 8-pip gain (+0.08%) to 1.0641.

Watch Out For:

  • 7:00 am GMT: UBS consumption indicator
  • 7:00 am GMT: German import prices (0.6% expected, 0.9% previous)
  • 7:00 am GMT: GfK German consumer climate (9.9 expected, 10.1 previous)
  • 9:00 am GMT: Euro Zone’s private loans (y/y) (1.7% expected, 1.6% previous)
  • 9:30 am GMT: U.K. preliminary quarterly GDP (0.5% expected, 0.4% previous)
  • 9:30 am GMT: U.K. index of services (3m/3m) (0.3% expected, 0.5% previous)
  • 11:00 am GMT: U.K. CBI realized sales (2 expected, 4 previous)

See more:

U.S. Session Recap

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