Asian Session Forex Recap – August 3, 2016

  • NZ labor cost index (q/q) remains at 0.4% in Q2 2016
  • U.K. BRC shop price index (y/y) declined by 1.6% in July vs. 2.0% dip in June
  • AU AIG services index shoots up from 51.3 to 53.9
  • NZ ANZ commodity prices up by 2.0% in July vs. 3.7% increase in June
  • China’s Caixin services PMI down from 52.7 to 51.7 in July vs. 52.9 reading expected

It was a tough trading session for the high-yielding currencies, as risk aversion dominated the forex trading scene. What were the major movers anyway?

Major Events:

Overall risk aversion – Asian equities clocked in its back-to-back losing day today, thanks to the yen rallying to its three-week highs following Shinzo Abe’s underwhelming stimulus measures. If you recall, Japan’s Prime Minister had just unveiled a 28 trillion JPY stimulus over the next couple of years, with 7.5T JPY of the plan dedicated to new government spending. Unfortunately, the figure might have already been priced in last week and have been labelled as inadequate in fighting off Japan’s deflation.

Of course, it also didn’t help that yesterday’s U.S. equities trading ended the day in the red.

BOJ meeting minutes – The Bank of Japan (BOJ) printed its JUNE meeting minutes, which showed that at least two board members questioned the central bank’s latest policies. One member asked for a reduction in the BOJ’s bond-buying activities, while another pointed out that the BOJ is switching its focus away from bond purchases to interest rates.

The release was mostly a non-mover though, mostly because the BOJ didn’t make any changes in June. Best keep your eyes glued to the tube when the JULY meeting minutes comes out!

Major Market Movers:

JPY – The yen lost a couple of pips on a bit of profit-taking, but soon went back to its bullish paths when as soon as risk aversion took hold in the markets.

EUR/JPY rose to a session high of 113.65 before settling down to 113.07, 11 pips (-0.10%) below its open price. Ditto for USD/JPY, which reached 101.37 before closing at 100.87 (a pip above its open price). Heck, even AUD/JPY shot up to 77.09 before ending the session at 76.66, 6 pips (-0.08%) below its open price.

USD – The Greenback also caught a couple of pips thanks to overall risk aversion in the markets.

EUR/USD is down by 9 pips (-0.08%) to 1.1214, GBP/USD is down by 27 pips (-0.20%) to 1.3320, and USD/CHF is up by 10 pips (+0.10%) to .9656.

Comdolls – Not even the upticks in commodity prices were enough to keep the comdoll bears away.

AUD/USD might be trading around its .7606 open price but USD/CAD shot up by 20 pips (+0.15%) to 1.3121 while NZD/USD dropped by 35 pips (-0.48%) to .7202.

Watch Out For:

  • 7:15 am GMT: Spanish services PMI (55.1 expected, 56.0 previous)
  • 7:45 am GMT: Italian services PMI (51.1 expected, 51.9 previous)
  • 7:50 am GMT: French final services PMI (expected to remain at 50.3)
  • 7:55 am GMT: German final services PMI (expected to remain at 54.6)
  • 8:00 am GMT: Euro Zone final services PMI (52.8 expected, 52.7 previous)
  • 9:30 am GMT: Kuroda scheduled to make a speech
  • 9:30 am GMT: U.K. services PMI (47.4 expected and previous)
  • 10:00 am GMT: Euro Zone retail sales 171K expected, 172K previous

See more:

U.S. Session Recap

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