Asian Session Forex Recap – August 11, 2016

  • Japan on Mountain Day bank holiday
  • AU MI inflation expectations up by 3.5% in July vs. 3.7% uptick in June
  • NZD rises despite RBNZ rate cut

A bank holiday in Japan and a lack of fresh catalysts spurred forex traders to extend yesterday’s market themes. Read on to see the major movers of the session.

Major Events:

Not many options left for the RBNZ? – As mentioned in the U.S. session recap, the Reserve Bank of New Zealand (RBNZ) just cut its rates down from 2.25% to 2.00% as market players had expected. Apparently, RBNZ Governor Wheeler and his gang didn’t like it one bit that their local currency is the belle of the forex ball with its relatively high interest rates.

Unfortunately, forex players still BOUGHT the Kiwi across the board despite the RBNZ’s new rates. Cold pizza is still pizza, right? In this case, NZD still has higher yields against its counterparts (though not as much as before).

Wheeler’s presser didn’t help either. Though he reiterated that there might be another rate cut on the table this year, he mostly just gave off vibes that the central bank has limited options to fight for a higher inflation. Duhn duhn duhn…

Overall risk aversion – With Japan’s markets on a bank holiday and with no fresh catalyst today, traders mostly extended yesterday’s price action. An oil stockpile buildup in the U.S. and a record high output from Saudi Arabia dragged oil prices lower today and inspired selloffs in other commodities. Meanwhile, a negative close for the U.S. equities helped extend the risk aversion beat.

Major Market Movers:

USD – The low-yielding dollar got back some of its pips following a risk-averse trading session.

EUR/USD is down by 23 pips (-0.21%) to 1.1170 from its 1.1192 session high, while USD/JPY is also up by 17 pips (+0.17%) to 101.46 and AUD/USD is down by 11 pips (-0.14%) to .7694.

NZD – New Zealand’s dollar lost some of its shine after shooting up as soon as the RBNZ announced its rate cut.

NZD/USD shot up to .7343 before ending the session 54 pips (+0.75%) higher to .7267 while NZD/JPY also rose to 74.33 before capping the session with a 69-pip gain (+0.95%) to 73.74.

Watch Out For:

  • 6:45 am GMT: French final CPI expected to remain at -0.4%
  • 8:00 am GMT: Italian trade balance to improve from 5.03B EUR?

See more:

U.S. Session Recap

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