Asian Session Forex Recap – August 15, 2016

  • U.K. Rightmove house price index down by 1.2% vs. 0.9% downtick in July
  • Japan’s preliminary GDP (q/q) flat vs. 0.2% expected, 0.5% previous
  • Japan’s GDP price index (y/y) up by 08% vs. 0.7% expected, 0.9% previous
  • Japan’s industrial production revised higher from 1.9% to 2.3%

High-yielding currencies took a step back during the Asian forex trading session, thanks to tight trading conditions and mixed risk sentiment.

Major Events:

Japan’s GDP numbersJapan’s GDP came in at 0.0% for the June quarter, weaker than the 0.2% growth expected and Q1 2016’s 0.5% expansion. On an annualized basis, the economy advanced by 0.2%, way slower than the previous quarter’s 2.0% increase and the expected 0.7% growth.

Details reveal that private consumption, which makes up 60% of the GDP, slowed from 0.6% to 0.2%. Meanwhile, external demand took off 0.3% off the GDP with exports falling by 1.5% (from 0.1% in the previous quarter) and imports shrinking by 0.1% (from -0.5% in Q1 2016).

Though the figures still pointed to growth for the world’s third largest economy, it still increased pressure for the Bank of Japan (BOJ) and Prime Minister Shinzo Abe to step up their stimulus efforts to achieve their growth and inflation targets.

Mixed risk sentiment – China’s equities hit a seven-month high today, as expectations of more stimulus from the People’s Bank of China (PBoC) inspired investors to take risks. It might have also helped that commodity prices inched higher and extended last week’s uptrends. The only party pooper was Japan’s weaker-than-expected GDP report, which didn’t bode well for global economic growth.

Major Market Movers:

JPY – The low-yielding yen got knocked down by a couple of pips on the back of risk appetite and Japan’s weak GDP numbers.

USD/JPY inched 21 pips (+0.21%) higher to 101.35 and GBP/JPY popped up by 14 pips (+0.11%) to 130.95.

Comdolls – Higher commodity prices could have boosted the commodity-related currencies during the session, but concerns for China and Japan, the world’s second and third largest economies, put a dent on risk-taking.

AUD/USD is down by 10 pips (-0.13%) to .7650, USD/CAD rose by 10 pips (+0.08%) to 1.2964, and NZD/USD fell by 12 pips (-0.17%) to .7176.

Watch Out For:

  • France and Italy on Assumption Day bank holiday
  • 7:15 am GMT: Switzerland PPI (-0.2% expected, 0.1% previous)

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