Asian Session Forex Recap – August 16, 2016

  • RBA’s meeting minutes: Inflation expected to be low for some time
  • AU new motor vehicle sales down by 1.3% in July vs. 3.5% uptick in June

Risk-taking took a turn in the middle of the Asian session, as forex traders took profits ahead of this week’s top-tier reports.

Major Events:

RBA’s meeting minutes – The meeting minutes of the Reserve Bank of Australia (RBA) showed that the central bank’s rate cut earlier this month was all about the strong Aussie. According to the release, RBA members wanted to maintain downward pressure on the Australian dollar as there was a “reasonable likelihood of further stimulus by a number of the major central banks.” Looks like the race to debase is still on!

The minutes also repeated many of the RBA’s usual sentiments. These include a shaky outlook for labor market and inflation growth and optimism over the diminished risks of rising home prices. Overall the RBA is positive that a.) Inflation will remain low for some time b.) A strong AUD would complicate the transition from the mining boom and c.) There’s room for growth with low inflation.

Retracement in oil prices – Oil prices took a step back from yesterday’s gains. If you recall, the Black Crack zoomed higher on the possibility of productions caps being discussed in an informal OPEC meeting next month. Brent crude oil is down by 0.62% to $48.05 while U.S. crude is also down by 0.48% to $45.49.

U-turn for risk-taking – High-yielding currencies started the session on a strong note, as Asian session traders took their cues from new highs in the U.S. equities. Risk-taking took a step back though, thanks to profit-taking from record highs in China’s equities, USD/JPY breaking below the 101.00 mark, and profit-taking ahead of this week’s tier 1 reports.

Australia’s ASX is down by 0.10%, the Shanghai index is down by -1.14%, and Nikkei is down by 1.44%.

Major Market Movers:

JPY – A break below USD/JPY’s 101.00 mark hit a lot of stops and inspired yen strength across the board.

USD/JPY is down by 80 pips (-0.78%) to 100.48, EUR/JPY fell by 75 pips (-0.66%) to 112.49, and GBP/JPY dropped by 69 pips (-0.53%) to 129.68.

Comdolls – Commodity-related currencies managed to keep their gains despite today’s slip in commodity prices.

AUD/USD is up by 10 pips (+0.13%) to .7684, USD/CAD is down by 4 pips (-0.03%) to 1.2915, and NZD/USD is up by 19 pips (+0.26%) to .7229.

Watch Out For:

  • 8:30 am GMT: U.K. CPI (y/y) expected to remain at 0.5%
  • 8:30 am GMT: U.K. PPI (0.6% expected, 1.8% previous)
  • 8:30 am GMT: U.K. RPI (1.7% expected, 1.6% previous)
  • 8:30 am GMT: U.K. core CPI (1.3% expected, 1.4% previous)
  • 8:30 am GMT: U.K. house price index (y/y) (8.3% expected, 8.1% previous)
  • 9:00 am GMT: German ZEW economic sentiment (2.1 expected, -6.8 previous)
  • 9:00 am GMT: Euro Zone ZEW economic sentiment (-6.3 expected, -14.7 previous)
  • 9:00 am GMT: Euro Zone trade balance (23.2B EUR expected vs. 24.5B EUR previous)

See more:

U.S. Session Recap

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