Asian Session Forex Recap – Sept. 5, 2016

  • U.K. BRC shop price index (y/y) down by 2.0% in August vs. 1.6% decline in July
  • Japan’s average cash earnings (y/y) up by 1.4% vs. 0.5% expected, 1.4% previous
  • AU AIG services index down from 53.9 to 45.0 in August
  • AU MI inflation gauge up by 0.2% vs. 0.3% decline in July
  • AU company operating profits (q/q) rises by 6.9% vs. 2.1% expected, -4.4% previous
  • AU ANZ job ads up by 1.8% vs. 0.8% decrease in July
  • NZ ANZ commodity prices up by 3.2% vs. 2.1% previous
  • China’s Caixin services PMI up from 51.7 to 52.1
  • Kuroda’s remarks boost the yen

Dollar weakness was the name of the game during the Asian trading session, as forex traders priced in dwindling chances of a Fed rate hike in September.

Major Events:

Post-NFP party – The VMAs stars aren’t the only ones who know how to do after-parties! Thanks to a not-so-stellar NFP report last Friday, market players are now thinking that the Fed won’t be as excited to raise its rates as they initially estimated.

Instead, all eyes will now be on the December meeting to see if the Fed will end the year with a bang. Not surprisingly, Asian session forex traders took their turn at selling the dollar like it’s going out of style. Read Forex Gump’s recap if you missed the monster event!

Australia’s data dump – Data from the Land Down Under came in mostly better-than-expected, with the inflation gauge higher at 0.2% against the 0.3% decline in July. Even the quarterly corporate profits surprised to the upside with a 6.9% rise when analysts had only been expecting a 2.1% increase. The cherry on top of the reports though, is a stronger-than-expected Chinese Caixin services PMI report (up from 51.7 to 52.1 in August).

Remarks from BOJ Chief Kuroda – Bank of Japan (BOJ) head honcho Haruhiko Kuroda hit the newswires today as he talked about monetary policy in Tokyo. He jawboned a bit in his speech, saying that the benefits of pushing for a 2.0% inflation is greater than its cost. Not only that, but he also hinted that conducting a “comprehensive review” of the central bank’s policies this month don’t necessarily translate to scaling down of the BOJ’s stimulus programs.

While Kuroda was busy defending the BOJ’s stimulus efforts, Japanese PM Shinzo Abe inadvertently pushed the yen higher by hinting that downside risks to Japan’s economy have increased. Though there was no direct quote from Abe, a Reuters report cited a senior government spokesman allegedly shared the helpful tidbit. Poor Kuroda.

Major Market Movers:

USD – Dollar bears continued to party today after the NFP report diminished the chances of a September rate hike by the Fed.

EUR/USD is up by 9 pips (+0.08%) to 1.1168, GBP/USD is up by 15 pips (+0.11%) to 1.3313, and USD/CHF is down by 15 pips (-0.15%) to .9793.

JPY – Kuroda’s jawboning might have worked if Abe had not spooked investors by hinting that downside risks have increased. Dollar sellers didn’t help, as they put more downside pressure on USD/JPY and other yen crosses.

USD/JPY is down by 44 pips (-0.42%) to 103.69, GBP/JPY is down by 44 pips (-0.32%) to 138.02, and EUR/JPY is down by 41 pips (-0.35%) to 115.76.

Watch Out For:

  • 7:15 am GMT: Spanish services PMI (55.1 expected, 54.1 previous)
  • 7:45 am GMT: Italian services PMI (51.8 expected, 52.0 previous)
  • 7:50 am GMT: French final services PMI expected to remain at 52.0
  • 7:55 am GMT: German final services PMI expected to remain at 53.0
  • 8:00 am GMT: Euro Zone final services PMI expected to remain at 52.1
  • 8:30 am GMT: Euro Zone Sentix investor confidence (5.1 expected, 4.2 previous)
  • 8:30 am GMT: U.K. services PMI (49.1 expected, 47.4 previous)
  • 9:00 am GMT: Euro Zone retail sales (0.5% expected, 0.0% previous)

See more:

Check out Last Week’s Top Movers!

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