Asian Session Forex Recap – Sept. 6, 2016

  • U.K. BRC retail sales monitor (y/y) down by 0.9% vs. 1.1% growth in July
  • AU current account deficit at 15.5B AUD vs. 20.2B AUD expected, 14.9B AUD previous
  • RBA maintains its rates at 1.50% in August

The Aussie was the biggest winner during the Asian session, as overall risk appetite got mixed in with a not-so-dovish RBA policy decision.

Major Events:

AUD’s pre-RBA shenanigans – Australia’s domestic currency gained pips across the board even BEFORE the RBA printed its monetary policy decision. Overall risk appetite might have helped, though Australia’s current account report didn’t hurt either.

The release showed a deficit of 15.5B AUD in Q2 2016, higher than Q1 2016’s 14.9B figure. A quick look, however, shows that Q1 2016’s reading was revised sharply lower, from 20.8B AUD to 14.9B AUD, while Q2 2016’s deficit is still better than the 20B AUD figure that market players had expected.

RBA’s monetary policy decision – The Reserve Bank of Australia (RBA) fired the first salvo this month, as it decided to keep its rates steady at a record low of 1.50% for another month. In fact, the central bank all but copy-pasted the previous month’s decision and only added a bit of reference to the latest rate cut. More importantly, Glenn Stevens and his team refrained from giving out any clues as to when it would cut its rates next. The lack of hints of further rate cuts allowed Aussie bulls to continue muscling their way higher in the charts.

Hamada’s comments – Koichi Hamada, advisor to Prime Minister Shinzo Abe, made waves in the forex scene when he suggested that the Bank of Japan (BOJ) should wait for the Fed’s September announcement before making any changes themselves.

In a Bloomberg article, Hamada was quoted saying that the “Fed deciding to raise its rates would do more to weaken the yen than anything the BOJ would do.” Does this mean that he’s expecting the Fed to raise its rates this month? Or that he knows the BOJ is cooking up something that would be released soon? In any case, the yen ended up falling across the board at the prospect.

Rally in oil prices
– Hope sure springs eternal for oil traders! There were no new updates regarding the oil summit coming up this month, but optimism over some sort of deal between the world’s largest oil producers continued to buoy Black Crack prices during the Asian session. Of course, overall risk appetite didn’t hurt either.

Major Market Movers:

AUD – Better-than-expected Australian data and a not-so-dovish RBA decision boosted the Aussie across the board.

AUD/USD is up by 48 pips (+0.63%) to .7633, AUD/JPY is up by 56 pips (+0.71%) to 79.02, and EUR/AUD is down by 84 pips (-0.57%) to 1.4612.

JPY – Whether it’s overall risk appetite or Hamada’s comments over a possible Fed rate hike dragged the yen lower against its major counterparts.

USD/JPY inched 7 pips higher (+0.07%) to 103.54, EUR/JPY is up by 15 pips (+0.13%) to 115.47, and GBP/JPY is up by 29 pips (+0.21%) to 137.90.

Watch Out For:

  • 5:45 am GMT: Swiss quarterly GDP (0.2% expected, 0.1% previous)
  • 6:00 am GMT: German factory orders (0.5% expected, 0.4 previous)
  • 7:15 am GMT: Swiss monthly CPI (-0.1% expected, -0.4% previous)
  • 8:10 am GMT: Euro Zone retail PMI (48.9 previous)
  • 9:00 am GMT: Euro Zone revised GDP expected to remain at 0.3%

See also:

U.S. Session Recap

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