Asian Session Forex Recap – Sept. 7, 2016

  • NZ manufacturing sales (q/q) up by 2.2% vs. 2.0% decline in Q1 2016
  • AU AIG construction index down from 51.6 to 46.6 in August
  • AU Q2 2016 GDP up by 0.5% vs. 0.6% expected, 1.0% previous
  • Japan’s leading indicators up from 99.2% to 100.0%

Thanks to a not-so-disappointing GDP report from Australia and a bit of ruckus among the yen crosses, the Aussie and yen ended the Asian forex trading session higher against their counterparts.

Major Events:

Australia’s Q2 2016 GDP – Today’s data showed the economy expanding by 0.5% in Q2 2016, lower than the expected 0.6% uptick and the first quarter’s downwardly revised 1.0% growth.

Still, the report marks the 21st consecutive quarter of growth and the 25th consecutive year without recession, the second longest in the developed world. The annualized figure also caught attention, as the 3.3% increase marks the fastest rate seen in four years. Good on ya, mate!

Details tell us that final consumption expenditure grew by 0.8% and contributed 0.6% to the GDP while government expenditure rose by a nice 1.9% and household spending also popped up by 0.4%. Net exports cut 0.2% from economic growth though, mostly thanks to rising imports and a slowdown in export growth. Overall not a bad picture for the Land Down Under though there are factors (such as government spending being a one-time booster) that need watching in the future.

JPY strength – Forex traders sold yen crosses like they were white clothes after Labor Day. One possible reason is an article by Sankei, Japan’s daily newspaper, saying that Bank of Japan (BOJ) members are divided between stimulus supporters and opposers. The article said that some support negative interest rates and prioritize government bond purchases while others aren’t fans of additional stimulus measures.

Another reason for the yen’s gains is more dollar weakness. If you recall, a set of disappointing reports from Uncle Sam further diminished chances of a Fed rate hike in September. USD/JPY traders may have triggered stop losses below 105.00 and caused widespread yen strength.

Major Market Movers:

JPY – Diminished Fed rate hike prospects is bad news for USD/JPY (and most yen crosses). This, along with a report on the BOJ members being divided over the direction of their policies sent yen pairs lower across the board.

USD/JPY is down by 63 pips (-0.55%) to 114.14, EUR/JPY is down by 58 pips (-0.57%) to 101.47, and GBP/JPY is down by 86 pips (-0.63%) to 136.11.

AUD – Worse-than-expected Australian GDP headline figures sent the Aussie lower, but the rosier details of the release enabled a bit of recovery for the high-yielding currency.

AUD/USD fell to .7651 before closing at .7672 (-0.16%) and EUR/AUD rose to 1.4684 before falling back down to 1.4667 (+0.18%). AUD/NZD and AUD/JPY didn’t show any mercy though, with the former falling by 36 pips (-0.35%) to 1.0329 and the latter sliding by 55 pips (-0.70%) to 77.83.

Watch Out For:

  • 6:00 am GMT: German industrial production (0.0% expected, 0.8% previous)
  • 6:45 am GMT: French trade balance (-3.7B EUR expected vs. -3.4B previous)
  • 7:00 am GMT: Switzerland’s foreign currency reserves
  • 7:30 am GMT: U.K. Halifax house price index (-0.3% expected, -1.0% previous)
  • 8:30 am GMT: U.K. manufacturing production (-0.4% expected, -0.3% previous)
  • 8:30 am GMT: U.K. industrial production (-0.3% expected, 0.1% previous)

See also:

U.S. Session Recap
London Session Recap

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