Asian Session Forex Recap – Sept. 20, 2016

  • AU CB leading index rises by 0.4% vs. 0.3% previous
  • AU house price index (q/q) up by 2.0% vs. 3.1% growth expected, -0.2% previous
  • Meeting minutes confirms RBA’s neutral tone

Forex price action was as exciting as watching paint dry, as a lack of catalysts kept traders in the sidelines. Here’s what happened in the last few hours.

Major Events:

RBA meeting minutes – The Reserve Bank of Australia (RBA) is holding off from more rate cuts, and it’s not just because of the heating property market. In its meeting minutes, the central bank confirmed its slightly optimistic tone, saying that

“Taking into account the recent data, and having eased monetary policy at its May and August meetings, the Board judged the current stance of monetary policy was consistent with sustainable growth in the Australian economy and achieving the inflation target over time.”

The RBA seems to be less worried over the housing market than it was a few months back. Remember that one of the cons of lowering interest rates was that it would overheat the housing market.

Though average home prices and clearance rates have risen, the RBA chose to focus beyond the numbers. In the minutes, it said that “housing market conditions overall appeared to have eased since the previous year.” Last but not the least, the RBA posted its regular warnings against a strong currency, saying that “appreciating exchange rate could complicate the necessary adjustments in the economy.”

Overall the central bank is saying that it’s all good in the hood for now, but that they have enough room to cut rates further if necessary. Good to know.

Overall risk aversion – Risk appetite took hits today thanks to a mix of factors. First, the dollar gained back a few pips it had lost from the previous trading sessions. Then, oil prices gave back some of its gains after traders pushed them higher on the back of rebel attacks in Libya and Nigeria as well as optimism over the upcoming OPEC meeting.

Australia’s ASX is down by 0.05%, the Shanghai index is down by 0.27%, Hang Seng is down by 0.23%, and Nikkei is down by 0.16% despite the return of Japanese investors from a holiday. Meanwhile Brent crude oil is down by 0.33% to $45.80 and U.S. oil prices is down by 0.57% to $43.61.

Major Market Movers:

USD – The dollar gained pips across the board on the back of profit-taking from yesterday’s losses and a bit of risk aversion in the markets.

USD/JPY is up by 10 pips (+0.10%) to 101.93, EUR/USD is down by 9 pips (-0.08%) to 1.1170, and USD/CHF is up by 6 pips (+0.06%) to .9807.

AUD and NZD – A not-so-dovish RBA meeting minutes and expectations of the RBNZ keeping its rates steady this week pushed the high-yielding comdolls against the dollar despite the overall risk aversion vibe.

AUD/USD is up by 5 pips (+0.07%) to .7541 while NZD/USD is up by 22 pips (+0.30%) to .7319.

Watch Out For:

  • 5:45 am GMT: Swiss SECO economic forecasts
  • 6:00 am GMT: Swiss trade balance (3.27B CHF expected, 2.93B CHF previous)
  • 6:00 am GMT: German PPI (0.1% expected, 0.2% previous)

See also:

U.S. Session Recap
London Session Recap

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