Asian Session Forex Recap – Sept. 22, 2016

  • RBNZ keeps its rates steady at 2.0%
  • Japan’s markets out on Autumnal Equinox Day holiday
  • Philip Lowe makes first statement as RBA Governor

Risk appetite was the name of the game during the Asian session, as forex traders celebrated the Fed’s decision to sit on its hands for another month.

Major Events:

Post-FOMC party – After weeks of speculations, the markets can now breathe a sigh of relief and enjoy at least another month of low interest rates from the major central bankers. Though volatility is limited by Japanese traders enjoying a holiday, market players were generally in a risk-friendly move after the BOJ and Fed’s September statements.

RBNZ keeps its rates at 2.0% – As I mentioned in my U.S. session recap, the Reserve Bank of New Zealand (RBNZ) has decided to keep its policies steady in September. However, the central bank was more dovish than analysts had expected.

It pointed out that growth is still below long-term trends and that a strong currency is still weighing on its exports. This disappointed interest rate junkies who were expecting a somewhat hawkish statement following the recent green shoots in New Zealand’s economic releases.

Philip Lowe interview – The new Reserve Bank of Australia (RBA) Governor sure didn’t shy away from the spotlight! In his first stint as RBA head honcho, Philip Lowe pulled off a pretty hawkish interview in front of the House of Representatives Standing Committee on Economics.

For starters, he hinted that the RBA won’t be as obsessed over its inflation targets, saying that they “have not been what some have called ‘inflation nutters’,” as they’ve recognized that “some degree of variability in inflation from year to year is both inevitable and appropriate.” He also added that “a flexible medium-term target was the best way to deliver low and stable inflation in a way that contributes to our other broad responsibilities, including employment and preserving financial stability.

In addition to that, the RBA Chief sounded pretty peachy over the economy, believing that the drag of lower commodity prices on national income is coming to an end. Good to know!

Major Market Movers:

USD – The Fed’s decision to sit on its hands for another month cheered the markets, inspiring risk appetite in the markets and weighing on the low-yielding dollar.

USD/JPY is down by another 9 pips (-0.09%) to 100.39, EUR/USD is up by 6 pips (+0.05%) to 1.1194, and GBP/USD is up by 6 pips (+0.05%) to 1.3048.

NZD – The RBNZ’s surprisingly dovish remark weighed on the Kiwi during the Asian session.

NZD/USD is down by 20 pips (-0.27%) to .7335, NZD/JPY is down by 27 pips (-0.37%) to 73.64, and EUR/NZD is up by 51 pips (+0.34%) to 1.5262.

Watch Out For:

  • 8:00 am GMT: ECB’s economic bulletin
  • 8:30 am GMT: U.K.’s Financial Policy Committee quarterly statement. Keep an eye out for any signs of easier policies!
  • 10:00 am GMT: CBI industrial order expectations expected to remain at -5

See also:

U.S. Session Recap
London Session Recap

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