Asian Session Forex Recap – Sept. 30, 2016

  • Japan’s household spending (y/y) slips by 4.6% vs. -2.1% expected, -0.5% previous
  • Japan’s unemployment rate (y/y) inches up from 3.0% to 3.1% in August
  • Japan’s national core CPI (y/y) down by 0.5% vs. 0.4% decline expected, 0.5% slip in July
  • Tokyo’s core CPI also down by 0.5% vs. -0.4% expected and previous
  • Japan’s preliminary industrial production popped up by 1.5% vs. 0.5% uptick expected, -0.4% previous
  • NZ ANZ business confidence up from 15.5 to 27.9 in September
  • AU HIA new home sales improves by 6.1% vs. 9.7% decline in July
  • AU private sector credit up by 0.4% vs. 0.5% expected, 0.4% previous
  • China’s Caixin manufacturing PMI up from 50.0 to 50.1

A pretty busy day for data crunchers, as China, Japan, Australia, and New Zealand all printed economic reports today. How did they affect their respective currencies?

Major Events:

Overall risk aversion – Asian session traders saw a cocktail mix of bearish news that fostered an overall risk-averse environment. For starters, concerns over Deutsche bank’s stability carried over to Asian investors. If you recall, shares of the banking giant recently hit a new low on reports that its clients are withdrawing their investments.

Oil prices also saw a bit of profit-taking after OPEC members’ agreement to cut production pushed the commodity higher. Last but not the least, investors of high-yielding assets are booking profits to settle their and of month (and quarter!) balances.

Nikkei is down by 1.28%, Hang Seng is down by 1.31% and Australia’s ASX is down by 0.50%, while the Shanghai index, which won’t see the light of day next week, is up by 0.26%.

Japan’s inflation numbers – Today’s reports from Japan is keeping pressure on the BOJ to boost consumer prices. Japan’s CPI fell by 0.5% from a year after showing 0.4% declines in the past three months. It marks the sixth monthly decline and the fastest slip since April 2013.

A closer look tells us that decreases in housing and transport prices fell while food prices rose slower than expected. More specifically, household spending fell by 4.6%, way faster than the 2.0% decline expected.

Core consumer prices also fell by 0.5% from a year earlier, marking the sixth monthly drop and the fastest since March 2013. Yipes! Core-core prices, which excludes food and energy factors, ticked 0.2% higher. Tokyo’s CPI, widely considered a leading indicator for the national figures, showed a 0.5% year-on-year slip in September.

The less-than-stellar numbers inspired speculations that the BOJ will further step up its game, which is probably why the yen fell sharply when Kuroda hit the stage earlier today.

China’s manufacturing PMI – Factory activity in China edged higher into expansionary territory in September. Caixin’s manufacturing PMI came in at 50.1, higher than its 50.0 reading in August.

Details of the report weren’t as rosy though. Output and new orders continued to show modest growth, but remain at their slowest pace in three months. More importantly, companies continued to shed jobs. Around 8% of companies surveyed reflected lower headcounts, mostly due to cost-cutting.

Major Market Movers:

JPY – The yen caught some last-minute action after BOJ Governor Kuroda hit the newswires. Though he said nothing new about the central bank’s latest policies, the prospect of more easing (especially after the weak CPI release) weighed on the low-yielding currency for a while.

USD/JPY hit a high of 101.78 before capping the session at 101.40, while EUR/JPY visited 114.13 before closing at 113.73 (0.34%). Ditto for GBP/JPY, which popped up to 131.94 before closing at 131.53 (+0.34%).

NZD – There were no major catalysts for the Kiwi during the session, though the strong ANZ business confidence report didn’t hurt.

NZD/USD is up by 11 pips (+0.15%) to .7264, NZD/JPY is up by 36 pips (+0.49%) to 73.66, and EUR/NZD is down by 24 pips (-0.23%) to 1.0505.

Watch Out For:

  • 5:00 am GMT: BOJ’s core CPI expected to inch higher from 0.5% to 0.6%
  • 5:00 am GMT: Japan’s housing starts (7.3% expected, 8.9% previous)
  • 6:00 am GMT: German retail sales (-0.2% expected, 1.7% previous)
  • 6:00 am GMT: U.K.’s Nationwide house price index (0.3% expected, 0.6% previous)
  • 6:45 am GMT: French consumer spending (0.4% expected, -0.2% previous)
  • 7:00 am GMT: KOF economic barometer (100.5 expected, 99.8 previous)
  • 8:00 am GMT: Italy’s unemployment rate expected to remain at 11.4%
  • 8:30 am GMT: U.K. current account (-30.5B GBP expected, -32.6B GBP previous)
  • 8:30 am GMT: U.K. final GDP expected to remain at 0.6%
  • 9:00 am GMT: Euro Zone CPI (and core) flash estimate (y/y)
  • 9:00 am GMT: Euro Zone unemployment rate (10.0% expected, 10.1% previous)

See also:

U.S. Session Recap
London Session Recap

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