Asian Session Forex Recap – Oct. 3, 2016

  • China’s markets out on National Day holiday
  • AU AIG manufacturing index up from 46.9 to 49.8 in September
  • Japan’s Tankan manufacturing index remains at 6 vs. 7 expected in Q3 2016
  • Japan’s non-manufacturing index down from 19 to 18 in Q3 2016
  • Japan’s final manufacturing PMI revised from 50.3 to 50.4 in September
  • AU MI inflation gauge up from 0.2% to 0.4% in September

Forex price action was a mixed bag of nuts, as traders priced in different headlines from the past couple of days. Read on to see the major market movers!

Major Events:

UK to trigger Article 50 next year – The pound gapped lower at the start of the week after British Prime Minister Theresa May confirmed reports that the U.K. will trigger the Article 50 of the Lisbon Treaty by no later than the end of March next year.

In the Conservative Party Conference in Birmingham over the weekend, PM May told the delegates that there will be no “unnecessary delay” in starting the two-year process. She also confirmed plans for a Great Repeal Bill to overturn the 1972 Act, which brought the U.K. into what was then the European Economic Community.

Despite her assurances though, uncertainty over the outcome of the negotiations in the next two years crept back into the markets.

Mixed risk sentiment – Last week’s headlines were still in Vogue today. For starters, rumors that Deutsche Bank is close to lightening its fines issued by the U.S. Justice Department eased fears over the failure of a too-big-to-fail bank.

Oil prices weren’t so lucky. Oil players are starting to doubt the impact of last week’s OPEC agreement, saying that it probably won’t address the oversupply situation as effectively as it needs to. Of course, it also didn’t help that a U.S oil rig count on Friday rose to its highest since February or that Iran is reportedly planning to increase its exports in the coming months.

BOJ to ease some more? – Nikkei led the gains in Asian bourses today. One possible reason is the easing of Deutsche Bank-related fears, though Japan’s better-than-expected quarterly Tankan manufacturing index didn’t hurt either. BOJ Governor Haruhiko Kuroda’s speech today may have also fanned the flames after he said that the BOJ has more room to ease.

Nikkei is up by 0.87%, Australia’s ASX is up by 0.78%, and Hang Seng is up by 1.35%. Meanwhile Brent crude oil fell by 0.48% to $49.95 while U.S. crude oil prices also slipped by 0.68% to $47.91.

Major Market Movers:

GBP – The pound started the week with weekend gaps before seeing a bit of recovery across the board.

GBP/USD gapped from 1.2962 to 1.2925 before ending the session at 1.2946 while GBP/JPY also fell from 131.46 to 130.82 before finishing at 131.30 and EUR/GBP popped up from .8665 to .8691 before closing at .8678.

AUD and NZD – High-yielding currencies like the Aussie and Kiwi took a step back amidst the mixed risk sentiment and a bit of profit-taking ahead of this week’s RBA monetary policy decision.

AUD/USD is down by 11 pips (-0.14%) to .7653 while NZD/USD also slipped by 8 pips (-0.11%) to .7270.

Watch Out For:

  • German markets out on Germany Unity Day holiday
  • 7:15 am GMT: Swiss retail sales (-1.6% expected, -2.2% previous)
  • 7:15 am GMT: Spanish manufacturing PMI (51.6 expected, 51.0 previous)
  • 7:30 am GMT: Swiss manufacturing PMI (51.9 expected, 51.0 previous)
  • 7:45 am GMT: Italian manufacturing PMI (50.2 expected, 49.8 previous)
  • 7:50 am GMT: French final manufacturing PMI expected to remain at 49.5
  • 7:55 am GMT: German final manufacturing PMI expected to remain at 54.3
  • 8:00 am GMT: Euro Zone final manufacturing PMI expected to remain at 52.6
  • 8:30 am GMT: U.K. manufacturing PMI (52.1 expected, 53.3 previous)
  • 8:30 am GMT: U.K.’s Financial Policy Committee (FPC) meeting minutes

See also:

Last Week’s Top Forex Movers

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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