Asian Session Forex Recap – Oct. 13, 2016

  • U.K. RICS house price balance up by 17% vs. 14% expected, 13% previous
  • NZ ANZ job ads up by 0.3% in September vs. 3.1% uptick in August
  • Japan’s bank lending (y/y) up by 2.2% vs. 2.0% expected and previous
  • AU MI inflation expectations up by 3.7% vs. 3.3% gain in September
  • China’s trade balance misses with 278B CNY surplus vs. 365B CNY expected, 346B CNY previous
  • Japan’s tertiary industry activity flat at 0.0% vs. 0.2% decline expected, 0.2% uptick in July

The dollar’s price action was a mixed bag of nuts, as it lost pips to the European and fellow low-yielding currencies but gained a few on the comdolls. What’s up with that?!

Major Events:

China’s trade data – Data from the world’s second largest economy revealed a weaker-than-expected surplus and significantly lower exports.

China’s trade surplus shrank from 346B CNY in August to 278.4B CNY in September. In dollar terms, that translates to $42B compared to $52.1B figure in August. A closer look tells us that exports dropped by a whopping 10% from a year earlier, overshadowing the1.9% annualized decline in imports and August’s 2.2% slip in exports.

Forex bears were all over the news, as the report not only underscored the impact of lower commodity prices, but also the weak external demand for China’s products. What’s more, part of the data misses were attributed to the PBoC’s efforts to weaken its currency, something that’s expected to continue on for some time.

The prospect of weaker commodity and export demand from China didn’t sit well with other major economies. This is partly why the Asian bourses are down today. Australia’s ASX is down by 0.71%, Hang Seng slipped by 1.38%, the Shanghai index is down by 0.13%, and Nikkei gave up its intraday gains to trade 0.39% lower.

OPEC reports high production – Oil prices fell during the Asian session, thanks to the Organization of the Petroleum Exporting Countries (OPEC) reported a rise in output in September.

The cartel pumped 33.39 million barrels per day in September, which marks the highest level in at least eight years. Not only that, but it also raised its 2017 non-OPEC supply growth forecasts. Not surprisingly, the prospect of a prolonged period of oversupply (despite recent talks of capping production) weighed on oil prices.

Brent crude oil is down by 0.62% to $51.49 while U.S. crude oil prices also slipped by 0.70% to $49.83.

Major Market Movers:

USD – The dollar gave back a few pips to the European and low-yielding currencies after shooting up at the release of the Fed’s hawkish meeting minutes.

EUR/USD is up by 9 pips (+0.08%) to 1.1023, USD/JPY hit a high of 104.65 before settling back down to 103.84 (-0.40%), and USD/CHF fell by 13 pips (-0.13%) to .9890.

Comdolls – China’s weak trade data did a number on commodity-related currencies.

AUD/USD is down by 31 pips (-0.41%), USD/CAD popped up by 24 pips (+0.18%), and NZD/USD slipped by 8 pips (-0.11%) to .7058.

Watch Out For:

  • 6:00 am GMT: German final CPI expected to remain at 0.1%

See also:

U.S. Session Recap
London Session Recap

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