Asian Session Forex Recap – Oct. 24, 2016

  • New Zealand markets out on Labor Day holiday
  • Japan’s trade balance shows 0.35T JPY surplus vs. 0.21T expected, 0.36T previous
  • Japan’s Nikkei manufacturing PMI up from 50.4 to 51.7, higher than 50.6 expected

Forex trading was a mixed bag of nuts, as a lack of fresh catalysts kept the major currencies in tight intraday ranges. Here’s what’s up!

Major Events:

Japan’s data releases – Data from the world’s third largest economy showed an expanding manufacturing activity in October. The flash Markit/Nikkei PMI rose to a seasonally adjusted 51.7 in September, which is not only higher than August’s 50.4 but also marks the fastest pace of expansion in nine months.

A closer look tells us that the index for new orders showed its first expansion in nine months while new export orders clocked in its second consecutive monthly growth. More importantly, goods producers also hired more workers, with the rate of job hiring picking up to a two-and-a-half year high. This is welcome news to investors who mostly saw subdued growth in Q3 2016.

Meanwhile, Japan’s trade numbers highlighted the exporters’ struggles with a strong yen and weak global demand. Exports fell by 6.9% from a year earlier in September, which is a bit better than the expected 10.8% dip but also marks the 12th straight month of declines. Exports to China (-8.4%) and the U.S. (-8.7%) both fell but shipments to Western Europe (+2.5%) and the EU countries (+0.7%) showed slight upticks.

Imports fell a bit more than exports did. It showed a 16.3% slide from a year earlier after dropping by an annualized rate of 17.3% last month. Though it’s also better than the 16.6% drop that analysts had estimated, it also marked its 21st consecutive month of decline in purchases. Imports from China (-16.7%), U.S. (-6.1%), Western Europe (-4.6%), and the EU countries (-3.7%) all showed further weaknesses.

The yen barely reacted to the news. See, though we saw consecutive decreases in exports and imports, trends are hinting of upside momentum for Japan’s trade activity with exports and imports dropping to a lesser extent in the past two months.

Iraq wants out of OPEC’s production cuts – Iraq dragged oil prices lower today when it hinted that it wants out of OPEC’s production cut deal set to be discussed in its November 30 meeting.

On Sunday Falah al-Amri, the head of Iraq’s State Oil Marketing Company, said that “We are not going back in any way, not by OPEC not by anybody else.” The OPEC member is producing 4.774 million barrels per day. It’s also the 12th largest oil producer in world and has the fifth largest petroleum reserves.

Brent crude oil is down by 0.39% to $51.58 while U.S. crude oil prices slid by 0.51% to $50.59.

Mixed risk sentiment – The Asian bourses started the day on shaky footing, as a weak Wall Street close and improved chances of a Fed rate hike held back investors. Australian equities trudged even lower ahead of Australia’s CPI release, while China’s markets are cheering the yuan’s sharp declines.

Australia’s S&P/ASX 200 is down by 0.40%, The Shanghai index is 1.33% higher, Hang Seng is up by 0.36%, and Nikkei is up by 0.20%.

Major Market Movers:

EUR and GBP – It was the European currencies that caught the attention of Asian traders today. Maybe they were catching up to last week’s headlines?

In any case, EUR/JPY is down by 8 pips (-0.07%) 112.93, GBP/JPY is down by 18 pips (-0.14%) to 126.77, EUR/USD is down by 13 pips (-0.12%) to 1.0869, and GBP/USD is down by 22 pips (-0.18%) to 1.2201.

Watch Out For:

  • 7:00 am GMT: French flash manufacturing PMI (50.2 expected, 49.7 previous)
  • 7:00 am GMT: French flash services PMI (54.1 expected, 53.3 previous)
  • 7:30 am GMT: German flash manufacturing PMI expected to remain at 54.3
  • 7:30 am GMT: German flash services PMI (51.9 expected, 50.9 previous)
  • 8:00 am GMT: Euro Zone flash manufacturing PMI (52.7 expected, 52.6 previous)
  • 8:00 am GMT: Euro Zone flash services PMI (52.4 expected, 52.2 previous)

See also:

Last Week’s Top Forex Movers

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