Asian Session Forex Recap – Oct. 25, 2016

  • BOC’s Poloz clarifies his “18-month-wait” statement
  • USD lost pips to the comdolls amidst risk-friendly environment

With not a lot of data on the docket, Asian session forex traders took cues from their U.S. counterparts and fostered a risk-friendly trading environment.

Major Events:

From Poloz to Po-WIN – As I mentioned in my U.S. session recap, Bank of Canada (BOC) Governor Stephen Poloz caused ruckus on the Canadian dollar’s price action when he said that “Our best plan right now, we think, is to wait for the next 18 months or so.” Market players took it to mean that the central bank won’t be cutting rates until then. In under an hour, however, Poloz came back on stage to clarify that:

“My statement concerning the need to wait 18 months was in reference to the time frame over which the output gap is expected to close, as noted in the Bank’s October Monetary Policy Report. It was not intended as a reference to the Bank’s monetary policy.”

The BOC head honcho went on to add that further stimulus won’t be an easy decision especially when parts of Canada have different growth tracks. He said that “If we were to be easing further, we’d be very close to using unconventional tools, and so that’s of course not a decision we take lightly.” The game is still on, interest rate junkies!

Oil slips lower – Oil prices slipped by a couple more points as players continued to price in Iraq’s refusal to play nice with other major producers. It also didn’t help that Britain’s Buzzard oilfield is scheduled to restart this week or that U.S. oil prices briefly dipped below the $50 mark yesterday.

Brent crude oil is down by 0.21% to $51.35 while U.S. crude oil prices is down by 0.06% to $50.49.

Overall risk appetite – With not a lot of fresh data on the docket, Asian session forex traders mostly took cues from their U.S. counterparts and fostered a risk-friendly environment. Word around the hood is that 80% of the third of Uncle Sam’s companies have beaten their earnings estimates.

Nikkei piggybacked on the good vibes as well as a weak yen to briefly hit its six-month highs. Japan’s index is up by 0.74% and Australia’s ASX 200 is up by 0.59% after yesterday’s weak trading while Hang Seng and the Shanghai index are down by 0.14% and 0.07% respectively.

Major Market Movers:

Comdolls – High-yielding currencies like the comdolls sucker-punched their lower-yielding counterparts on the back of risk appetite in the markets.

AUD/USD rose by 21 pips (+0.28%) to .7619 and NZD/USD was pushed 20 pips higher (+0.28%) to .7150. The Loonie also gained a couple of pips though it has given some of its post-Poloz gains after the BOC Governor clarified his “18-month-wait” statement.

USD/CAD fell to a low of 1.3278 before settling back with a 51-pip decline (-0.38%) for the session, while CAD/JPY shot up by 46 pips (+0.59%) to 78.33 after visiting the 78.52 mark.

JPY – Overall risk appetite pushed the low-yielding yen lower against most of its major counterparts.

USD/JPY shot up by 23 pips (+0.22%) to 104.47, EUR/JPY popped up by 31 pips (+0.27%) to 113.65, and GBP/JPY inched 35 pips higher (+0.28%) to 127.74.

Watch Out For:

  • 8:00 am GMT: German IfO business climate (109.6 expected, 109.5 previous)

See also:

U.S. Session Recap
London Session Recap

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