Asian Session Forex Recap – Oct. 27, 2016

  • New Zealand trade deficit widened to 1.43B NZD vs. 1.12B NZD forecast
  • AU quarterly import prices down by 1.0% vs. 0.7% decline expected, 1.0% drop in Q2

With not a lot of forex-related data on the docket, the dollar managed to squeeze out a couple more pips from its major counterparts.

Major Events:

New Zealand’s trade data – Data from New Zealand revealed a wider trading gap than analysts had expected. Trade deficit clocked in at 1.43B NZD in September from a year earlier, wider than the expected 1.12B NZD gap. Oh, and have I mentioned that September’s data marked the third consecutive month of deficit and is the widest gap on record? Duhn duhn duhn.

Details tell us that exports fell by 5.4% from a year earlier, led by drops in sales of meat and edible offal, while imports rose by 1.8% thanks to increase in purchases of capital goods.

Despite the figures, the Kiwi barely reacted to the news. Could it be that the bears have all but priced in another rate cut from the RBNZ?

Kuroda’s speech – The yen flexed its muscles a bit during the Asian session after Bank of Japan (BOJ) Governor Kuroda hinted that the central bank will stand pat in its next meeting.

In a speech before Parliament earlier today, Kuroda shared that he doesn’t see any immediate need to change its interest rate and bond yield targets. If you recall, he and his team recently switched gears to focus their firepower on keeping 10-year Japanese government bond (JGB) yields low.

Kuroda also nixed any plans to buy bonds denominated in foreign currencies, saying that it would amount to a currency intervention. Last but not the least, he hinted that the BOJ won’t be acting if yields on ultra-long JGB (read: longer than 10-year bonds) would rise a bit more.

Deputy Governor Kikuo Iwata, who also spoke before Parliament, balanced Kuroda’s not-so-dovish statement by stressing the need for using large-scale bond purchases to hit their price targets. What’s more, he also said that “There is no limit to how much (the BOJ can) expand base money.” Talk about teamwork!

Major Market Movers:

JPY – The yen snuck back some pips against its counterparts when Kuroda hinted of no action in the BOJ’s next meeting, but the rally soon fizzled out when Iwata took center stage.

USD/JPY dipped to 104.3 before finishing the session 4 pips higher (+0.04%) at 104.45, EUR/JPY fell to 113.7 before closing at 113.85 (-0.05%), and AUD/JPY slipped to 79.57 before recovering to 79.66 (-0.26%).

USD – With not a lot of major reports scheduled during the session, the dollar managed to extend its gains after Uncle Sam printed relatively strong reports during the U.S. session.

GBP/USD is down by 17 pips (-0.14%) to 1.2213, AUD/USD is down by 11 pips (-0.14%) to .7631, and USD/CAD is up by 8 pips (+0.06%) to 1.3390.

Watch Out For:

  • 6:00 am GMT: UBS consumption indicator
  • 7:00 am GMT: Spanish unemployment rate (19.3% expected, 20.0% previous)
  • 8:30 am GMT: U.K. preliminary Q3 GDP. Read Forex Gump’s trading guide if you’re planning on trading the event!
  • 8:30 am GMT: Services index (3m/3m) (0.8% expected, 0.6% previous)
  • 10:00 am GMT: CBI realized sales (-2 expected, -8 previous)

See also:

U.S. Session Recap
London Session Recap

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

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!