Asian Session Forex Recap – Oct. 28, 2016

  • Japan’s household spending slips by 2.1% vs. 2.6% decline expected, 4.6% drop in August
  • Tokyo core CPI down by 0.4% vs. 0.5% drop expected/previous
  • Japan’s core CPI remains at -0.5% as expected
  • Japan’s unemployment rate improves to 3.0% from 3.1% previous/expected
  • AU HIA new home sales up by 2.7% after 6.1% growth in August
  • AU PPI (q/q): 0.3% vs. 0.6% expected, 0.1% previous

Risk-taking was the name of the game during the Asian session, as investors celebrated the rise in bond yields for major economies.

Major Events:

Japan’s inflation reports – Headline consumer prices fell for another month in September as housing and transportation prices fell while food prices remained steady. Core numbers also came in weak, down 0.5% as expected and marked its 7th consecutive month of declines.

The “core-core” reading, which excludes energy and food costs, showed that prices slowed for the third straight month and finished with a flat growth in September. Even Tokyo’s core CPI, widely recognized as a leading indicator of inflation, slipped by 0.4% in October after showing a 0.5% downtick in September.

A closer look tells us that household spending fell by 2.1% in September from a year earlier even as the unemployment rate dropped to 3.0% and the ratio of job openings-to-applicants rose to its highest level in more than 25 years. Overall these numbers reflect the Japanese consumers’ reluctance to spend their moolah amidst uncertain economic prospects.

Mixed risk appetite
– Asian session traders mostly shrugged off Japan’s weak CPI in favor of celebrating higher bond yields across the globe. See, speculations that the BOE and ECB won’t be changing their current policies anytime soon, as well as another round of strong U.S. data boosted their respective government bond yields. This was good news for Asian firms that sought yields from foreign government bond investments. On the other hand, other traders also booked profits ahead of the U.S. GDP release coming up in a few hours.

The Shanghai index is down by 0.04%, Hang Seng is down by 0.65%, and Australia’s ASX 200 is in the red by 0.22%. Nikkei, which also took advantage of an even weaker yen, is up by 0.62%.

Major Market Movers:

USD – The Greenback gave back some of its pips on the back of risk appetite and a bit of profit-taking ahead of Uncle Sam’s Q3 GDP report.

EUR/USD is up by 12 pips (+0.11%) to 1.0909, USD/JPY slipped by 11 pips (+0.10%) to 105.16, and GBP/USD popped up by 15 pips (+0.12%) to 1.2183. Even the comdolls had a good session with AUD/USD rising by 10 pips (+0.13%) to .7596 and NZD/USD shooting up by 20 pips (+0.28%) to .71741.

Watch Out For:

  • 5:00 am GMT: BOJ’s core CPI (0.3% expected, 0.4% previous)
  • Unscheduled: German preliminary CPI expected to remain at 0.1%
  • 5:30 am GMT: French preliminary GDP (0.3% expected, -0.1% previous)
  • 6:45 am GMT: French consumer spending (0.3% expected, 0.7% previous)
  • 6:45 am GMT: French preliminary CPI (0.2% expected, -0.2% previous)
  • 7:00 am GMT: Switzerland’s KOF economic barometer (101.8 expected, 101.3 previous)
  • 7:00 am GMT: Spanish flash CPI (y/y) (0.3% expected, 0.2% previous)
  • 7:00 am GMT: Spanish flash GDP (q/q) (0.7% expected, 0.8% previous)

See also:

U.S. Session Recap
London Session Recap

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