Asian Session Forex Recap – Nov. 4, 2016

  • AU retail sales rises by 0.6% in September vs. 0.4% uptick expected, 0.5% previous
  • Japan’s Markit services PMI up from 48.2 to 50.5 in October
  • No changes on the RBA’s GDP and inflation forecasts

Forex price action was as tight as Game 7 of the World Series, as Asian session traders brace themselves ahead of the NFP release and the U.S. election weekend.

Major Events:

AU retail sales – Score another one for Australia! After reporting a narrower-than-expected trade deficit yesterday, today’s release now shows retail sales growing by 0.6% for the month of September, higher than the expected 0.4% uptick and August’s 0.5% gain. This also marks the fastest growth since June 2015, and boosting its annualized figure to 3.3%, the fastest pace since May!

A closer look tells us that growth was driven by sales in household goods retailing (+2.3%) and cafes, restaurants, and takeaway food service (+1.0%). The only blight in the Australia Bureau of Statistics (ABS) report was the quarterly sales volumes, which reflected a 0.1% decline for Q3 2016. This miss is significant not only because it’s directly factored in Australia’s GDP, but it also suggests that the increase in retail sales is mostly due to price instead of volume increases.

RBA’s economic update – In its latest economic update under the monetary policy statement, the Reserve Bank of Australia (RBA) shared that its growth and inflation outlooks are mostly unchanged from its August forecasts.

Underlying inflation is still expected to remain at 1.50% by December 2016 and 1.50% – 2.50% by June 2017, while GDP outlook is expected to stay in the 2.50% – 3.50% range by December 2016 through June 2017. The central bank also allayed fears over its largest trading partner, saying that “The downside risks to Chinese growth in the near term appear to have diminished.” Last but not the least, the RBA dropped its hints that a strong exchange rate is a big source of uncertainty over its forecasts.

End-of-week jitters – The dollar gained back some of the pips it had lost early in the week, as Asian session forex traders took profits from their short dollar positions ahead of the NFP release and the U.S. presidential election this weekend.

See, market players have taken a leaf out of the Brexit playbook and are now taking their risky positions off even though Clinton has maintained her narrow lead over Trump. It also doesn’t help that the Asian bourses took their cues from the U.S. markets in the absence of fresh catalysts.

  • Australia’s A SX 200 is down by 0.86% to 5,180.80
  • The Shanghai index is down by 0.14% to 3,124.10
  • Hang Seng is down by 0.10% to 22,663.00 and
  • Nikkei 225 is down by 1.33% to 16,906.50

Major Market Movers:

USD – The Greenback took back a pip or two from its counterparts today after seeing a week of losses.

EUR/USD is down by 11 pips (-0.10%) to 1.1095, USD/JPY inched 16 pips higher (+0.16%) to 103.07, and USD/CHF popped up by 10 pips (+0.10%) to .9750.

Watch Out For:

  • 8:15 am GMT: Spanish services PMI (55.2 expected, 54.7 previous)
  • 8:45 am GMT: Italian services PMI (51.6 expected, 50.7 previous)
  • 8:50 am GMT: French final services PMI expected to remain at 52.1
  • 8:55 am GMT: German final services PMI expected to remain at 54.1
  • 9:00 am GMT: Euro Zone final services PMI expected to remain at 53.5
  • 10:00 am GMT: Euro Zone PPI (0.0% expected, -0.2% previous)

See also:

U.S. Session Recap
London Session Recap

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