Asian Session Forex Recap – Nov. 15, 2016

  • RBA prints its meeting minutes
  • Profit-taking grips the Asian markets

The Greenback took small steps back against its major counterparts, as a bit of profit-taking dominated forex trading during the Asian session.

Major Events:

RBA’s meeting minutes – The Reserve Bank of Australia (RBA) has just printed its November meeting minutes after keeping its interest rates steady at 1.50% earlier this month. The central banks’ release has three key takeaways:

First, RBA Governor Lowe and his gang are doing cartwheels over the recent rise in commodity prices. They said that it’s lighting a fire under Australia’s trade numbers, at least enough for the RBA to revise their growth forecasts higher. Of course, it also didn’t hurt that economic conditions in China, Australia’s largest trading partner, have somewhat steadied.

Next, the RBA is worried that the improvements in the unemployment rate aren’t translating to overall growth in the jobs sector. It said that ‘’members observed that there was uncertainty about the degree of spare capacity in the labour market and how this might ultimately affect inflationary pressures.’’

See, while the jobless rate has been falling steadily, the gains are concentrated at part-time work while participation rate continued to decline. Still, the RBA concluded that ‘‘the overall assessment was that the risks around the inflation forecast were broadly balanced.’’

Last but not the least point is that the RBA is not as confident over Australia’s housing market as it was last month. It shared that ‘‘While overall conditions had eased relative to 2015, some indicators had strengthened over the previous few months.’’ Specifically, housing prices significantly picked up in Sydney and Melbourne even though the impact of tighter lending conditions are visible in other areas.

Despite the details, the Aussie barely reacted to the release. Then again, the RBA’s optimism were probably priced in when the RBA first announced its policies for November.

Widespread profit-taking – After consecutive days of gains, the Asian bourses took steps back and were hit by a small wave of profit-taking. Recall that traders have been pricing in a surge in fiscal stimulus for when Trump takes over as U.S. President, which had inspired broad and extended risk rallies across the board.

Australia’s A SX 200 is down by 0.37%, Hang Seng edged 0.31% higher, Nikkei slipped by 0.06%, and the Shanghai Index sustained a 0.28% decline.

Major Market Movers:

USD – The Greenback gave up a couple of pips to its counterparts after days of dominating the forex scene.

EUR/USD popped up by 28 pips (+0.26%) to 1.0753, USD/JPY slid 47 pips lower (-0.43%) to 108.06, and USD/CHF slipped by 19 pips (-0.19%) to .9970.

Comdolls – Commodity-related currencies started the session on strong footing, as commodity prices extended their gains. The tides turned, however, as soon as profit-taking gripped the markets.

AUD/USD hit a high of .7582 before finishing at .7560 while USD/CAD dipped to 1.3528 before going back up to 1.3536. Ditto for NZD/USD, which touched a session high of .7145 before returning back to .7114.

Watch Out For:

  • 8:00 am GMT: Germany’s preliminary GDP (0.3% expected, 0.4% previous)
  • 8:45 am GMT: French final CPI expected to remain at 0.0%
  • 9:15 am GMT: RBA’s Lowe to give a speech. Will he give comments about Trump’s Presidency?
  • 10:00 am GMT: Italy’s preliminary GDP (0.2% expected, 0.0% previous)
  • 10:30 am GMT: U.K. CPI, core CPI, PPI, RPI, and HPI. Read the top U.K. events you should look out for this week!
  • 11:00 am GMT: Euro Zone’s flash GDP expected to remain at 0.3%
  • 11:00 am GMT: German ZEW economic sentiment (7.9 expected, 6.2 previous)
  • 11:00 am GMT: Euro Zone trade balance (22.3B EUR expected, 23.3B EUR previous)
  • 11:00 am GMT: Inflation report hearings. Watch out for any changes in the BOE’s growth and inflation outlook!

See also:

U.S. Session Recap
London Session Recap

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