Asian Session Forex Recap – Nov. 16, 2016

  • AU MI leading index remains at 0.1% in October
  • AU wage price index (q/q) up by 0.4% vs. 0.5% uptick expected and previous
  • AU new motor vehicle sales down by 2.4% after a 2.4% gain in September

Risk-taking was on like Donkey Kong today, as Asian session forex traders tracked the overall risk-friendly vibe from the U.S. session.

Major Events:

Australia’s data dump – Only the Land Down Under’s had reports scheduled today, as it printed a leading index, a wage price index, and its new motor vehicle sales report.

The Westpac-Melbourne Institute Leading Index reflected a 0.1% growth in October, with Chief Economist Bill Evans saying that it’s “a clear positive signal for the near term economic outlook.”

Meanwhile new motor vehicle sales showed a 2.4% decline in October after shooting up by a similar rate in September. Details show that, on an annualized basis, Passenger vehicles and Other vehicles decreased by 0.7% and 0.1% respectively. By contrast, sales for Sports utility vehicles increased by 1.4%.

The most important tidbit among Australia’s data dump is the wage price index, which came in at 0.4% in Q3 2016 when analysts had been expecting another 0.5% growth. If you recall, the Reserve Bank of Australia (RBA) cited weak wage growth as one of the biggest concerns over the patchy growth in Australia’s labor market. A weaker-than-expected reading would help dispel rumors that the RBA is considering rate hikes after cutting it twice earlier this year.

Overall risk appetite – Market bulls had a field day today, as stars lined up for a risk-friendly environment. For starters, the lack of major data on tap encouraged Asian session traders to track the strong performance of its U.S. counterparts (the DJIA logged its 4th consecutive record high close).

It also didn’t hurt that the pause in the U.S. bond selloff helped stem fears that investors will dump their emerging market bets in favor of U.S.-related investments. Last but not the least, oil prices recovered after a report by the American Petroleum Institute (API) showed an unexpected build in oil supply and caused a hiccup in oil price rallies.

Brent crude oil is now up by 0.60% to $47.23 while U.S. crude oil prices recovered by 0.48% to $46.03.

Australia’s A SX 200 is now 0.03% higher and Hang Seng is seeing a 0.39% uptick while the Shanghai index is 0.19% lower. Nikkei, which enjoyed triple roundhouse combo of low yen, higher JGB yields, and overall risk appetite, is now up by 1.10%.

Major Market Movers:

USD – The dollar gave up a couple of pips as traders bought higher-yielding currencies and took some profits off from yesterday’s pro-dollar trades.

EUR/USD is up by 32 pips (+0.30%) to 1.0748, USD/JPY inched 33 pips (-0.30%) lower to 108.99, and USD/CHF slipped by 30 pips (-0.30%) to .9993.

Comdolls – Much like yesterday, commodity-related currencies like the Aussie, Loonie, and Kiwi started the session strong before they got hit by a bit of profit-taking.

AUD/USD hit a high of .7572 before settling down to .7557 while NZD/USD shot up to .7115 before going back down to .7098. USD/CAD, which was dragged further by higher oil prices, straight up fell by 32 pips (-0.24%) to 1.3435.

Watch Out For:

  • 10:00 am GMT: FOMC member Bullard to give a speech in London
  • 10:30 am GMT: U.K.’s employment numbers (unemployment rate, claimant count change, average earnings index). Read Forex Gump’s trading guide to see what you can expect from the event!
  • 11:00 am GMT: Switzerland’s ZEW economic expectations

See also:

U.S. Session Recap
London Session Recap

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