Asian Session Forex Recap – Nov. 17, 2016

  • AU shows net gain of 9.8K jobs vs. 20.3K expected, -29.0K in September
  • AU unemployment rate remains at 5.6% instead of rising to 5.7% as expected
  • China’s foreign direct investment (ytd/y) maintains 4.2% growth in October
  • BOJ launches first fixed-rate debt purchasing since announcement in September

Ho-hum. Price action was a mixed bag of nuts during the Asian session, as forex traders prepare for Yellen’s testimony scheduled later today.

Major Events:

Australia’s jobs reports – The labor market in the Land Down Under painted a mixed picture today. As expected, the unemployment rate stayed at 5.6%, its lowest level since September 2013 in October.

In addition to that, a net of 9,800 jobs were created during the month. This is due to 41,500 workers finding full-time employment even as 31,700 workers lost their part-time work. The cherry on top of the sweet report is hourly earnings seeing a 0.9% uptick, which lines up with the increase in full-time work.

Before you buy the Aussie like there’s not tomorrow though, you should know that Jacqui Jones, head of Australia’s Bureau of Statistics Labour and Income branch, urges us to look past the “seasonally adjusted” numbers and pay more attention to trends.

She noted that “Since December 2015 we have seen a continued decline in trend full-time employment and an increase in part-time employment, with a corresponding increase in the share of hours worked by part-time workers.” She added that part-time work has risen up from 31% to 32% of total employment in the past year, which is pretty quick considering that it was only at 29% 10 years ago. Yipes!

Overall the numbers line up with the RBA’s concerns over the growing underemployment. If you recall, the central bank has chosen to adopt a “wait and see” approach on the matter, hinting that it’s too early to tell how the trend will impact Australia’s inflation trends.

BOJ launches fixed-rate debt purchasing program – Earlier today the Bank of Japan (BOJ) offered to buy an unlimited amount of Japanese Government Bonds (JGBs) at fixed rates. The BOJ is buying JGBs with remaining maturities of 1-3 years at a fixed yield of 0.020%, while those set to mature within 3-5 years will see a yield of 0.019%.

This is the first time the BOJ has acted on its announcement in September to shift from targeting interest rates to controlling bond yield curves. Remember that the BOJ wants to keep a lid on bond yields to encourage investors into buying higher-yielding assets. The BOJ’s show of commitment helped push the 10-year JGB yields as well as the yen lower during the session.

Major Market Movers:

JPY – The yen started the trading session on strong footing as some traders take profits ahead of Yellen’s testimony later today. The tides soon turned, however, as soon as the BOJ launched its bond-buying session.

USD/JPY dipped to a low of 108.56 before shooting back up to 108.99, GBP/JPY hit a low of 134.99 before recovering to 135.28, and EUR/JPY fell to 116.25 before going back up to 116.55.

AUD – Though not too pronounced, the Aussie lost pips against its major counterparts as soon as the Bureau of Statistics noted that all is not well with Australia’s labor market as the seasonally adjusted numbers portray.

EUR/AUD ended the session 30 pips (+0.21%) higher at 1.4309, AUD/NZD dropped by 48 pips (-0.45%) to 1.0532, and AUD/JPY 19 pips lower (-0.23%) to 81.46 despite the overall yen weakness in the markets.

Watch Out For:

  • 10:00 am GMT: Italian trade balance (2.85B EUR expected, 2.52B EUR previous)
  • 10:30 am GMT: U.K. retail sales. (Check out Forex Gump’s trading guide!)
  • 11:00 am GMT: Euro Zone’s final CPI (y/y) expected to remain at 0.4%
  • 11:00 am GMT: Euro Zone’s final core CPI (y/y) expected to remain at 0.8%

See also:

U.S. Session Recap
London Session Recap

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