Asian Session Forex Recap – Dec. 2, 2016

  • Japan’s annualized monetary base down from 22.1% to 21.5% vs. 23.2% expected
  • AU retail sales increases by 0.5% in October vs. 0.3% expected, 0.6% previous

The Greenback took a step back against its major counterparts, as Asian session forex traders took profits before the NFP report release. Here’s what’s up!

Major Events:

Australia’s retail sales – For the first time in a while, data from the Land Down Under beat market estimates. Retail sales for the month of October showed a 0.5% growth following a 0.6% uptick in September.

This beat analyst estimates of a 0.3% increase and marks the third consecutive month of growth for the report. For trading newbies out there, you should know that retail sales is often a proxy for consumer spending, which in Australia’s case, accounts for more than half of its GDP.

A closer look tells us that gains in other stores (0.80%), household goods (0.70%), and food sales (0.60%) more than made up for the 0.40% weakening of clothing, footwear, personal accessories, and department store sales.

The Aussie initially popped up at the report’s release, but the bulls had failed to sustain their momentum and eventually passed the baton to the bears.

Profit-taking across the board – Profit-taking was the name of the game during the Asian session, as traders closed their pro-dollar trades ahead of today’s NFP report. It also didn’t help that the dollar has did not strengthen as quickly as the U.S. Treasury yields yesterday, supporting claims that the Trump rally is fading.

Last but not the least, some traders could have also decided to close shop ahead of the weekend and this Sunday’s Italian referendum. As Forex Gump highlighted in a post, a “NO” vote would mean that the government would have a harder time enacting changes and possibly a resignation from Italy’s current PM Renzi.

Uncertainty surrounding today’s NFP report and Sunday’s Italian referendum weighed on the Asian bourses today. Australia’s A SX 200 is down by 1.04%, Hang Seng is down by 1.24%, the Shanghai index is down by 0.80%, while Nikkei has limited its losses to 0.67%.

Oil prices also hopped on the profit-taking train after gaining ground on the back of OPEC’s surprise deal earlier this week. Brent crude oil is down by 1.17% to $53.31 while U.S. crude oil prices is also down by 0.76% to $50.64.

Major Market Movers:

USD – The dollar gave up pips to its major counterparts on the back of profit-taking ahead of today’s NFP report.

EUR/USD is up by 36 pips (+0.34%) to 1.0681, USD/JPY slipped by 11 pips (-0.10%) to 113.92, GBP/USD 32 pips (+0.25%) to 1.2614, and USD/CHF saw a 22-pip decline (-0.22%) to 1.0099.

AUD –The Aussie received a boost from Australia’s better-than-expected retail sales report, but soon lost momentum as profit-taking and a bit of risk aversion took over.

AUD/USD shot up to a high of .7434 before settling back down to .7412 while EUR/AUD shot up by 52 pips (+0.36%) to 1.4412 and AUD/JPY dropped by 10 pips (-0.12%) to 84.44.

Watch Out For:

  • 7:45 am GMT: Switzerland’s quarterly GDP (0.3% expected, 0.6% previous)
  • 9:00 am GMT: Spanish unemployment change (-25.8K expected, 44.7K previous)
  • 10:30 am GMT: U.K. construction PMI (52.3 expected, 52.6 previous)
  • 11:00 am GMT: Euro Zone PPI (0.4% expected, 0.1% previous)

See also:

U.S. Session Recap
London Session Recap

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