Article Highlights

  • Japanese retail sales down by 0.6% y/y in June vs. -0.4% forecast
  • Japan’s June household spending decreased by 3.0% y/y
  • Japanese unemployment rate up from 3.5% to 3.7%
  • Australia HIA new home sales rebounded by 1.2% from 4.3% decline
  • Fonterra announces lower milk payout price, NZD tanks
  • German import prices data due
  • U.K. to release public sector net borrowing and mortgage approvals data
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In case you’re wondering what that sharp Kiwi selloff was all about, then here’s the latest scoop: Fonterra, which is New Zealand’s largest dairy producer and exporter, announced a significant decline in its milk payout price from 8.25 NZD/kg last year to 6 NZD/kg. According to the company, demand from China and other emerging economies has waned and led to a continuous slide in dairy prices.

NZD/USD has broken below its previous consolidation above .8540 and has reached a low of .8512 as of this writing. NZD/JPY has tumbled to a low of 86.80 while AUD/NZD has created a strong break above the 1.1000 major psychological resistance after the announcement. Australia was able to print a 1.2% rebound in HIA new home sales, erasing part of the 4.3% decline in the previous month.

Over in Japan, data was mostly weaker than expected as retail sales and employment figures both missed expectations. For the month of June, retail sales fell by an annualized 0.6%, worse than the estimated 0.4% drop. The jobless rate climbed from 3.5% to 3.7% instead of holding steady as expected. Household spending printed a smaller than estimated decline of 3.0%, which was not enough to ease fears that the Japanese economy might be in for a deeper slowdown following the April sales tax hike.

Only medium-tier reports are lined up from the euro zone and the United Kingdom in the next few hours. German is set to print data on import prices and might show a 0.3% uptick, which would be an improvement from the previous flat reading. The U.K. will print data on public sector net borrowing and mortgage approvals, with strong results likely to help the pound get back on its feet.

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