Article Highlights

  • Japanese national core CPI down from 3.3% to 3.1% in Aug
  • Japanese Tokyo core CPI dropped from 2.7% to 2.6% in Aug
  • Chinese August CB leading index down from 1.2% to 0.7%
  • Former RBA economist: Central bank miscalculated housing risks
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Forex traders showed no love for the yen, as the latest inflation figures from Japan hinted that further BOJ stimulus might be necessary. The national core CPI slipped from 3.3% to 3.1% in August instead of just dipping to 3.2% while the Tokyo core CPI fell from 2.7% to 2.6%. USD/JPY jumped back above the 109.00 handle after the release while EUR/JPY found support at 138.50 and is moving closer to the 139.00 handle.

Over in China, the CB leading index for August showed a mere 0.7% uptick, weaker compared to the previous month’s reading, which was already downgraded to 1.2%. This suggests that the world’s second largest economy might see a prolonged slowdown, which might continue to weigh on commodity currencies.

AUD/USD carried on with its dive below the .8800 mark as it descended to a low of .8751. AUD/JPY is also in a weak spot, as the pair broke below the 96.00 major psychological support. Pushing the Aussie lower in today’s Asian forex trading session were comments from a former RBA economist suggesting that the central bank miscalculated the housing bubble risks. According to Jeremy Lawson, who is know a global economist at Standard Life, the Australian housing market is overvalued by 20-30% and that additional policy tools must be employed to keep the bubble from bursting.

Data coming up in the forex calendar includes the German GfK consumer climate report, which might show a decline from 8.6 to 8.5 for September. Also due today is the German import prices report, which might show a 0.2% decline in prices for August. Watch out for weaker than expected readings that could lead to a deeper euro selloff!

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

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