Article Highlights

  • Most Asian markets closed for Labor Day holiday
  • Japan’s national core CPI climbed from 2.0% to 2.2% in April
  • Japanese household spending down by 10.6% yoy vs. estimated 11.7% drop
  • Japan’s jobless rate ticked down from 3.5% to 3.4%, average earnings up 0.1%
  • Chinese official manufacturing PMI steady at 50.1 in April
  • Chinese April official services PMI down from 53.7 to 53.4
  • Producer prices in Australia increased by 0.5% in Q1
  • New Zealand Finance Minister supported RBNZ rate cut bias
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Even though most Asian session forex market participants were off enjoying the Labor Day holiday, currency pairs were still able to make a few good moves thanks to top-tier releases in the past few hours. Japan was at the front and center of it all, with the economy printing its latest inflation and spending reports.

Most of the headline figures came in the green, as Japan’s national core CPI climbed from 2.0% to 2.2%, halting its seven-month losing streak. Household spending data was better than expected, with the report showing a 10.6% year-over-year decline in April versus expectations of an 11.7% drop.

Meanwhile, the jobless rate dipped from 3.5% to 3.4%, reflecting an improvement in hiring conditions. However, average cash earnings showed a meager 0.1% uptick, which means that wage growth has remained subdued.

Nonetheless, the upbeat figures were enough to usher risk appetite back in, allowing yen pairs to recover. USD/JPY is up 28 pips (+0.24%), EUR/JPY is higher by 11 pips to the 134.00 handle (0.09%), and GBP/JPY is enjoying a 40-pip lead (0.22%).

Australia had its fair share of upbeat data, as the economy reported a 0.5% increase in producer prices for the first quarter. This is stronger than the previous 0.1% rise and the estimated 0.2% gain, suggesting that consumer price levels could enjoy stronger upward pressure later on. However, Aussie bulls didn’t party after the release, as most forex traders and analysts continue to price in expectations for an RBA rate cut next week.

The Kiwi was also hit by rate cut expectations after Finance Minister Bill English highlighted the fact that inflation has been below trend for quite some time, citing that the RBNZ might have scope to lower interest rates. NZD/USD is down by 25 pips (-0.34%) after breaking below the .7600 major psychological support while NZD/JPY is lower by 13 pips (-0.15%).

The forex calendar shows that the British pound might steal the show in the upcoming London trading session since the U.K. is gearing up to release its manufacturing PMI. The reading is expected to improve from 54.4 to 54.6, which would reflect a stronger pace of expansion and possibly allow the pound to resume its climb. Watch out for that release at 9:30 am GMT!

U.S. Session Recap

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