Article Highlights

  • Japanese Sept flash manu PMI down from 51.7 to 50.9 vs. 51.3 forecast
  • New Zealand trade deficit widened to 1035M NZD vs. 875M NZD in Aug
  • New Zealand July trade deficit downgraded from 649M NZD to 726M NZD
  • Fonterra upgraded milk payout forecasts
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Yen forex pairs sprang back to action upon the return of Japanese traders from their long holiday and the release of Japan’s flash manufacturing PMI. Analysts expected the index to fall from 51.7 to 51.3 in September but saw a sharper drop to 50.9, reflecting a worse slowdown in industry expansion.

USD/JPY is down 26 pips and is testing support at 120.00 (-0.21%), EUR/JPY is lower by 18 pips to 134.32 (-0.14%), and GBP/JPY is down 16 pips to 183.25 (-0.04%).

Earlier in the trading session, New Zealand printed its August trade balance and indicated a wider deficit of 1035 million NZD versus the projected 875 million NZD shortfall. Components of the report revealed that exports actually picked up by 5.6% year-over-year, led by meat and fruit shipments. Imports also posted gains, which suggests that the trade report isn’t all that bad. However, the previous trade balance for July suffered a downgrade from a 649 million NZD deficit to a 726 million NZD shortfall.

On a more positive note, Fonterra announced higher milk payout forecasts, hinting that the slump in the country’s dairy industry might already be over. New Zealand’s largest dairy company and exporter boosted its 2014/15 milk payout from $3.85 to $4.40, potentially yielding higher revenues for farmers and producers. Still, the company noted that while prices are picking up, an increase in demand has yet to be seen.

NZD/USD is up 20 pips and is closing in on the .6300 handle (+0.33%), NZD/JPY is up 10 pips to 75.50 (+0.11%), and AUD/NZD is down 37 pips to 1.1118 (-0.38%). The Kiwi also chalked up gains against its European forex peers, with EUR/NZD down by 40 pips (-0.22%) and GBP/NZD down by 29 pips (-0.12%).

Euro bears seem to be revisiting the forex arena, as Germany just printed a weaker than expected GfK consumer climate index of 9.6 versus the projected 9.8 figure, down from the previous 9.9 reading. The German IFO business climate index is up next and a decline from 108.3 to 107.6 is expected. The ECB’s targeted LTRO program is also scheduled to roll out today, adding to the downside pressure on the shared currency.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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