Article Highlights

  • Paris attacks cause weekend gaps among major currencies
  • IMF fund staff endorses yuan to be included in the SDR reserve currency basket
  • Japan is back in recession…again
  • Japan prelim Q3 2015 GDP: -0.2% vs. -0.1% expected, -0.3% previous
  • Japan prelim Q3 2015 GDP (y/y):-0.8% vs. -0.2% expected, -1.2% previous
  • UK Rightmove house prices: -1.3% vs. 0.6% previous
  • AU new motor vehicle sales -3.6% v. 5.9% expected
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Major Events:

Paris attacks – Not surprisingly, terrorist attacks in Paris weighed on high-yielding currencies and caused weekend gaps among major pairs. Risk aversion had traders flocking to safe-haven, or low-yielding currencies and other investments.

Hong Kong’s Hang Seng Index is down 1.6%, followed by Korea’s KOSPI (-1.5%) and Japan’s Nikkei and Australia’s ASX all losing about 1.0%.

Japan enters technical recession…again – The Land of the Rising Sun fell into its second technical recession since December 2012 when Prime Minister Shinzo Abe took office. Apparently, weak global growth outlook and weak demand from China had Japanese companies holding back on inventory and business spending. GDP dropped by an annualized rate of 0.8% in Q3 2015 after a 0.7% decline in Q2. Will these numbers prompt the BOJ to step up its QQE program?

Commodities gain ground – Gold, usually a favorite bet in times of risk aversion, jumped by 1.0% during the session while oil prices also saw some gains as traders anticipated retaliation and increase in demand for the black crack. The comdolls didn’t gain much support from commodities though, as risk aversion still limited the gains for the high-yielding currencies.

Major Currency Movers:

JPY – Weekend gaps, weekend gaps everywhere! The yen was under the spotlight as Japan’s markets received a double whammy of Japan getting hit with another technical recession and overall risk aversion from Paris’ attacks.

USD/JPY gapped 39 pips lower but is currently trading with an 18-pip gain while EUR/JPY gapped 48 pips lower and even hit an intraday low of 130.65 before getting back up to 131.32.

USD – Overall risk aversion and possibly profit-taking from last Friday’s slight losses pushed the Greenback higher across the board. EUR/USD slipped by 12 pips (-0.11%) while GBP/USD also stepped back by 8 pips (-0.05%) and USD/CHF popped up by 12 pips (+0.12%).

Comdolls – The Aussie, Loonie, and Kiwi found some support from stronger gold and oil prices as well as a better-than-expected retail sales report from New Zealand. Still, it was risk aversion that dictated price action and the comdolls ended up sustaining net losses against its lower-yielding counterparts.

AUD/USD is back to its session open prices after rising to an intraday high of .7135 while AUD/JPY hasn’t closed its 35-pip gap as the pair hasn’t moved much from its open prices. NZD/USD also dropped from its session high of .6581 to trade at .6529 as NZD/JPY drops from its 80.52 session high to trade at 79.99. Last but not the least is USD/CAD, which popped up to a high of 1.3336 before sliding back down to 1.3318.

Watch Out For:

  • 10:00 am GMT Euro Zone final CPI (y/y)
  • 10:15 am GMT Draghi will give a speech in Madrid. Watch out for any hints of QE from the ECB head honcho!
  • 11:00 am GMT Germany’s Bundesbank monthly report

See more:

U.S. Session Recap

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