Article Highlights

  • China CB leading index: 0.6% vs. 1.6% previous
  • NZ credit card spending: 7.8% vs. 7.3% previous
  • RBA’s Heath: weak AUD has helped boost growth
  • PBoC reduces Standing Lending Facility (SLF) Rates
  • Asian equities markets mixed
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Forex price action was a mixed bag of nuts, as a lack of major economic data paved the way for a bit of profit-taking and extension of yesterday’s moves.

Major Events:

Continuation/extension of yesterday’s moves – With no major data on the docket, forex traders started the trading session extending the dollar’s weakness, a theme that has been playing out since the FOMC minutes all but hinted at a December rate hike. Whether it’s profit-taking or overall risk aversion though, the Greenback soon recovered some of its losses halfway through the session.

PBoC cuts its short-term rates – The People’s Bank of China (PBoC) reduced its Standing Lending Facility (LSF) interest rates with the seven-day rates cut from 3.25% to 2.75% and its overnight rates down from 5.5% to 4.5%. Unlike the bank’s interest rates and RRR, the shorter, less popular SLF rates are rarely used to influence price action. Nevertheless, the changes hinted that the central bank might be getting into its easing mode again and inspired some talks of further stimulus from the PBoC.

RBA’s Heath talks about improvements – Alex Heath, head of economic analysis for the RBA, gave an upbeat speech and talked about the positive impact of a weaker currency on economic growth. Not surprisingly, the speech gave the Aussie a bit of boost throughout the session.

Major Currency Movers:

USD – The Greenback started the trading session weak against its forex counterparts before a round of profit-taking hit the markets and enabled the dollar to gain some pips.

EUR/USD is down 15 pips (-0.14%), GBP/USD is down by 6 pips after falling to a session low of 1.5271, USD/JPY is back down to its open price after hitting a session high of 123.05, and USD/CHF hit resistance at 1.0154 before capping the session at 1.0315.

AUD and NZD – The comdolls were some of the currencies that managed to extend their gains against the Greenback. One possible reason is that the Aussie got further boost from Heath’s bullish statement while the Kiwi found support from a stronger-than-expected credit card spending report in New Zealand and a bit of profit-taking from yesterday’s dairy prices-related moves.

AUD/USD hit a session high of .7211 before slipping back to its open prices while AUD/JPY also hit a session high of 88.60. Meanwhile, NZD/USD popped up by 25 pips (+0.38%) while NZD/JPY is up 29 pips (+0.36%).

Watch Out For:

  • 7:00 am GMT German PPI report (expected at -0.2% vs. -0.4% expected)
  • 8:00 am GMT Mario Draghi gives a speech. Watch out for any hints of future stimulus!
  • 9:30 am GMT UK public sector borrowing (expected at 6B GBP vs. 9.4B GBP previous)
  • 10:15 am GMT German Bundesbank President Weidmann to give a speech

See more:

U.S. Session Recap

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