Article Highlights

  • NZ CPI (q/q): -0.5% vs. -0.2% expected, 0.3% previous
  • AU Westpac consumer sentiment: -3.5% vs. -0.8% last month
  • China foreign direct investments slightly down from 7.9% to 6.4% from a year earlier
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Risk aversion was the name of the game during the Asian session, as forex traders priced in weak data and new lows for oil prices.C.

Major Events:

New Zealand’s inflation report – Australia’s trading neighbor started the day on the wrong side of the charts after its CPI report printed weaker than analysts had expected. The report clocked in a 0.5% decline for Q4 2015, its largest quarterly drop since December 2008. This put the annual inflation at 0.1% for 2015, the lowest reading in 17 years.

For reference, the RBNZ has been targeting a 1%-3% annual inflation for more than a year now. A closer look reveals falling oil prices and cheaper fresh food as the biggest culprits for the decline in consumer prices.

More losses for oil – The Black Crack fell further across the board today, thanks to investors digesting an EIA report that hinted that the markets could “drown in oversupply,” at least until 2016. Brent crude is down by almost 1% to $28.55 while WTI is down by 1.37% to $29.16.

Nikkei leads risk aversion in equities – Japanese traders led the risk aversion parade following further declines in oil prices and weak U.S. equities performance. It also didn’t help that the recent yen strength is dragging down Japanese exporting companies. Before lunch break, Nikkei was down by 2.90%; Shanghai was down by 1.38%; Hang Seng was down by 3.77%, and Australia’s ASX was down by 1.23%.

Major Currency Movers:

JPY – When risk aversion is in Vogue, you can bet your neighbor’s cat that forex traders will flock low-yielders like the yen.

USD/JPY fell by 47 pips (-0.40%); EUR/JPY slipped by 16 pips (-0.13%), and GBP/JPY plummeted by 94 pips (-0.57%). Heck, even CHF/JPY saw a 25-pip decline (-0.21%)

NZD – The Kiwi caught a double whammy over New Zealand’s weak inflation readings and overall risk aversion in the markets.

NZD/USD is down by 100 pips (-1.54%); NZD/JPY is down 147 pips (-1.93%); GBP/NZD rocketed by a whopping 308 pips (+1.41%), and AUD/USD popped up to 1.0842 before settling down to 1.0763.

CAD – Loonie bears were given fresh meat today, thanks to oil prices making new lows in the markets.

USD/CAD popped up by 56 pips (+0.38%); CAD/JPY is down by 63 pips (-0.78%) and EUR/CAD popped up by 104 pips (+0.65%).

Watch Out For:

  • 7:00 am GMT: German PPI expected to deteriorate from -0.2% to -0.3%
  • 9:30 am GMT: U.K. employment numbers. It includes claimant count and average earnings, all of which the BOE are very much interested in. Read how it can affect the pound this week!
  • 10:00 am GMT: Swiss ZEW economic expectations

See more:

U.S. Session Forex Recap

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

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