Article Highlights

  • Australia celebrates Australia Day
  • New Zealand celebrates Wellington Anniversary
  • AU NAB business confidence down from 5 to 3 in December
  • AU NAB business conditions down from 10 to 7
  • Japanese trade surplus widened from 0.02T JPY to 0.04T JPY
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Forex traders started their week on a positive note, thanks to rising commodity prices and an extension of risk appetite trading in the equities markets.

Major Events:

Japan’s trade data vs. more BOJ easing – The yen’s price action was a mixed bag of nuts as Japan’s trade balance report warred with speculations of more easing from the Bank of Japan (BOJ). If you recall, a news report last week hinted that the central bank is “seriously considering” adding to its already substantial stimulus program.

Luckily for yen bulls, Kuroda was mum on the issue and didn’t add fuel to the fire during his speech over the weekend. It also helped that Japan’s trade activity reflected a surplus of 140.2B JPY ($1.2B) in December. Apparently, the 8% decline in exports was offset by an 18% decrease in imports. Okay, so the surplus had more to do with falling oil prices than improvement in activity. For now, the bulls are taking it.

Appetite for equities and commodities – Market players brought their A-game and pushed equities and commodities higher across the board. For starters, the cold climate in the Northern hemisphere is boosting oil demand and extending the Black Crack’s rally.

Crude is up by 1.24% while Brent is up by 1.83% to $33.47. Meanwhile, gold is edging 4.40% higher thanks to pre-FOMC jitters among dollar traders. Equities traders must have also had their caffeine fix, with Nikkei up by 0.90%; Hang Seng up by 1.14%, and ASX 200 up by 1.84%.

Major Currency Movers:

USD and JPY – Low-yielding currencies had no match for their high-yielding counterparts in a risk-appetite environment. USD/JPY, however, remained in a tight battle just below the 119.00 handle.

EUR/USD inched 8 pips higher (+0.07%) while EUR/JPY rose by 29 pips (+0.23%) throughout the session. Ditto for GBP/USD and GBP/JPY, which rose by 33 (+0.23%) and 55 pips (+0.33%) respectively.

Comdolls – The Aussie and Kiwi benefited the most from the extension of risk appetite in the markets.

AUD/USD gained 18 pips (+0.26%) while NZD/USD also surged by 33 pips (+0.51%). Interestingly, the oil-related Loonie remained relatively unmoved across the board despite the rally in oil prices.

Watch Out For:

  • 9:00 am GMT: German IfO business climate to slip from 108.7 to 108.5?
  • 9:00 am GMT: Italian retail sales to rise by 0.2% vs. 0.3% decline last month?
  • 11:00 am GMT: German Buba monthly report
  • 11:00 am GMT: U.K. CBI industrial order expectations expected at -10 vs. -7 previous

See more:

U.S. Session Forex Recap

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