Article Highlights

  • New Zealand credit card spending up by 7.4% vs. 8.4% uptick in December
  • Japan corporate services prices up by 0.4% vs. 0.2% previous
  • Australian markets out on Australia Day holiday
  • Australian markets out on Australia Day holiday
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Risk aversion was the name of the game during the Asian session, as forex traders priced in lower oil prices and dovish Fed decision speculations.

Major Events:

More losses for oil – Thanks to a lack of market-moving economic reports, analysts had time to look closely into oil price movements. Black Crack prices have been sliding since yesterday and the bears have gained momentum. Brent crude is currently down by 1.81% to $30.40 while WTI is down by 2.79% to $29.49. Could this mean a return to a risk-off environment?

PBoC conducts largest open market cash injection in 3 years
– Aside from lowering the USD/CNY midpoint by a bit, the People’s Bank of China (PBoC) also conducted its largest open-market cash injection in three years. The central bank sold 80 billion yuan worth of 7-day reverse repos and an addition 28-billion yuan worth of reverse repos. Not a surprising move though, since market players had expected a liquidity injection from the PBoC ahead of China’s Lunar New Year celebrations starting February 8.

Safe havens rule the session – Uncertainty over oil price slides and the upcoming central bank decisions pushed forex traders back into the arms of safe-haven investments like gold and the low-yielding yen. The dollar wasn’t in the running, likely due to analysts speculating on a dovish Fed decision this week. Gold rocketed to a 12-week high of $1,113.79 and is currently up by 0.73%.

Major Currency Movers:

JPY – The yen was one of the biggest gainers of the session with USD/JPY falling by 48 pips (-0.41%); EUR/JPY slipping by 36 pips (-0.28%); GBP/JPY dropping by 99 pips (-0.59%), and AUD/JPY plunging by 60 pips (-0.73%).

CAD – We can’t really talk about oil without talking about how it had affected the oil-related Loonie’s prices. Not surprisingly, currency fell across the board.

USD/CAD shot up by 58 pips (-0.41%) while CAD/JPY saw a 68-pip decline (-0.82%) and GBP/CAD rose by 32 pips (+0.16%). Last but not the least is EUR/CAD, which is 84 pips (+0.55%) higher than its session open price.

Watch Out For:

  • 7:00 am GMT: Switzerland trade balance (2.90B CHF expected vs. 3.14B CHF surplus last month)
  • 10:45 am GMT: BOE Governor Carney to testify on the Financial Stability Report before the Treasury Select Committee in London. Will we hear more concerns over wages and inflation?

See more:

U.S. Session Forex Recap

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