Article Highlights

  • BRC retail sales monitor up by 2.6% vs. 0.1% growth last month
  • Australia business conditions down from 7 to 5
  • Australia business confidence down from 3 to 2
  • Japan preliminary machine tool orders down by 17.2% vs. 25.7% decline last month
  • 5.7 magnitude earthquake in New Zealand registered
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Thanks to another low-volume trading session, forex traders extended the risk aversion theme across the board.

Major Events:

Risk aversion intensifies – With most of the Asian markets still out on holidays, market players had extended the U.S. session’s risk-aversion theme. Nikkei dropped to a fresh three-week low on the back of poor performances of Japan’s export stocks, while the Australian markets also saw red with a 2.33% loss. It also didn’t help that oil prices tanked once again, while concerns over global growth and the major central banks’ contest to set the most negative interest rates made the headlines.

Double whammy for the Aussie – As if risk aversion and weak Australian markets wasn’t enough, the Aussie also had to deal with weaker-than-expected business conditions and business confidence reports from the Land Down Under. Both releases remained tepid in January, which isn’t the best picture to project when the economy is struggling to hold up amidst falling oil prices and global growth concerns.

Major Currency Movers:

JPY – Continued risk aversion sent forex traders in the arms of the low-yielding yen and pushed it higher across the board despite weaknesses in the Japanese equities markets.

USD/JPY is struggling below the 115.00 handle, EUR/JPY is down 95 pips (-0.73%), GPB/JPY fell by another 137 pips (-0.82%), and AUD/JPY dropped by 116 pips (-1.42%).

Comdolls – The Aussie might have taken more hits, but the other comdolls were also fair game in a risk-averse environment.

AUD/USD fell by 53 pips (-0.75%), EUR/AUD is up by 114 pips (+0.72%), and GBP/AUD shot up by `25 pips (+0.61%). Meanwhile, USD/CAD inched 6 pips higher (+0.04%) and NZD/USD slipped by 35 pips (-0.53%).

Watch Out For:

  • 6:45 am GMT: Switzerland unemployment rate (3.5% expected vs. 3.4% previous)
  • 7:00 am GMT: German industrial production (0.2% expected vs. -0.3% previous)
  • 7:00 am GMT: German trade balance (19.4B surplus expected vs. 19.7B surplus last month)
  • 9:30 am GMT: U.K. trade balance (10.4B GBP deficit expected vs. 10.6B GBP deficit previous)

See more:

U.S. Session Forex Recap

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