Article Highlights

  • Australia HIA new home sales shoots up by 6.0% vs. 2.7% decline last month
  • China still on bank holiday
  • BOJ intervenes by checking interbank rates
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A lack of economic data forced forex traders into trading yesterday’s themes, and pushed the major currencies deep into Chopsville.

Major Events:

Risk aversion continues – Thanks to the lack of market-moving reports, Asian session traders barely had anything new at hand and so they continued on with the risk aversion theme. Investors ignored a slight improvement in Australia’s new home sales report as well as upticks in commodity prices in favor of concerns for energy-related equities.

BOJ intervention? – Market bees are buzzing that the Bank of Japan (BOJ) literally called some interbank dealers to “check” their rates. This spooked more than a few market makers and inspired a spike among yen crosses. If you recall, the BOJ has been struggling to stimulate inflation and their negative interest rates aren’t having any impact amidst a risk-averse environment.

All eyes on Yellen – With barely any economic reports due for release over the next couple of hours, forex traders are looking to Janet Yellen for new direction. The Fed head honcho will give her semi-annual monetary policy report before the House Financial Services Committee in D.C., and is expected to drop a couple of hints on whether they’re sticking to their rate hike prediction of four rate hikes this year.

Major Currency Movers:

JPY – The low-yielding currency was all over the place when risk aversion warred with spikes resulting from the BOJ’s “intervention.”

USD/JPY capped the session with a 55-pip loss (-0.48%) while EUR/JPY also slipped by 56 pips (-0.43%) and GBP/JPY dropped by 69 pips (-0.42%).

Comdolls – The high-yielding currencies shrugged off Australia’s better-than-expected economic data and a bit of improvement in commodity prices.

AUD/USD slipped by 5 pips (-0.07%) while USD/CAD ticked 23 pips higher (+0.17%) and NZD/USD fell by 22 pips (-0.33%).

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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