Article Highlights

  • Japan’s flash manufacturing PMI disappoints at 48.0 vs. 49.6 expected, 49.1 previous
  • Japan’s tertiary industry activity down by 0.1% vs. 0.4% decline expected, 0.7% uptick in January
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It was a topsy-turvy day for the major currencies, as forex traders extended the U.S. session themes and priced in changes in oil prices.

Major Events:

V-shaped trading – Asian session traders started their day extending the overall risk aversion from the U.S. session. If you recall, weak corporate earnings and a decline in oil prices boosted safe havens like the Greenback across the board. Fortunately for the bulls, risk appetite soon picked up and pared the losses of the higher-yielding currencies.

Japan’s disappointing reports – Japan’s flash manufacturing PMI and tertiary industry activity numbers both printed lower than their previous readings. Manufacturing fell by its fastest pace in more than three years, thanks in part to earthquake concerns in the Land of the Rising Sun. This is not good news for the Bank of Japan’s (BOJ) Kuroda who has all but hinted that the central bank is ready and willing to make it rain to help boost the economy.

Oil price recovery – There were no major economic reports on tap today, so investors turned their attention to the Black Crack. This time around they focused on China’s recent upside surprises in economic data, falling U.S. oil production, and lower-than-expected increases in U.S. crude stockpiles. This is probably why Brent crude oil is currently trading 1.28% higher at $45.10 while U.S. oil is also up by 1.44% to $43.81.

Major Currency Movers:

JPY – The pickup in risk appetite took its toll on the yen, which then boosted the Nikkei hours after the opening bell. Still, it doesn’t explain the sudden spike for the yen crosses seen just after the break. An algo, perhaps? In any case, the yen dropped across the board.

USD/JPY is up by 57 pips (+0.52%), EUR/JPY is up by 70 pips (+0.57%), and GBP/JPY is up by a whopping 106 pips (+0.68%).

USD – The dollar lost some pips to its counterparts thanks to a risk-friendly trading environment and higher oil prices.

EUR/USD inched 6 pips higher (+0.05%), GBP/USD is up by 21 pips (+0.15%), and USD/CAD is down by 13 pips (-0.10%).

Watch Out For:

  • 7:00 am GMT: French flash manufacturing PMI (49.9 expected vs. 49.6 previous)
  • 7:00 am GMT: French flash services PMI (50.2 expected vs. 49.9 previous)
  • 7:30 am GMT: German flash manufacturing PMI (51.0 expected vs. 50.7 previous)
  • 7:30 am GMT: German flash services PMI (expected to remain at 55.1)
  • 8:00 am GMT: Euro Zone flash manufacturing PMI (51.8 expected vs. 51.6 previous)
  • 8:00 am GMT: Euro Zone flash services PMI (53.3 expected vs. 53.1 previous)
  • 9:00 am GMT: Italian retail sales (0.2% expected vs. 0.0% previous)

See more:

U.S. Session Forex Recap

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Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!