Asian Session Forex Recap – Oct. 21, 2016

Article Highlights

New Zealand’s annualized credit card spending shoots up by 8.2% vs. 2.0% uptick in August
Dollar continues to dominate the forex scene
BOJ to move inflation target schedule again?

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The dollar continued to clobber its major counterparts, as a lack of new economic releases inspired Asian session forex traders to extend moves from the previous session.

Major Events:

Overall risk aversion – The dollar continued to gain across the board thanks to a combination of factors. For one thing, risk-aversion vibes from weak earnings reports during the U.S. session extended to the Asian session and limited risk appetite.

It also didn’t help that EUR/USD’s sharp decline during the U.S. session boosted the dollar across the board, which made USD-denominated commodities (like oil and gold) more expensive for non-U.S. buyers.

Australia’s S&P/ASX 200 is down by 0.30% to 5,425.80
China’s Shanghai index is down by 0.36% to 3,073.44
Hong Kong’s Hang Seng is flat 23,374.40
Nikkei 225, boosted by a weaker yen and strong dollar prospects, is up by 0.03% to 17,230.99

Meanwhile Brent crude oil is down by 0.23% to $51.26 while U.S. crude oil prices is also down by 0.32% to $50.47.

BOJ to adjust inflation expectations…again? – Earlier today Bank of Japan (BOJ) Governor Kuroda hinted that he and his team might push back their estimates for when the economy will hit their 2.0% target…again.

In a speech in Parliament, he said that “It’s already in the middle of the fiscal year, but the rate of price increases is in negative territory,” adding that “There may be some modification to our forecast that inflation will hit our 2% target during fiscal 2017.” Take note that Japan’s fiscal 2017 runs from April 2017 through March 2018. Will this mean more stimulus from the BOJ next month?

Major Market Movers:

USD – The dollar gained a couple more pips against its major counterparts when no new catalyst showed up to change the previous session’s price action.

EUR/USD is down by another 22 pips (-0.20%) to 1.0905, USD/CHF popped up by another 24 pips (+0.24%) to .9951, USD/CAD rose by 22 pips (+0.17%) to 1.3244, and NZD/USD slid by 26 pips (-0.36%) to .7169.

JPY – Unlike the dollar, the yen ended the session in the red against most of its major counterparts. Kuroda’s dovish remarks might have helped, of course.

USD/JPY shot up by another 15 pips (+0.14%) to 104.10, AUD/JPY inched 4 pips higher (+0.05%) to 79.42, and EUR/JPY, which hit a session high of 113.86, eventually fell back down to 113.51 (-0.06%).

Watch Out For:

8:30 am GMT: U.K. public sector net borrowing (8.6B GBP expected, 10.1B GBP previous)
9:00 am GMT: German Bundesbank President Weidmann to speak in Frankfurt