Article Highlights

  • Land Down Under celebrates Australia Day holiday
  • NZ Q4 2016 CPI rose to its highest since 2014
  • Japan’s service producer price index clocks in at 0.4% vs. 0.3% in November
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The Greenback continued to take hits from its major counterparts, as Asian session traders priced in the overall risk appetite and concerns over the Trump administration’s currency biases.

Major Events:

New Zealand’s Q4 CPI – Higher prices of newly-built houses pushed New Zealand’s consumer prices up by 1.3% from a year earlier in Q4 2016. This is much better than the 0.4% uptick in Q3 and the expected 1.2% increase. Not only that, but it also marks the fastest CPI growth since Q3 2014! Wowza!

On a quarterly basis, this translates to a 0.4% growth, a bit higher than the 0.3% uptick seen in Q3.

A closer look tells us that housing-related prices continued to drive overall prices higher, with purchase of newly-built houses excluding land up by 6.5%, its largest increase since Q3 2005. Transport prices also rose by 3.7% thanks to higher oil prices, while prices of non-tradeable goods saw a 2.4% gain.

Overall, the better-than-expected CPI report is expected to lessen the pressure on the Reserve Bank of New Zealand (RBNZ) to stimulate the economy. Not surprisingly, Kiwi bulls came out of the woodwork and pushed the comdoll higher across the board.

Overall risk appetite – With not a lot of fresh catalysts in the last couple of hours, Asian bourses simply tracked its Wall Street counterparts. And, as I mentioned in my U.S. session recap, market players partied in the streets when the Dow breached the 20K mark on Trump’s latest policy announcements.

Nikkei, which received an extra boost from bullish earnings season expectations, jumped by 1.62% while Hang Seng also rose by 1.39% and the Shanghai index inched 0.13% higher.

Oil prices also shot higher after an inventory report dragged Black Crack a bit lower across the board. Recall that a weaker Greenback is good news for non-U.S. buyers of dollar-denominated goods like crude oil.

Major Market Movers:

JPY – USD/JPY weakness dragged the other major yen crosses lower at the start of the session, but overall risk appetite soon weighed on the low-yielding currency.

USD/JPY fell to 113.05 before easing to 113.35, GBP/JPY slipped to 142.91 before recovering to 143.38, and EUR/JPY dipped to 121.68 before ending the session at 121.94.

NZD – New Zealand’s strong CPI report boosted the Kiwi early in the session, but soon gave back some of its gains as the trading session progressed.

NZD/USD shot up to .7314 before closing at .7284 (+0.33%), NZD/JPY hit a high of 82.87 before calling it quits at 82.58 (+0.12%), and AUD/NZD plummeted to a low of 1.0358 before recovering to 1.0394 (-0.15%).

Watch Out For:

  • 8:00 am GMT: Switzerland’s trade balance (2.81B expected, 3.64B previous)
  • 8:00 am GMT: Spanish unemployment rate expected to remain at 18.9%
  • 8:00 am GMT: GfK German consumer climate (10.0 expected, 9.9 previous)
  • 9:30 am GMT: German Bundesbank President Weidmann to give a speech in Berlin
  • 10:30 am GMT: U.K. preliminary GDP release. Read Forex Gump’s trading guide about the event!
  • 10:30 am GMT: U.K. BBA mortgage approvals (41.1K expected, 40.7K previous)
  • 10:30 am GMT: U.K. services index (0.9% expected, 1.0% previous)

See also:

U.S. Session Recap
London Session Recap

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