Article Highlights

  • NZ building consents down by 7.2% vs. 9.6% decline in November
  • Japan’s core machinery orders shoots up by 6.7% vs. 3.2% expected, 5.1% decline in November
  • AU HIA new home sales inches up by 0.2% vs. 6.1% uptick in November
  • U.K. RICS house price balance up to 25% vs. 23% expected and previous
  • AU NAB quarterly business confidence down from 6 to 5 in Q4 2016
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The dollar recouped some of its losses from the previous session, while the New Zealand continued its decline across the board following a dovish RBNZ statement. Here’s what happened during the Asian forex trading session!

Major Events:

Japan’s machinery orders Core machinery orders in Japan rose by 6.7% in December. The reading is a big improvement from November’s 5.1% decline and the 3.2% uptick that market players had expected.

For newbies out there, you should know that core orders exclude ships and orders from the electric power utilities. The report tends to produce volatile results, but is still widely regarded as a leading indicator for capital spending in the next six to nine months.

A closer look tells us that core orders from manufacturers jumped by 1.0% in December following a 9.8% uptick in November. Meanwhile, orders from the services sector rose by 3.5% after falling by 9.4% in November.

The better-than-expected release further puts Japan’s Shinzo Abe in a pickle. See, the PM is due to meet Trump over the weekend where they’re expected to talk about how Japan has been taking advantage of its existing trade deals with Uncle Sam.

More losses for Kiwi – Losses for the New Zealand dollar didn’t stop at the RBNZ’s dovish statement. For starters, New Zealand’s building approvals fell by another 7.2% in December after clocking in a 9.6% decline in November.

It also didn’t help that RBNZ Assistant Governor John McDermott kept the downward pressure on the Kiwi. In an interview following the RBNZ decision, McDermott shared that the central bank is still “uncomfortable” with the current level of NZD, and that they want to be sure about the 2.0% inflation before they consider raising rates.

As mentioned in my U.S. session recap, Wheeler and his team had just moved the goal posts on inflation targets. They’re now expecting to hit their 2.0% goal in Q2 2019 rather than in Q4 2018. Duhn duhn duhn.

Major Market Movers:

USD – The dollar recouped some of its losses from the previous session, as a bit of risk-aversion convinced traders to load up on the low-yielding currency.

EUR/USD almost hit 1.0700 before falling back down to 1.0686, USD/JPY fell to a low near 111.75 before recovering to 112.00, and USD/CHF climbed back up to the .9950 area.

NZD – The New Zealand dollar extended its losses following weak reports from New Zealand and more jawboning from RBNZ’s Assistant Governor.

NZD/USD dropped by another 60 pips or so to test the .7200 support while NZD/JPY also lost more than 100 pips to the 80.65 area.

Watch Out For:

  • 7:00 am GMT: Japan’s preliminary machine tool orders (y/y)
  • 7:45 am GMT: Switzerland’s unemployment rate expected to remain at 3.3%
  • 8:00 am GMT: German trade balance (23.2B EUR expected, 21.7B EUR previous)

See also:

U.S. Session Recap
London Session Recap

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