Article Highlights

  • AU MI inflation expectations slips from 4.3% to 4.1% in January
  • AU unemployment rate slips from 5.8% to 5.7% in January
  • AU employment change clocks in at 13.5K vs. 9.7K expected, 16.3K previous
  • BOJ’s Kuroda: Low profits at financial institutions could sow seeds of new financial crisis
  • FOMC voting member Dudley: Fed aims to raise rates “in the months ahead”
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Profit-taking was the name of the game during the Asian forex trading session, as a lack of major catalysts inspired traders to book profits from the previous days’ price action.

Major Events:

Australia’s employment data – Earlier today, Australia’s Bureau of Statistics printed January’s employment numbers. The headline unemployment rate came in at 5.7%, slightly lower than December’s 5.8% reading. A closer look, however, paints a not-so-rosy picture.

As it turns out, most of the job gains came from part-time employment. Australia added a net of 13,500 jobs in January, but only because the 58,300 increase in part-time jobs offset the whopping 44,800 decrease in full-time employment.

Labor force participation rate also slipped from 64.7% to 64.6%, which hints that the drop in unemployment rate is caused by workers getting discouraged rather than finding jobs. On the bright side, monthly hours ticked higher ticked 0.6% higher for the month.

Today’s releases means that there are now 129,800 more part-time workers than there were a year ago, while 40,100 fewer workers enjoying full-time jobs. For the next couple of months, you can bet your pips that the RBA (and other market player) will pay closer attention to the quality of Australia’s jobs and what it could mean for consumers’ spending habits.

Central banker speeches – Bank of Japan (BOJ)’s Kuroda made headlines earlier today when he hinted that easy monetary policy might sow the seeds of a new financial crisis.

In a conference on deposit insurers, Kuroda cautioned against low profits of financial institutions, saying that while easy monetary policy measures were necessary to stimulate growth, it has also hurt profits for institutional investors by narrowing their margins. He added that mergers and consolidations remain good options for financial institutions.

Kuroda’s sentiments came as a surprise especially on the heels of him defending the benefits of massive stimulus on the economy.

Elsewhere, FOMC voting member Dudley weighed in his hawkish bias earlier today when he said that he expects to raise interest rates “in the months ahead” if the pace of growth runs just above 2.0% and inflation continues to rise.

He also remained confident that Trump and Congress will pursue fiscal policy stimulus, which further “tilts the risks to the economy a little to the upside.” Looks like further rate hikes are getting thumbs up from even the notoriously dovish members!

Overall profit-taking – The dollar weakened against most of its counterparts after performing strongly in the past couple of days. Word around the hood is that the combination of easing Treasury yields from their peaks; a lack of additional hawkish guidance from Yellen, and retail sales rising due to higher prices rather than larger volumes convinced traders to book their profits.

Nikkei lost 0.53% on the dollar’s weakness against the yen, while Australia’s A SX 200 also slipped by 0.08%. China’s markets remain positive though, with the Shanghai index climbing by 0.19% and Hang Seng shooting 0.41% higher.

Market Movers:

USD – The dollar gave back some of its gains on a round of profit-taking in the Asian markets.

EUR/USD shot up by another 24 pips (+0.23%) to 1.0613, USD/JPY dipped by 35 pips (+0.31%) to 113.91, and USD/CHF slipped by 29 pips (-0.29%) to 1.0039.

AUD – The Aussie hovered near its three-week highs when Australia’s jobs data came out, but soon lost steam as traders took a closer look at the details.

AUD/USD spiked to .7773 before settling down to .7711, AUD/JPY hit a session high of 88.18 before sliding back down to 87.82, and AUD/NZD made a play for the 1.0696 handle before ending the morning session at 1.0671.

Watch Out For:

  • 7:30 am GMT: French unemployment rate (9.8% expected, 10.0% previous)
  • 10:00 am GMT: Italian trade balance (4.00B EUR expected, 4.20B EUR previous)

See also:

U.S. Session Recap
London Session Recap

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