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Today’s Asian session was rather quiet, with most currency pairs contently milling about in tight ranges. Aussie pairs and Kiwi pairs were an exception, though, since the two currencies were in a race to the bottom, with the Aussie ultimately winning the (dis)honor of being the weakest currency of the session.

  • Average cash earnings in Japan y/y: -0.4% vs. 0.4% expected, 0.4% previous
  • Australian retail sales m/m: -0.1% vs. 0.3% expected, -0.2% previous

Major Events/Reports:

Australian retail sales disappoint

Retail trade turnover in Australia fell by 0.1% month-on-month in March, missing expectations for a 0.3% rebound. Just as bad, the previous month’s 0.1% decline was downgraded to show a 0.2% fall.

Quarter-on-quarter, retail sales rose by 0.27% in Q1 2017. This is significantly slower than Q4 2016’s 1.07% increase. As such consumer spending will very likely be slower in Q1 2017, which will then likely result in slower GDP growth in Q1.

Looking at the details, four of the six major retail store types printed declines in retail sales turnover in March.

The biggest drag came from the 0.5% drop in retail sales from food retailers. The next major drag was from the 0.5% decline in sales reported by cafes, restaurants, and takeaway food services.

The other drags came from the 0.6% slide in department store sales and the 0.1% contraction in sales from household goods retailers.

Iron ore continues to slide

Iron ore took a another beating during today’s Asian session, with Dalian iron ore down by 2% to 460.50 yuan ($67). And as usual, market analysts are blaming iron ore’s weakness on the build-up in iron ore inventories and weaker demand from Chinese steel mills.

Risk aversion hits Asia-Pacific

Equity indices in the Asia-Pacific region were mixed, but many of the major ones were printing losses.

  • Australia’s ASX 200 was down by 0.48% to 5,842.60
  • New Zealand’s NZX 50 was down by 0.19% to 7,412.12
  • The Shanghai Composite was down by 0.28% to 3,070.01
  • Hang Seng was up by 0.40% to 19,877.00
  • The Nikkei Index was down by 0.09% to 19,877.00

Market analysts attributed the signs of risk aversion on profit-taking due to the lack of positive catalysts, as well as the liquidity crunch in China because of the government’s crackdown on leverage. Other than those, some market analysts were also pointing to jitters over South Korea’s elections.

Major Market Mover(s):

AUD & NZD

The Aussie the the Kiwi both encountered selling pressure during today’s Asian session, very likely because of the risk aversion that seems to have prevailed in the Asia-Pacific region.

The Aussie ended up being the main loser of the session, though. And that was likely because of yet another slide in iron ore prices, as well as Australia’s disappointing retail sales report.

AUD/USD was down by 39 pips (-0.52%) to 0.7351, AUD/CHF was down by 33 pips (-0.45%) to 0.7342, AUD/NZD was down by 19 pips (-0.18%) to 1.0656

NZD/USD was down by 23 pips (-0.34%) to 0.6898, NZD/CAD was down by 30 pips (-0.32%) to 0.9446, NZD/CHF was down by 19 pips (-0.26%) to 0.6889

GBP

Most pound pairs were essentially range-bound for the session and there were no apparent catalysts for the pound. Even so, the pound did manage to score wins against all its forex rivals.

GBP/USD was up by 11 pips (+0.09%) to 1.2952, GBP/NZD was up by 82 pips (+0.44%) to 1.8772, GGB/AUD was up by 109 pips (+0.62%) to 1.7616

Watch Out For:

  • 6:00 am GMT: German industrial production (-0.6% expected, 2.2% previous)
  • 6:00 am GMT: German trade balance (€21.2B expected, €21.0B previous)
  • 6:45 am GMT: French government’s budget balance (-€21.5B previous)
  • 8:00 am GMT: Italian retail sales (0.2% expected, -0.3% previous)
  • 9:30 am GMT: Australia’s annual budget will be released