Every day, I’ll be giving you a recap of all you need to know about what happened during the Asian Session.
From economic reports to news that rocked the markets, you get a quick review of events that moved the major currencies.
You’ll also see these recaps on Forex Market News- BabyPips.com
Pip Diddy
Trade talks took center stage during the Asian session, as traders priced in the U.S.-Mexico trade deal and a promising phone call between Trump and Merkel.
Unless you were too busy playing World of Warcraft: Battle for Azeroth, then you should know that markets were shook in the late U.S. session after the U.S. and Mexico finally inked a trade deal.
You can my U.S. session update for the deets, but for now you should know that the Asian bourses – much like their U.S. counterparts – cheered the development.
Commodities missed the risk appetite train, however. Gold dipped on a bit of dollar strength, while crude oil prices took a breather from its previous sessions’ gains and dipped a bit lower.
A few hours ago, the White House released a statement revealing that President Donald Trump and German Chancellor Angela Merkel “strongly supported ongoing discussions between Washington and Brussels to remove barriers to a deeper trading relationship” over a phone call.
Trump and Merkel reportedly discussed other issues such as Syria and Ukraine, but it was the possibility of better trade relations that fanned the fire from the previous session’s rallies.
Aussie bulls didn’t appreciate the U.S.-Mexico trade deal. For one thing, Trump shared in the same presser that he’s seenzoning China’s negotiation attempts because “it’s just not the right time to talk right now.”
It also didn’t help that copper prices were set to fall for its third out of four sessions as the U.S.-China trade war story played on.
AUD/USD is down by 20 pips (-0.27%) to .7329; AUD/JPY is down by 5 pips (-0.06%) to 81.59; AUD/CAD is down by 19 pips (-0.20%) to .9511; EUR/AUD is up by 41 pips (+0.26%) to 1.5925, AUD/CHF is down by 14 pips (-0.20%) to .7187, and GBP/AUD is up by 25 pips (+0.14%) to 1.7561
Not surprisingly, the possibility of better U.S.-EU trade relations brought the bulls to the euro’s yard.
EUR/JPY is up by 23 pips (+0.18%) to 129.94; EUR/GBP is up by 11 pips (+0.12%) to .9068; EUR/NZD is up by 29 pips (+0.16%) to 1.7460, and EUR/CHF is up by 5 pips (+0.05%) to 1.1445.
###USD
The Greenback continued to inch higher against its major counterparts after the U.S. and Mexico announced a trade deal.
USD/JPY is up by 25 pips (+0.22%) to 111.32; GBP/USD is down by 19 pips (-0.15%) to 1.2872; USD/CAD is up by 10 pips (+0.08%) to 1.2977, and USD/CHF is up by 8 pips (+0.09%) to .9805.
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#Asian Session Recap: CAD Higher on Talks of Canada’s NAFTA Cooperation
Ho-hum. With no fresh catalysts to price in, Asian session market traders took cues from their previous sessions’ counterparts.
Analysts have been talking about how the U.S.-Mexico bilateral trade deal will affect Canada’s prospects almost as soon as the development was announced.
Markets were hopeful that Canadian Foreign Minister Chrystia Freeland and her team could negotiate a deal instead of falling into a tariff battle with the world’s largest economy.
Well, earlier today Globe and Mail cited “people in government and industry familiar with the deal-making” and hinted that Ottawa is “ready to make concessions.”
Apparently, Canada is willing to provide more access to its dairy market and maybe loosen up its intellectual property rules that would grant stricter protections to pharmaceutical patents.
In return, Canada wants to save NAFTA’s dispute-settlement system that allows countries to challenge each others’ duties at binational trade panels.
But there’s a catch. Washington reportedly wants Freeland and her team to sign a deal by Friday or President Trump could walk away from NAFTA altogether and just work with Mexico. What’s more, the POTUS could also make tariffs rain on Canada’s auto exports.
The U.S. and Canada have three days to work it out, but for now, Globe and Mail’s report is keeping market players optimistic.
There were no fresh catalysts to rock the markets today, so Asian session traders played catch up to the previous sessions’ price action.
If you recall, everyone and his momma were happy that the U.S. and Mexico were able to hammer out a deal. It also didn’t hurt that latest economic data pointed to higher confidence among U.S. consumers.
Commodity prices also extended their gains, with gold taking advantage of a bit of dollar aversion while oil prices recovered from their U.S. session losses.
###CAD
The Loonie received support after a report hinted that Canada is ready and willing to give in to some of the U.S.’ more important demands in favor of a deal.
USD/CAD is down by 24 pips (-0.18%) to 1.2908; CAD/JPY is up by 23 pips (+0.26%) to 86.19; EUR/CAD is down by 28 pips (-0.19%) to 1.5094; GBP/CAD is down by 38 pips (-0.23%) to 1.6609, AUD/CAD is down by 10 pips (-0.10%) to .9479; NZD/CAD is down by 10 pips (-0.11%) to .8663, and CAD/CHF is up by 18 pips (+0.24%) to .7565.
###AUD and NZD
A combination of dollar weakness, overall risk appetite, and a steady yuan all helped boost commodity-related currencies like the Aussie and Kiwi.
AUD/USD is up by 6 pips (+0.08%) to .7344; AUD/JPY is up by 12 pips (+0.15%) to 81.70; AUD/CHF is up by 9 pips (+0.12%) to .7171; EUR/AUD is down by 12 pips (-0.07%) to 1.5923; GBP/AUD is down by 19 pips (-0.11%) to 1.7522, and AUD/NZD is up by 5 pips (+0.04%) to 1.0941.
NZD/USD is up by 4 pips (+0.06%) to .6712; NZD/JPY is up by 11 pips (+0.14%) to 74.68; NZD/CHF is up by 8 pips (+0.12%) to .6554, and GBP/NZD is down by 16 pips (-0.08%) to 1.9172.
##Watch Out For:
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#Asian Session Recap: Traders Shrug Off Brexit, NAFTA Updates
The Aussie and Kiwi took the brunt of a bit of profit-taking after Asian session traders shrugged off positive trade developments seen in the previous sessions.
##Major Events/Reports:
###New Zealand’s disappointing reports
The Kiwi started the session on a weak note thanks to a batch of worse-than-expecting reports from New Zealand.
First, building consents dropped by a whopping 10.3% in July, faster than the 8.2% decline we saw in June. While the report is usually a volatile one, the back-to-back declines did NOT give traders happy pills.
Meanwhile, business confidence dropped by another 5 points in August. In a report titled “spooked,” ANZ detailed that manufacturing is the least confident sector while the service industry is the most optimistic.
###Australia’s data misses
Australia didn’t do much better in terms of economic releases.
For one thing, the quarterly private capital spending dipped by 2.5% when analysts had expected a 0.6% increase. More importantly, components that contribute to the GDP, such as plant and equipment (-0.9%), manufacturing (+2.7%), mining (-7.2%) and services (-1.0%) mostly saw declines.
And then there’s July’s business approvals, which dropped by 5.2% after rising by 6.8% in June. For comparison, analysts had only seen a 2.2% drop for the report.
###Markets ignore trade global trade updates
No China? Not our problem! Asian session market players mostly ignored positive developments in the NAFTA and Brexit-negotiations.
In case you missed it, Donald Trump himself is optimistic that we could see a trilateral deal as early as the end of the working week when Canada is expected to agree to handshake deals after days of negotiations.
Meanwhile, the EU looks like it’s ready to offer Britain a unique partnership, something that eased investors’ uncertainties and will help in advancing the Brexit negotiations.
Unlike in the London and U.S. sessions, however, Asian market players weren’t that impressed. Instead, they continued to worry about the (lack of) progress in the U.S.-China trade war.
Word around the hood is that the U.S. will make time for negotiations with China after it finishes with its NAFTA counterparts, but for now, the uncertainty isn’t doing wonders for the Asian bourses.
Gold prices slipped along with other assets, though crude oil prices were cushioned by a larger-than-expected decrease in crude oil inventories printed in the U.S. session.
##Major Market Mover(s):
###AUD and NZD
Disappointing reports and concerns over the unresolved U.S.-China trade war weighed heavily on the Aussie and Kiwi.
AUD/USD is down by 23 pips (-0.32%) to .7287; AUD/JPY is down by 29 pips (-0.36%) to 81.34; AUD/CHF is down by 20 pips (-0.28%) to .7074; EUR/AUD is up by 44 pips (+0.27%) to 1.6057, and GBP/AUD is up by 68 pips (+0.38%) to 1.7883.
NZD/USD is down by 54 pips (-0.80%) to .6659; NZD/JPY is down by 61 pips (-0.82%) to 74.37; NZD/CHF is down by 48 pips (-0.73%) to .6465; GBP/NZD is up by 175 pips (+0.90%) to 1.9567, and AUD/NZD is up by 59 pips (+0.54%) to 1.0942.
##Watch Out For:
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#Asian Session Recap: Trade Concerns Weigh on the Comdolls
Traders mostly shrugged off positive Chinese data, believing that global trade frictions will eventually weigh on economic growth.
##Major Events/Reports:
###Risk aversion in play
Asian session market players took cues from their U.S. counterparts and mostly shrugged off positive economic data printed today.
See, many believe that the piling on of tariffs from the U.S., along with threats of more tariffs in the foreseeable future, will eventually weigh on China’s manufacturing and exporting activities.
Commodities remained unfazed, however, with gold taking advantage of a bit of risk aversion while crude oil prices recovered some of their losses from the previous session.
##Major Market Mover(s):
###AUD and NZD
AUD/USD is down by 11 pips (-0.15%) to .7252; AUD/JPY is down by 12 pips (-0.15%) to 80.48; AUD/CHF is down by 15 pips (-0.22%) t o.7023; EUR/AUD is up by 24 pips (+0.15%) to 1.6084, and GBP/AUD is up by 37 pips (+0.20%) to 1.7937.
NZD/USD is down by 15 pips (-0.22%) to .6642; NZD/JPY is down by 16 pips (-0.21%) to 73.72; GBP/NZD is up by 45 pips (+0.23%) to 1.9583, and NZD/CHF is down by 18 pips (-0.28%) to .6433.
###CAD
USD/CAD is up by 35 pips (+0.27%) to 1.3015; CAD/JPY is down by 20 pips (-0.20%) to 85.27; EUR/CAD is up by 33 pips (+0.22%) to 1.5181, and GBP/CAD is up by 46 pips (+0.27%) to 1.6930.
##Watch Out For:
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#Asian Session Recap: Markets Start the Week with U.S. – China Trade Concerns
Risk aversion was the name of the game during the Asian session, as investors start to price in the U.S. possibly upping its tariff game on China’s goods as soon as this week.
##Major Events/Reports:
###Australia’s data dump
Data from the Land Down Under came in mixed, though that didn’t stop Aussie bulls and bears from being all over the place today.
Retail sales slowed from 0.4% to a flat reading in July, which shook traders who had expected a 0.3% uptick for the month.
Thankfully, a quarterly reading of Australian company profits showed a 2.0% gain when many had only seen a 1.3% increase in Q2 2018. Profits in the mining sector still led the gains, though financial services saw the biggest spike during the period.
And then there’s AIG’s manufacturing index, which rebounded from 52.0 to 56.7 in August. Exports slowed down a bit though the employment sub-index grew by 3 points after stagnating in July.
###Concerns over U.S.-China trade war renews risk aversion
There were tons of economic data printed earlier today but the U.S.-China trade war remained center stage for a lot of investors.
See, a few days ago Trump threatened that he will impose 25% tariff on as additional $200 billion worth of Chinese goods as soon as the public comment period that ended last Thursday passes.
For newbies out there, know that the Trump administration has already imposed tariffs on $50 billion worth of Chinese exports.
It also didn’t help that today’s set of manufacturing reports already pointed to slower global demand as a result of the U.S. and China’s tariffs.
China’s Caixin manufacturing PMI slowed to a 14-month low; Japan’s manufacturing PMI revealed weaker new export orders, and South Korea’s factory activity contracted for a sixth consecutive month. Yowza!
Meanwhile, risk aversion and anticipation of lower demand from China (and other commodity-importing countries) took its toll on commodity prices.
##Major Market Mover(s):
###AUD
The Aussie dropped like a rock in early Asian session trading but a strong company profits report as well as a bit of profit-taking ahead of the U.S. Labor Day holiday helped the comdoll recover some of its losses.
AUD/USD is up by 5 pips (+0.06%) to .7194; AUD/NZD is up by 31 pips (+0.29%) to 1.0888; AUD/CHF is up by 14 pips (+0.21%) to .6978, and GBP/AUD is down by 37 pips (-0.21%) to 1.7970.
###NZD
The New Zealand dollar wasn’t as lucky as the Aussie. Its high-yielding status made it a target for risk aversion and it stayed weak against some of its major counterparts.
NZD/USD is down by 12 pips (-0.18%) to .6607; NZD/JPY is down by 23 pips (-0.31%) to 72.27, and EUR/NZD is up by 44 pips (+0.25%) to 1.7560.
###EUR
There’s no direct catalyst that boosted the common currency against some of its counterparts though its rep of being a safe haven in the European region might have helped some.
EUR/GBP is up by 23 pips (+0.25%) to .8975; EUR/CHF is up by 15 pips (+0.13%) to 1.1255, and EUR/CAD is up by 24 pips (+0.16%) to 1.5152.
###JPY
It was a busy session for the yen bulls, which took advantage of the overall risk aversion in the markets.
USD/JPY is down by 14 pips (-0.13%) to 110.90; EUR/JPY is down by 15 pips (-0.12%) to 128.68; GBP/JPY is down by 47 pips (-0.32%) to 143.37, and CHF/JPY is down by 27 pips (-0.24%) to 114.33.
##Watch Out For:
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#Asian Session Recap: RBA Keeps Rates Steady, Traders Worry About Emerging Markets
As in the previous trading session, Asian session market players priced in their worries over the “emerging” markets and boosted the safe havens higher across the board.
##Major Events/Reports:
###RBA’s policy statement
As expected, the Reserve Bank of Australia (RBA) kept its interest rates at 1.50% for another month in August.
In its statement, the central bank continued to believe that non-mining business investment, public structure investment, and exports will continue to prop up the economy.
It also maintained its outlook that growth will grow to “a bit above” 3.0% in 2018 and 2019; inflation will be higher than 2.0% in 2019 and 2020, and that wages will gradually lift over time.
The lack of significant changes in the RBA’s statement was a welcome development for traders who had worried that the out-of-cycle interest rate increases of four major Australian banks will push the RBA into cutting (instead of raising) its rates down the road.
###Emerging market worries underpin risk-taking
With no Wall Street prices to take cues from, Asian session market players priced in their concerns over the emerging (submerging?) markets.
As mentioned in the U.S. session recap, Argentina just implemented new export taxes and spending cuts; Turkey’s central bank just raised its rates to keep inflation in check, and political uncertainty is clouding Brazil’s economic prospects.
Of course, it also didn’t help that traders are still at the edge of their seats waiting for the U.S. to possibly announce a fresh set of tariffs ($200 billion worth this time!) on China’s goods.
Crude oil was a little more mixed. Brent crude lost ground after India allowed state refiners to import Iranian oil, while U.S. oil prices inched higher after two platforms in the Gulf of Mexico were evacuated in preparation for hurricane Gordon.
The two oil benchmarks encountered a bit of profit-taking by the end of the session, however.
##Major Market Mover(s):
###AUD
Global trade concerns weighed heavily on the Aussie early in the session, but the comdoll recovered a bit after the RBA kept its policies unchanged in August.
AUD/USD is down by 21 pips (-0.29%) to .7192; AUD/JPY is down by 20 pips (-0.25%) to 79.88; EUR/AUD is up by 23 pips (+0.14%) to 1.6129; GBP/AUD is up by 40 pips (+0.23%) to 1.7882; AUD/CHF is down by 15 pips (-0.22%) to .6976, and AUD/NZD is down by 21 pips (-0.19%) to 1.0905.
###USD
The Greenback caught a couple more pips across the board on uncertainty in the emerging markets and the U.S.-China trade war.
USD/CHF is up by 8 pips (+0.08%) to .9700; USD/CAD is up by 21 pips (+0.16%) to 1.3113; NZD/USD is down by 7 pips (-0.10%) to .6593, and USD/JPY is up by 4 pips (+0.04%) to 111.07.
###EUR
The common currency slipped against its major counterparts after seeing support in the previous trading sessions.
EUR/USD is down by 18 pips (-0.15%) to 1.1600; EUR/JPY is down by 17 pips (-0.13%) to 128.85; EUR/GBP is down by 7 pips (-0.08%) to .9020, and EUR/NZD is down by 12 pips (-0.07%) to 1.7591.
##Watch Out For:
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#Asian Session Recap: AUD Jumps on Strong GDP Data, Equities Take Cues from U.S.
Concerns over the U.S.-China trade relations and emerging market economies remained, but that didn’t stop currency bulls from making pips rain today.
##Major Events/Reports:
###Australia’s GDP report
One of the biggest stories in the forex space is Australia printing its fastest GDP in SIX YEARS.
Data from the Land Down Under showed growth rising by 0.9% in Q2 2018, which is way faster than the 0.7% uptick that many had expected. Not only that but Q1 2018’s growth was also revised higher from 1.0% to 1.1%!
On an annualized basis, the economy had grown by 3.4%. This is not only faster than the expected 2.8% increase, but it’s also better than the previous quarter’s 3.1% reading. Heck, it’s the fastest annualized growth seen since Q3 2012!
Details tell us that it was mostly domestic demand and foreign trade that boosted the economy.
Final consumption expenditure rose by 0.7% and contributed 0.4% to the GDP, with household spending heating up from 0.5% in Q1 to 0.7%. Government spending also inched 0.1% higher and contributed 0.2% to the GDP, while exports added 0.2% to growth.
Overall, today’s strong numbers support the RBA’s current stance that we’ll sooner see a rate hike than a rate cut from the central bank.
###Mixed market trading
Asian session equity players took cues from their U.S. counterparts and let cautiousness rule today’s trends.
And why not? Global trade concerns remain with the U.S. set to resume its NAFTA negotiations with Canada today and word around the hood is that the latter won’t budge as easily as markets had initially priced in.
Meanwhile, traders are staying away from riskier assets ahead of Thursday when the public comment period on China’s tariffs is scheduled to end.
See, the Donald has hinted that he will impose 25% tariffs on another $200B worth of China’s goods on top of the tariffs on $50B worth of products already in place.
Last but not the least is the lack of reassurance from the emerging market sector. This time around, investors are pricing in South Africa’s descent to recession and continued increase in Turkey’s unsustainable inflation.
Commodity prices missed the risk aversion train, however, thanks to a bit of profit-taking after the previous sessions’ losses.
##Major Market Mover(s):
###AUD
A much better-than-expected GDP report from Australia energized the Aussie bulls and the comdoll ended up erasing a chunk of its losses from the previous sessions.
AUD/USD is up by 18 pips (+0.26%) to .7192; AUD/JPY is up by 31 pips (+0.39%) to 80.22; EUR/AUD is down by 13 pips (-0.08%) to 1.6122; AUD/NZD is up by 37 pips (+0.34%) to 1.0975, and GBP/AUD is down by 26 pips (-0.16%) to 1.7881.
###JPY
While global trade and growth-related concerns remained in the forex space, the Aussie’s strong growth along with a bit of profit-taking helped traders take on more risks that led to losses for the safe haven yen.
USD/JPY us up by 10 pips (+0.09%) to 111.54; CHF/JPY is down up 30 pips (+0.26%) to 114.55; EUR/JPY is up by 28 pips (+0.22%) to 129.33; CAD/JPY is up by 15 pips (+0.18%) to 84.65, and GBP/JPY is up by 23 pips (+0.16%) to 143.44.
##Watch Out For:
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#Asian Session Recap: USD Hit By Pound Strength, AUD and NZD Slip on Risk Aversion
Another day, another chance to price in global trade and emerging market concerns!
##Major Events/Reports:
###Australia’s trade data
A report from the Land Down Under showed the trade surplus narrowing by about 20% to 1.55B AUD in July.
While it’s weaker than the upwardly revised 1.94B surplus in June, it’s also a bit better than than the 1.55B figure that analysts had estimated.
A closer look tells us that exports had slipped by 1.0% from a month ago thanks to weaker activity for metal ores and minerals (-5.0%) and rural goods (-2.0%).
Meanwhile, imports was flat at 34.52B AUD with bigger purchases of fuels and lubricants (+23.0%) and non-monetary gold (+11.0%) offset by lower demand for capital goods (-6.0%) and consumption goods (-2.0%).
Overall, the upside surprise in the headline numbers was not enough to offset concerns that Australia’s trade activity will take hits if (when?) the U.S.-China trade war escalates.
###Overall risk aversion
With no fresh data to price in, Asian session market players mainly recycled previous market themes.
Specifically, traders are back to worrying about the emerging markets and their shaky growth. See, many believe that the stability and profit-taking that we saw earlier this week don’t mean that the economic weaknesses will go away.
It also didn’t help that the Trump administration doesn’t look ready to play nice with China just yet. Just yesterday Trump himself shared that:
The lack of resolution for one of the biggest market-movers did NOT make investors risk-hungry.
Commodity prices were a little more mixed, with gold taking advantage of dollar weakness while risk aversion weighed on crude oil benchmarks.
##Major Market Mover(s):
###AUD and NZD
Concerns over the U.S.-China trade war and emerging markets did not fare well for the high-yielding comdolls.
AUD/USD is down by 13 pips (-0.17%) to .7179; AUD/JPY is down by 27 pips (-0.34%) to 79.94; AUD/CHF is down by 23 pips (-0.32%) to .6966; EUR/AUD is up by 40 pips (+0.25%) to 1.6205, and GBP/AUD is up by 48 pips (+0.27%) to 1.7986.
NZD/JPY is down by 12 pips (-0.16%) to 73.37; NZD/CHF is down by 9 pips (-0.14%) to .6394; GBP/NZD is up by 22 pips (+0.11%) to 1.9595, and EUR/NZD is up by 15 pips (+0.08%) to 1.7655.
###USD
There were no direct catalysts for the dollar’s broad weakness today, but analysts point to the pound getting a boost from Brexit headlines as the spark that started the mini fire sale.
USD/JPY is down by 18 pips (-0.16%) to 111.35; USD/CHF is down by 13 pips (-0.14%) to .9704; GBP/USD is up by 9 pips (+0.07%) to 1.2913, and EUR/USD is up by 4 pips (+0.04%) to 1.1634.
##Watch Out For:
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#Asian Session Recap: AUD Hit By Risk Aversion, JPY Jumps Despite Trade Worries
Global trade was the name of the game during the Asian session, as traders price in the U.S. negotiations with major trading partners Canada, China, and maybe even Japan.
##Major Events/Reports:
###Trade tensions take center stage
The bears are alive with the sound of…trade conflict. While we saw a couple of economic data printed today, traders were more interested in the U.S.’ trade negotiations.
The U.S. and Canadian trade reps did not reach a deal yesterday and word around the hood is that Canada isn’t expecting to shake hands this week. Luckily, Trump also shared his optimism that Canada will remain on the NAFTA negotiation table in a rally in Montana.
Meanwhile, traders are still at the edge of their seats wondering if Trump’s team will impose yuuuge tariffs on more Chinese goods.
See, the public comment period for the proposed tariffs on $200 billion worth of goods is up at 4:00 am GMT today many believe that the POTUS would want to get things going ASAP.
Adding to the tension is China recently sharing that it would roll out “necessary retaliatory measures” if the U.S. implements said additional tariffs. Yikes!
But there’s a new player in the game! Japan might be dragged into the trade war after all.
In a phone call to a Wall Street Journal columnist, Trump reportedly lauded good relationship with Japan’s leadership but cautioned that
Duhn duhn duhn.
Commodity prices were a little more mixed, with gold taking advantage of the overall risk aversion while the oil benchmarks took a breather from their gains from the previous trading session.
##Major Market Mover(s):
###AUD
Not surprisingly, the Aussie took the heaviest hits from concerns over the U.S.’ trade relationships with China and Japan.
AUD/USD is down by 34 pips (-0.47%) to .7161; AUD/JPY is down by 51 pips (-0.64%) to 79.18; AUD/CAD is down by 53 pips (-0.56%) to .9403; AUD/CHF is down by 32 pips (-0.46%) to .6913; EUR/AUD is up by 86 pips (+0.54%) to 1.6231, and GBP/AUD is up by 95 pips (+0.53%) to 1.8053.
###CAD
Loonie bulls took charge after the lack of results from the U.S. and Canadian reps were overshadowed by Trump sharing that “We’re going to make a fairer deal with Canada” in a rally in Montana.
USD/CAD is down by 12 pips (-0.18%) to 1.3130; EUR/CAD is down by 11 pips (-0.07%) to 1.5262; GBP/CAD is down by 14 pips (-0.08%) to 1.6975, and CAD/CHF is up by 7 pips (+0.09%) to .7351.
###JPY
All lower-yielding currencies made pips during the session, but it was the yen that took home the crown today.
USD/JPY is down by 17 pips (-0.16%) to 110.57; EUR/JPY is down by 19 pips (-0.14%) to 128.53; CHF/JPY is down by 19 pips (-0.16%) to 114.55; GBP/JPY is down by 23 pips (-0.16%) to 142.95, and NZD/JPY is down by 27 pips (-0.37%) to 72.69.
##Watch Out For:
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#Asian Session Recap: Comdolls Take Hits on Concerns Over Fresh U.S. Tariffs
Price action was a mixed bag of nuts during the Asian session, as traders digested economic reports and themes that dominated the start of the week.
##Major Events/Reports:
###Japan’s GDP revised higher
Japan’s GDP was revised from 0.5% to 0.7% in Q2 2018, which is a lot stronger than the 0.2% contraction that we saw in Q1 2018.
On an annualized basis, the world’s third largest economy grew by 3.0%. That’s much faster than the initial 1.9% reading and the expected 2.6% uptick!
A closer look tells us that it was mostly the increase in capital spending that boosted growth. Higher activity in transport and postal services as well as electrical and chemical industries lifted the data point by 3.1%, its fastest growth since 2015. Wowza!
Overall, today’s release showed that capital expenditure continues to prop up the economy even as Japan saw blows from a string of natural disasters.
###Mixed risk sentiment
Global trade continued to hog the spotlight after Trump threatened to implement higher tariffs on $267B worth of Chinese goods ON TOP OF the $200 billion worth that’s already expected to be implemented over the next couple of days.
The Asian bourses started the session on a weak note, but Nikkei and A SX 200 saw some profit-taking and eventually closed mid-day trading in the green.
Commodity prices were also mixed with gold taking hits from a bit of dollar demand while oil bulls cheered the two less oil rigs reported by Baker Hughes last Friday AND Iran’s sanctions scheduled to take effect in November.
##Major Market Mover(s):
###NZD
The high-yielding Kiwi took hits on renewed U.S. dollar demand after Uncle Sam printed a stronger-than-expected NFP report last Friday. Of course, it also didn’t help that Asian session traders are starting to price in higher U.S. tariffs on more Chinese goods.
NZD/USD is down by 16 pips (-0.25%) to .6517; NZD/JPY is down by 16 pips (-0.22%) to 72.35; NZD/CHF is down by 8 pips (-0.13%) to .6319; EUR/NZD is up by 33 pips (+0.19%) to 1.7715; GBP/NZD is up by 57 pips (+0.29%) to 1.9815, and AUD/NZD is up by 32 pips (+0.30%) to 1.0906.
###CAD
The Loonie failed to take advantage of higher oil prices as traders focused on trade-related matters instead. For newbies out there, you should know that Canada has yet to reach trade deals with the U.S. even after days of anticipation-filled meetings.
USD/CAD is up by 16 pips (+0.12%) to 1.3183; CAD/JPY is down by 8 pips (-0.10%) to 84.21; AUD/CAD is up by 15 pips (+0.16%) to .9369, and GBP/CAD is up by 27 pips (+0.16%) to 1.7022.
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Global trade-related news didn’t go away for most of the Asian session market players, but they were set aside long enough for the bulls to get some intraday momentum.
There were no bombshell economic release in the past couple of hours, so trade-related news remained under the spotlight for market geeks.
Traders are still watching Canada’s next round of NAFTA negotiations with the U.S., which had been going on for at least a year now.
Word around the hood is that Canadian reps are operating under the assumption that they have until the end of the month to get a deal with one of Canada’s biggest trading partners.
Meanwhile, China’s Foreign Minister Geng Shuang warned that the world’s second-largest economy is ready and willing to strike back in case the U.S. fires another round of tariff increases. In a presser, he shared that:
“If the U.S. side obstinately clings to its course and takes any new tariff measures against China, then the Chinese side will inevitably take countermeasures to resolutely protect our legitimate rights…”
Whether it’s a lack of fresh volatility-inducing headlines or a bit of profit-taking from the previous days’ losses, Asian session market players found enough courage to take on some risk today.
Commodity prices were a little more mixed, with gold slipping on the back of dollar demand while crude oil prices rode the risk appetite train.
Asian session traders caught up to their London and U.S. counterparts and priced in the upbeat headlines regarding Britain’s EU exit.
GBP/USD is up by 14 pips (+0.11%) to 1.3039; EUR/GBP is down by 4 pips (-0.04%) to .8894, and GBP/NZD is up by 13 pips (+0.06%) to 1.9972.
News of Japanese chipmaker Renesas acquiring its U.S. counterpart Integrated Device Technology Inc. for $6.7 billion brought the bears to the yen’s yard today. Of course, it didn’t help the safe haven that market players were in the mood to take on some risk.
USD/JPY is up by 33 pips (+0.30%) to 111.43; EUR/JPY is up by 45 pips (+0.35%) to 128.25; GBP/JPY is up by 58 pips (+0.40%) to 145.30; CHF/JPY is up by 34 pips (+0.30%) to 113.29; AUD/JPY is up by 31 pips (+0.39%) to 79.34, and NZD/JPY is up by 26 pips (+0.36%) to 72.75.
There were no direct catalysts for the franc’s losses though an overall risk-friendly trading environment might have dragged on the low-yielding currency.
EUR/CHF is up by 8 pips (+0.07%) to 1.1308; GBP/CHF is up by 16 pips (+0.12%) to 1.2713, and AUD/CHF is up by 7 pips (+0.09%) to .6942.
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There were no new catalysts to price in during the Asian trading session, so market players mostly took cues from their U.S. counterparts.
With not a lot of market-moving data or catalysts available, Asian session traders ended up extending themes from the previous trading sessions.
One notable move came from MSCI’s broadest index of Asia-Pacific shares outside Japan, which saw a 0.3% decline that dragged it to its lowest levels since July 2017.
We don’t have to look far for answers. China requesting the WTO to sanction the U.S. to the tune of $7 billion a year over a violation of its anti-dumping duties only serves to fuel the ongoing U.S.-China trade war.
Of course, it also doesn’t help that Donald Trump reinforced his tough stance on China yesterday.
Commodity prices also felt the sting of risk aversion, with gold taking a backseat to dollar demand while crude oil benchmarks took a breather from their post-API report rallies.
Not surprisingly, the high-yielding Aussie took heavy hits across the board as traders became more concerned about the U.S.-China trade war.
AUD/USD is down by 19 pips (-0.26%) to .7098; AUD/JPY is down by 28 pips (-0.35%) to 79.14; AUD/CAD is down by 24 pips (-0.26%) to .9274; EUR/AUD is up by 30 pips (+0.18%) to 1.6325, and GBP/AUD is up by 30 pips (+0.16%) to 1.8326.
There were no fresh headlines from Japan, so the yen’s safe-haven status is likely the reason why the currency shot up against its major counterparts.
USD/JPY is down by 13 pips (-0.12%) to 111.50; EUR/JPY is down by 35 pips (-0.27%) to 128.29; GBP/JPY is down by 39 pips (-0.27%) to 145.03, and CHF/JPY is down by 34 pips (-0.30%) to 114.45.
The Loonie shrugged off a pullback in crude oil benchmarks and extended its gains from the previous session after Canada showed signs of flexibility to the U.S.’ NAFTA demands.
EUR/CAD is down by 21 pips (-0.14%) to 1.5141; GBP/CAD is down by 27 pips (-0.16%) to 1.6996; CAD/CHF is up by 15 pips (+0.20%) to .7455, and NZD/CAD is down by 19 pips (-0.23%) to .8505.
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Talks of the U.S. renewing its trade talks with China boosted the Asian bourses today, while a positive report from Australia pushed the Aussie higher.
A report from the Land Down Under showed the economy adding a net of 44,000 jobs for the month of August. That’s not only better than July’s 4,300 cut, but it also surpassed analysts’ estimates of a 15,000 increase!
The jobless rate was also cause for celebration. It matched last month’s 5.3% reading, which remains the lowest since November 2012.
A closer look tells us that a net of part-time employment inched 10,300 higher, while a net of 33,700 workers had found full-time jobs for the month.
The cherry on top of the sweet sundae is the labor force participation rate rising by 0.2% to 65.7% when market geeks had only expected a 65.6% reading.
Remember that full-time employment means steadier jobs and more confidence to spend. Overall, today’s numbers would help alleviate the Reserve Bank of Australia (RBA)’s concerns over high borrowing possibly weighing on consumer spending.
Asian session traders took cues from their U.S. session counterparts and extended the celebration over the U.S. extending an invite to Chinese reps for another round of trade negotiations this month.
The risk-friendly trading environment failed to boost commodities, however, as gold took hits on some dollar strength while crude oil prices took hits on OPEC downgrading its 2019 global demand forecasts for a second consecutive month yesterday.
The Aussie got a double boost from overall market risk appetite and Australia printing a much better-than-expected labor market report.
AUD/USD is up by 24 pips (0.34%) to .7194; AUD/JPY is up by 39 pips (+0.48%) to 80.15; AUD/NZD is up by 41 pips (+0.37%) to 1.0968; EUR/AUD is down by 34 pips (-0.21%) to 1.6177, and GBP/AUD is down by 49 pips (-0.27%) to 1.8141.
Traders shrugged off a better-than-expected machinery orders report from Japan and instead priced in a risk-friendly trading environment across the yen crosses.
USD/JPY is up by 16 pips (+0.14%) to 111.41; EUR/JPY is up by 33 pips (+0.25%) to 129.67; GBP/JPY is up by 28 pips (+0.19%) to 145.41, and CHF/JPY is up by 38 pips (+0.33%) to 114.96.
Despite the market players’ risk appetite, the low-yielding franc ended up making pips against its major counterparts. There are no direct explanations for the move, though some traders might be taking profits ahead of the top-tier releases during the London session.
USD/CHF is down by 13 pips (-0.13%) .9692; GBP/CHF is down by 11 pips (-0.08%) to 1.2649; EUR/CHF is down by 3 pips (-0.02%) to 1.1279; NZD/CHF is down by 10 pips (-0.16%) to .6357, and CAD/CHF is down by 12 pips (-0.13%) to .7455.
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Traders mostly shrugged off China’s mixed economic reports in favor of pricing in several risk-friendly market headlines.
Data from the world’s second largest economy showed mixed results.
China’s real estate investment moderated in August, which raised concerns that a cooling property market wouldn’t help if/when the U.S.-China trade war takes its toll on the economy.
Fixed asset investment – considered an early signal of economic activity – also slowed to a record low growth in August. While China has already taken measures to boost public and private spending, analysts believe that it will take months before we see their effects.
Industrial production fared a bit better with its 6.1% growth from a year earlier, while retail sales beat market expectations by clocking in a 9.0% growth for the month.
The real estate numbers got the most attention from market players today, though a lot of traders chose to keep their eyes on updates on the U.S.-China trade war.
It seems like Asian session traders were in the mood to focus on the bright spots in the markets today.
For starters, China’s mixed data releases; Trump tempering expectations over the U.S.-China trade negotiations, and a commentary from state-owned China Daily saying that China “will not hesitate to take countermeasures” took a backseat to optimism over Washington’s invitation to at least talk trade.
Meanwhile, emerging market concerns became a teeny tiny bit less concerning after Turkey’s central bank aggressively raised its rates to combat the country’s inflation.
Commodity prices were a little more mixed, with gold prices taking advantage of a dip in dollar demand while oil benchmarks took more hits on global demand concerns.
Whether it’s risk-taking or profit-taking from losses earlier this week, the high-yielding Kiwi was the biggest winner during the Asian session.
NZD/USD is up by 15 pips (+0.22%) to .6583; NZD/JPY is up by 13 pips (+0.18%) to 73.62; EUR/NZD is down by 29 pips (-0.16%) to 1.7759; GBP/NZD is down by 23 pips (-0.11%) to 1.9919, and AUD/NZD is down by 14 pips (-0.13%) to 1.0924.
The pound extended its win against its major counterparts as traders continued to price in Brexit-related optimism and the BOE retaining its hawkish bias.
GBP/USD is up by 9 pips (+0.07%) to 1.3114; EUR/GBP is down by 4 pips (-0.04%) to .8916; GBP/AUD is up by 17 pips (+0.09%) to 1.8234, and GBP/CAD is up by 6 pips (+0.04%) to 1.7041.
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Asian markets had a quiet start to the week, but traders are concerned over events that could unfold over the next couple of days.
The Wall Street Journal was under the spotlight today as traders cited the newspaper for several key rumors.
First is a report published over the weekend that cited an unnamed senior administration official saying that Trump could announce the additional tariffs on another $200 billion worth of Chinese goods as early as Monday.
And as if that’s not explosive enough, WSJ also quoted Chinese officials who revealed that talks between Vice Premier Liu He and Treasury Secretary Steven Mnuchin (and maybe even Trump) could get nixed once the POTUS announces his next round of tariffs.
Not surprisingly, the possibility of further escalation in the U.S.-China trade war kept a lot of traders in the sidelines, if not liquidating their higher-yielding bets.
With Japan’s markets out on a holiday; China and Hong Kong’s markets still subdued after the weekend’s typhoon, and traders staying in the sidelines until trade war speculations become facts, the Asian bourses ended up mixed today.
Commodity prices weren’t any better, with gold taking advantage of the dollar’s weakness while crude oil prices got hit by a bit of risk aversion.
The Greenback had a strong start but traders eventually paid attention to lower U.S. bond yields and the Greenback gave up its gains before the end of the session.
USD/JPY is down by 7 pips (-0.06%) to 111.98; EUR/USD is up by 13 pips (+0.11%) to 1.1635; GBP/USD is up by 13 pips (+0.10%) to 1.3079; AUD/USD is up by 5 pips (+0.08%) to .7157, and USD/CAD is down by 5 pips (-0.04%) to 1.3035.
There were no direct catalysts for the franc’s weakness, but a bit of risk-taking in the euro region ahead of this week’s Brexit talks might have dragged the safe haven lower.
EUR/CHF is up by 12 pips (+0.11%) to 1.1253; GBP/CHF is up by 11 pips (+0.09%) to 1.2650; AUD/CHF is up by 5 pips (+0.08%) to .6922, and CAD/CHF is up by 5 pips (+0.06%) to .7420.
The Kiwi also didn’t have a direct catalyst to push it higher, but the bulls got busy anyway. One potential reason is that some traders had taken intraday profits after the initial trade war-related scare in the early Asian session.
NZD/USD is up by 11 pips (+0.16%) to .6555; NZD/JPY is up by 8 pips (+0.10%) to 73.40; NZD/CHF is up by 10 pips (+0.16%) to .6340, and NZD/CAD is up by 11 pips (+0.12%) to .8544.
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What tariffs? Asian session forex traders shrugged off the latest round of U.S. tariffs on Chinese goods in favor of pricing in currency-specific catalysts.
The Reserve Bank of Australia (RBA) made Aussie bulls happy earlier this month when it stuck to its hawkish bias even though four major Australian banks had hiked their interest rates out of schedule.
Well, it seems like the central bank really isn’t worried over the out-of-cycle rate increases that can dent the impact of its easy policies.
In its meeting minutes the RBA noted that lenders accounting for 40% of the outstanding housing credit had announced higher mortgage lending rates in response to “higher funding costs.” It added that:
“Once they take effect, these increases would imply a small rise in the average outstanding variable housing loan rate, unwinding about half of the decline observed in the average housing loan rate over the preceding year.”
Despite that, RBA members still maintain that “the next move in the cash rate would more likely be an increase than a decrease” though lack of progresses in unemployment and inflation also means that “there was no strong case for a near-term adjustment in monetary policy.”
If you’ve just tuned in, then you should know that the Trump administration officially announced that it would place a 10% tariff on $200 billion worth of Chinese products on September 24 and crank them dues higher to 25% by the end of the year.
China has yet to respond to the U.S.’ move though many believe that it will start with officials rejecting U.S. Treasury Secretary Steven Mnuchin’s invite for another round of trade talks in Washington.
The additional tariffs, along with the possibility of China retaliating over the latest decision weighed on most of the Asian bourses.
Nikkei was spared from the pain, however, thanks to optimism that current PM Shinzo Abe will widely defeat former defense minister Shigeru Ishiba in Liberal Democratic Party’s leadership election on September 20.
Gold took a few steps back when a jump in long-term U.S. Treasury yields boosted dollar demand. Crude oil benchmarks weren’t as lucky, an escalation in the U.S.-China trade war presents uncertainty over the future of Black Crack demand.
The RBA sticking to its hawkish bias was a welcome surprise for Aussie traders. Meanwhile, the lack of immediate retaliation from China brought the bulls to the Aussie and Kiwi’s yards.
AUD/USD is up by 17 pips (+0.23%) to .7193; AUD/JPY is up by 27 pips (+0.34%) to 80.53; AUD/CAD is up by 25 pips (+0.26%) to .9381, and AUD/CHF is up by 13 pips (+0.19%) to .6919.
NZD/USD is up by 18 pips (+0.27%) to .6594; NZD/JPY is up by 29 pips (+0.39%) to 73.82; NZD/CAD is up by 24 pips (+0.28%) to .8599; GBP/NZD is down by 37 pips (-0.18%) to 1.9956, and NZD/CHF is up by 14 pips (+0.23%) to .6343.
Whether it was profit-taking from the previous session’s strong moves; Japanese traders buying yen-denominated assets after yesterday’s holiday, or risk-taking in the currency arena, the low-yielding yen ended the session lower against its major counterparts.
USD/JPY is up by 12 pips (+0.10%) to 111.96; GBP/JPY is up by 16 pips (+0.11%) to 147.32; EUR/JPY is up by 26 pips (+0.20%) to 130.93, and CHF/JPY is up by 19 pips (+0.16%) to 116.37.
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Risk-taking was the name of the game during the Asian session, as softer-than-expected tariffs and the easing of yuan devaluation concerns encouraged the bulls to party in the streets.
In a speech at the World Economic Forum in Tianjin, Chinese Premier Li Keqiang talked about China’s strong fundamental economic prospects.
What made investors sit up and take notice is that Li also assured that the world’s second-largest economy won’t devalue its currency to make its exports more competitive.
The official said that “[r]ecent fluctuations in the renminbi exchange rate have been seen as an intentional measure, but that isn’t true,” adding that (emphasis mine):
“One-way devaluation will do more harm than good to China’s economy. China will by no means stimulate exports by devaluing the yuan.”
Asian session traders took cues from their U.S. counterparts and celebrated the fact that the U.S. and China both announced softer-than-expected tariff measures this week.
For reference, the U.S. is planning on imposing 10% dues (instead of 25%) on $200B worth of Chinese goods, while China will impose a 25% tariff on $60B worth (instead of $200B) of U.S. goods.
It also didn’t hurt that we’ve been seeing positive Brexit-related headlines lately.
Commodity prices jumped on the risk-taking bandwagon, with gold taking advantage of a bit of dollar weakness while crude oil benchmarks extended their rallies despite a bearish stockpiles report from API.
The Aussie, which has tracked the yuan’s movements in the past, got a boost from Li’s comments about China not devaluing its local currency to boost its exports.
Not surprisingly, comdoll-related Kiwi also found support from Li’s statements.
AUD/USD is up by 19 pips (+0.27%) to .7283; AUD/JPY is up by 23 pips (+0.28%) to 81.34; AUF/CHF is up by 19 pips (+0.27%) to .6981; AUD/NZD is up by 16 pips (+0.14%) to 1.0977; EUR/AUD is down by 35 pips (-0.22%) to 1.6124, and GBP/AUD is down by 45 pips (-0.25%) to 1.8165.
NZD/USD is up by 11 pips (+0.17%) to .6594; NZD/JPY is up by 15 pips (+0.21%) to 74.10; NZD/CHF is up by 64 pips (+0.23%) to .6360; GBP/NZD down by 21 pips (-0.11%) to 1.9938, and EUR/NZD is down by 14 pips (-0.08%) to 1.7698.
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With not a lot of fresh catalysts, Asian session market players ended up extending the risk-friendly environment seen in the London and U.S. sessions.
Looks like Kuroda and his team still have work to do!
Data from Japan printed earlier today saw core consumer prices rising by 0.9% from a year earlier in August. Though this is a bit faster than the expected 0.8% uptick, it’s also waaay lower than the Bank of Japan (BOJ)’s 2.0% target.
As if that’s not discouraging enough, only 49.3% of the core CPI components saw price increases from a year earlier. That’s the lowest percentage since November 2013!
Overall, today’s numbers underscore the challenge the BOJ faces in meeting its goals, and basically tells us that the central bank has not much incentive to take away its easy policies anytime soon.
With not a lot of fresh catalysts to rock the market boat, Asian session players took cues from the previous sessions’ moves.
If you recall, positive Brexit headlines and a stronger-than-expected retail sales report had boosted the pound, while speculations that the U.S.-China trade war won’t negatively affect the economy as much as expected boosted the London and U.S. markets.
The cherry on top of the Asian bourses’ gains was speculation that China will also increase its support to help the economy weather the trade war.
In commodities, dollar weakness won over safe-haven appeal and boosted gold. Meanwhile, crude oil benchmarks extended their rallies despite Trump ordering OPEC to “get prices down now!” Maybe he should try asking nicely?
The yen received a one-two punch from a weak inflation report (that points to extended easy policies from BOJ) and risk-taking during the trading session.
USD/JPY is up by 24 pips (+0.21%) to 112.72; EUR/JPY is up by 34 pips (+0.25%) to 132.81; GBP/JPY is up by 39 pips (+0.26%) to 149.60
AUD/JPY is up by 19 pips (+0.23%) to 82.21; NZD/JPY is up by 23 pips (+0.30%) to 75.41; CAD/JPY is up by 16 pips (+0.18%) to 87.32, and CHF/JPY is up by 27 pips (+0.23%) to 117.56.
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