Forex Afternoon Wrap – 21/10

Oct 21, 12:02 pm

Markets turn to BoC monetary policy

  • New Zealand Visitor Arrivals m/m 4.2% vs. 0.5% previously
  • Australia CB leading index m/m -0.4% vs. 0.3% previously
  • Australia MI leading index m/m 0.1% vs. -0.3% previously
  • Japan trade balance -0.36Tn vs. -0.07Tn
  • New Zealand Credit card spending y/y 7.3% vs. 10.4% previously
  • Japan all industries activity m/m -0.2% vs. -0.1%
  • UK Public Sector net borrowing 8.6bn vs. 9.1bn


  • BoC Rate statement
  • BoC overnight rate
  • BoC Press conference
  • Crude oil inventories
  • BoE Governor Carney speech

The Asian trading session saw most of the economic data releases out of Australian and New Zealand. The currency pairs did not react much to the news and continued to trade off yesterday’s themes, which saw a weaker Australian dollar. The Kiwi continued to decline into mid-day today after Fonterra’s prices fell -3.1%. NZDUSD touched a session low to 0.6702 before retracing back some of the declines. The Australian dollar is trading weaker today, down -0.42% at the time of writing with AUDUSD struggling near the daily lows below 0.7216.

The Japanese Yen remained weak, continuing its uptrend from the last four days. USDJPY was trading near 120.02 at the time of writing. The Yen eased back despite news that earthquakes had struck parts of Japan, although no major causalities were being reported.

The Asian equity markets closed mixed as the Nikkei225 jumped 1.91% but the Shanghai and the Hang Seng both closed weaker with -3.47% and -0.37% lower for the day.

The European trading session was relatively quiet with no major releases being scheduled. The equity markets were all trading in the Green as the DAX and the FTSE100 gained 0.98% and 0.50% respectively.

The Euro is up 0.10% for the day as the single currency struggles to break above 1.1372 but remains supported above 1.13365, which was tested briefly today. The Euro is likely to trade sideways ahead of the ECB’s meeting due tomorrow.

The British Pound which was trading flat for the past few days is up 0.07% for the day but remains biased to the downside. UK’s public sector net borrowing rose less than expected with 8.6 billion against estimates of 9.1 billion.

The US trading session will see the Bank of Canada’s monetary policy. Expectations are for the BoC to hold rate steady but could offset the event with some dovish narrative. The Canadian dollar is trading weaker as USDCAD gains 0.15% for the day but remains range bound within yesterday’s price highs and lows. A break down below yesterday’s low of 1.293 could signal further declines in the near term as the Canadian dollar gets a short term boost on the BoC’s action. There are no economic releases scheduled from the US. The futures markets are currently pointing to a higher open with the Dow Jones expected to open +57 points while the S&P500 is expected to open 0.48% higher.

BoE Governor, Mark Carney is expected to speak later this evening which could keep the British Pound a bit volatile should any of the remarks reflect on the monetary policy.

The commodity markets are trading flat for the day with Crude oil currently down -0.39% ahead of the EIA crude oil inventories report due later this evening. Expectations are that the US crude oil stockpiles to have increased 3.5 million barrels, down from 7.6 million barrels increased last week.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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