Forex Forecast

Friday Reversal FX markets staged a quick turn around on Friday with risk currencies making back some of their losses from the previous trading days.

Antipodeans Rebound The Australian dollar recovered all of yesterday’s losses overnight, despite media reports of another mining project being postponed. Other than that, news and economic dataflow was extremely light.

JPY Gains Risk appetite suffered during the New York session, with safe-haven currencies like USD and JPY gaining across the board. Eurozone PMI numbers for September were not inspiring with the composite PMI printing slightly softer than expectations at 45.9.

Dollar Rebound Continues Risk traded on a soft tone overnight, with the AUD and EUR extending their losses. The composite PMI indicator in the Eurozone was slightly softer than expectations at 45.9 (manufacturing above but services below).

AUDUSD Feeling Heavy Antipodean currencies were pushed around overnight by mixed data releases, references to currency strength by politicians, and some unfavorable press coverage. New Zealand GDP came in considerably stronger than expected at +0.6% q/q (cons. 0.4%).

USDJPY Retreats USJPY drifted back during New York hours as the enthusiasm following the BoJ’s announcement of additional JPY10 tr of asset purchases quickly faded.

BoJ Launches More Easing The Bank of Japan surprised the market by announcing another round of easing – and a fairly substantial one at that. The lifetime of the Asset Purchase Program was extended by 6-months and its size was increased by JPY 10 trn.

BoJ In Focus Risk appetite remained subdued on Tuesday with EUR losing across the board during New York hours. The German ZEW survey for economic sentiment came in slightly above expectations at -18.2 in September but the current conditions index was softer at 12.6 against a consensus of 17.7.

Risk Indicators Tick Lower Risk continued to trade on a soft note overnight with AUD leading the way in the FX space. Most major equity markets were trading in the red at the time of writing while periphery spreads to Germany widened for a second consecutive day.

RBA Primed to Ease The latest set of RBA minutes were even more dovish than the policy statement indicated two weeks ago. Crucially, a key phrase made a reappearance for the first time since June – the board noted that “the inflation outlook continued to provide scope to adjust policy in response to any significant […]