Daily FX Trading Review: Weak Japanese Data Supports Case for BOJ Easing – Aug 29, 2014

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Daily FX Trading Review: Weak Japanese Data Supports Case for BOJ Easing - Aug 29, 2014

The yen suffered a wave of bleak reports in today’s Asian FX trading session, with household spending posting a whopping 5.9% decline and the jobless rate climbing from 3.7% to 3.8%. The preliminary industrial production report also fell short of consensus as it marked a 0.2% uptick instead of the projected 1.2% gain while the previous month’s report was downgraded. Retail sales was stronger than expected with a 0.5% gain though. Data on housing starts is due and another weak figure could push the yen lower.

The US dollar consolidated to most of its major FX trading counterparts recently, although it did enjoy a bit of support when the US GDP was upgraded from 4.0% to 4.2%. Initial jobless claims came in at 298K, closely in line with estimates and the previous figure. Pending home sales also came in better than expected at 3.3% versus the estimated 0.6% gain while the previous month’s reading suffered a downgrade. Personal spending and income data are due today, along with the Chicago PMI and revised consumer sentiment figure.

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The euro managed to hold its ground despite weaker than expected data from Germany. The euro zone’s largest economy showed a 2K increase in unemployment and a flat CPI reading while Spain’s flash CPI showed a 0.5% decline. Euro zone CPI estimates are due today and weak readings might lead to more FX trading selling for euro pairs, as it would convince most traders that further easing from the ECB is needed.

The pound also consolidated to most of its rivals in recent FX trading, despite the strong bounce in medium-tier data. The CBI realized sales report jumped from 21 to 37, outpacing the consensus at 27. This suggests that local demand remains sustained and that the UK might be in for an economic pickup sooner or later. Nationwide HPI and preliminary business investment data are due today and it could provide more clues on how the economy is doing.

The franc drew a bit of support from Switzerland’s improved jobs data, with the employment level climbing from 4.17M to 4.20M in the previous quarter. However, bleak reports from the euro zone prevented the currency from extending its FX trading gains. For today, the KOF economic barometer is due and it might show a dip from 98.1 to 97.9, indicating a slight downturn. A stronger than expected reading, however, could keep the franc supported.

The comdolls were stuck in consolidation to the dollar recently as there were no major reports released. Australia’s private capital expenditure report showed a stronger than expected quarterly gain while Canada printed a bleak current account balance. New Zealand building consents marked a mere 0.1% uptick while business confidence declined. Later on, Canada will print its monthly GDP report and possibly print a 0.2% expansion.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.