Daily FX Trading Update: PBOC Adjusts Yuan Reference Rate Again – Aug 13, 2015

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Daily FX Trading Update: PBOC Adjusts Yuan Reference Rate Again - Aug 13, 2015

USD
The US dollar lost ground to its major counterparts when traders quickly booked profits after the PBOC’s yuan devaluation announcements. Some analysts are speculating that this could weigh on Fed rate hike prospects if it results to a decline in exports from other nations, particularly those shipping raw materials to China. US retail sales data is up for release today and traders are expecting to see a 0.4% rebound in core consumer spending and a 0.6% increase in headline retail sales. Initial jobless claims and import prices data are also on today’s docket.

EUR
The euro continued to advance against most of its rivals, as all seemed well in Greece. Data from the euro zone was weaker than expected though, with the region’s industrial production and Italian trade balance both missing expectations. For today, the German and French final CPI readings are due, along with the ECB minutes.

GBP
The pound initially sold off after the release of the UK jobs data, as the average earnings index showed a sharper than expected decline from 3.2% to 2.4% versus the projected 2.8% reading. However, the pound managed to regain ground upon seeing better than expected claimant count change data, which indicated a 4.9K drop in joblessness. Apart from that, the previous reading was revised to show a smaller increase in claimants. There are no reports due from the UK today.

CHF
The franc regained a bit of ground to the dollar and the euro but was still in a weak spot. Swiss ZEW economic expectations showed a nice recovery from -5.4 to +5.9, indicating potential improvements down the line. Swiss PPI is due today and a 0.2% decline in producer prices is eyed.

JPY
The yen advanced against the dollar and most of its forex peers, as profit-taking took place and risk aversion set in during the Asian session. Data from Japan was better than expected, with the industrial production figure upgraded and the tertiary industry activity index printing a higher than expected 0.3% uptick. Earlier today, however, the core machinery orders report printed a worse than expected 7.9% tumble.

Commodity Currencies (AUD, NZD, CAD)
The comdolls managed to recoup their losses after the Chinese central bank’s yuan devaluations, as traders closed out their recent positions. Data from China was mostly weaker than expected, with industrial production, retail sales, and fixed asset investment falling short of expectations. In Australia, the MI inflation expectations index improved from 3.4% to 3.7%. New Zealand retail sales are up for release in the late US session or early Asian trading session.

To contact the reporter of the story: Samuel Rae at samuel@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.