Forex news and economic trading headlines 2 August 2016

News:

  • Japan confirms further stimulus measures totalling JPY 28.1 trln
  • Japan's Aso says he and Kuroda discussed ways to defeat deflation and spur economic growth
  • BOJ's Kuroda says ending deflation is a goal shared with the government
  • Japan's Ishihara says economy lacks strength in spending and investment
  • Yen rallies on Japan's stimulus package announcement
  • RBA announcement: CUT RATES by 25bp
  • Fed's Kaplan is aware that a strong dollar can be destabilising for China
  • Dallas Fed's Kaplan repeats that the FOMC should proceed in a "gradual and patient" manner when raising rates
  • BOE rate cut won't have a huge economic impact says ex-MPC member Charlie Bean
  • Option expiries 10 am NY cut today 2 August
  • Nikkei 225 closes down -1.47% at 16,391.45

Data:

  • July 2016 UK Markit CIPS construction PMI 45.9 vs 43.8 exp
  • June 2016 Eurozone PPI 0.7% vs 0.4% exp m/m
  • Switzerland mftg PMI July 50.1 vs 51.9 exp
  • Japan consumer confidence July 41.3 vs 42.0 exp

It's been all about the yen today as Japanese PM Abe finally unveiled his latest stimulus package. Mind you, the aussie $ and pound have had a few moments of their own.

The session began with the RBA cutting rates by 0.25% as widely expected and we saw AUD pairs take a quick dip lower with AUDUSD dipping to 0.7490 from 0.7530 but was quickly on the rise. Demand has been notable as shorts run for cover with USD supply and large option expiry interest today at 0.7520. Even AUDJPY selling couldn't dent the appetite for all things Oz and AUDUSD has climbed steadily to post 0.7582.

Abe's govt finally revealed its extended stimulus which came in bang on expectations. Cue a clamour for yen as the markets gave a thumbs down to the lack of imagination and hopes of further yen weakness. USDJPY immediately dropped to test 102.00 again having had a look at 102.50 earlier and once 102.00 broke is was a steady decline to 101.47

Yen pairs all followed suit and that capped core pairs with GBPUSD failing at 1.3235 to then dip below 1.3200 and EURUSD retreating after a brief stay above 1.1200. Stronger than expected UK PMI data (albeit from a low base) helped GBP pairs to rally helped by dip-demand on USDJPY.

Cable climbed steadily to post 1.3257 as EURGBP failed into 0.8500 and fell to test 0.8450 before fresh selling of GBPJPY saw the move grind to a halt.

USDCAD has been in steady retreat on a combo of firmer oil and softer greenback and we've now posted 1.3045 from 1.3130 .

With the RBA and Abe out the way attention now turns to Thursday's BOE decision but we have some further volatility to navigate first.