ForexLive Asia FX news wrap: CAD drops on reports of Nafta ‘rejection’

Forex and Bitcoin news for Asia trading Tuesday 31 July 2018

It was BOJ day today, a day where we normally wait around on tenterhooks, jumping at shadows, until finally the Bank announces that they are doing nothing. But, today we had plenty of activity ahead of the central bank announcement.

CAD was the biggest mover in front of the BOJ. The currency dropped on a report form the Canadian press that Foreign Affairs Minister Chrystia Freeland has had Canda's bid to take part in senior-level NAFTA talks between the U.S. and Mexico later this week has been 'rejected' by American officials in the office of U.S. Trade Representative Robert Lighthizer. Gotta say i find that difficult to believe, but that was the report.

As an interesting aside the news hit and then two hours later it crossed on the Bloomberg news wire. It was when we got the Bloomberg headline hitting that USD/CAD surged 50-odd points.

On the data agenda we had a big load. PMIs from China were the main focus (aside from the BOJ). Non-manufacturing and Composite PMIs hit very early indeed, the numbers leaked around 40 minutes ahead of scheduled release time. They came in much weaker than the previous month. The manufacturing PMI, though, came out as scheduled and only had the smallest possible fall from the previous month (down 0.1 of a point). The impact of the early numbers was a few points lower for the AUD but it soon drifted back to more or less unchanged.

The impact on the AUD was greater from the data that soon followed, building approvals coming in much stronger than was expected (be wary of this though, it is a very volatile data point and is subject to swings). Private sector credit data was out at the same time, but the market focused on the permits data. The credit numbers were not great, a decent drop from the previous month. AUD/USD rose to a session high around 0.7425, retraced most of its gain and then moved back toward the high.

NZD was also the subject of data-induced moves today. Early building permits data showed a large drop on the month 9the caveat of volatility in this data set applies here as well). ANZ's Business survey followed, with Activity Outlook dropping to a 9 year low and Business Confidence to a 10 year low. Dreadful figures indded. NZD has not done too much on the session though, it did swing in a 25-odd point range but is net littel changed.

EUR/USD barely moved on the session. Cable, though, dropped a few points net for the day (not much in it really though)

Ahead of the BOJ USD/JPY had a drift lower to circa 110.95 but regained to above 110.05. A spike to circa 111.20 came in the low-liquidity time leading up to the announcement as markets nervously awaited the decision by withdrawing many of their resting orders (think of leaving your arm dangling in shark-infested water .... not a good idea, right? Although the shark would disagree.).

As I post the BOJ announcement has just been made, USD/JPY has popped to circa 111.35. Dane will pick up the BOJ in the Europe time wrap. Major headlines are here: