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Asia Recap: Yen rallies as Japan remain in recession

FXStreet (Bali) - The Japanese Yen was the big mover in Asia, with a shockingly disappointing Japanese GDP in Q3, the catalyst to see an initial rally in Yen crosses before a nasty turnaround, as long term Yen bears locked in profits and a 'buy the rumour sell the fact' play developed.

USD/JPY opened Asian in a bullish tone, paring some of Friday's US retail sales-led losses ahead of Japan's Q3 growth figures. The miss was quite appalling, with GDP (QoQ) for the third quarter printing -0.4% vs +0.5% exp and -1.9% (revised lower) in Q2, and an annualized read of 1.6% vs +2.1 exp.

The initial reaction was Yen negative, Y 117.00 being paid against the USD, before a massive wave of selling in USD/JPY caught the market by surprise, sending the rate as low as 115.47 before a modest bounce towards 115.75/85.

While today's GDP data makes the planned sales tax hike delay/snap election in Japan a done deal - chatter is Abe will announce it tomorrow - , the scenarios were fully discounted last week, leading to higher risks of a 'buy the rumour, sell the fact' response in both Yen crosses and Nikkei 225.

AUD/USD retained the bullish tone, approaching the 0.88 round number after breaching 0.8760/70 resistance during interbank trading, with news of a major China-Australia free-trade deal reportedly supporting the Aussie on its quest to keep absorbing offers, although broad-based USD weakness was still the main driver. NZD/USD mirrored and even amplified the bull moves seen in its neighboring currency, with upbeat NZ retail sales and NZ FinMin saying that NZD/USD mid−to−high 70s is sustainable for the economy, providing another reason to stay bullish near term. EUR/USD strengthened further until 1.2575 was reached, while 1.5730 was the highest in Cable.

Key headlines

New Zealand Retail Sales (QoQ) came in at 1.5%, above forecasts (0.85%) in 3Q.... ex Autos (QoQ) came in at 1.5%, above forecasts (1%) in 3Q

Gold referendum threatens efforts to keep EUR/CHF cap

EUR/CHF: Weekly SNB sight deposit data to show intervention activity - JPMorgan

Japan PM set to confirm tax delay, snap election on Nov 18 - Nikkei

Japan's Q3 GDP: Negative growth to force 2nd sales tax delay

Australia New Motor Vehicle Sales (YoY): -0.5% (October) vs previous 0.8%

Australia New Motor Vehicle Sales (MoM) down to 1.6% in October from previous 2.9%

Japan's EcoMin: Biggest reason GDP drop private inventory adjustment

Japan PM Eco Adviser Honda: GDP 'shocking'

USD : Price action warrants caution, squeeze may extend

NZ FinMin: NZD/USD mid-to-high 70s sustainable for the economy

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