Asian Session Forex Recap – July 15, 2016

  • China’s Q2 2016 GDP growth remains at 6.7% against 6.6% growth expectations
  • China’s industrial production rises from 6.0% to 6.2% in June vs. 9.4% uptick expected
  • China’s fixed asset investment up by 9.0% vs. 9.4% expected, 9.6% previous
  • China’s retail sales up by 10.6% vs. 9.9% expected, 10.0% previous

It was a topsy-turvy trading session for the major currencies, as forex traders priced in risk sentiment and a couple of economic updates.

Major Events:

Terrorist attack in France – Well that wasn’t very nice. A few hours ago at least 80 people were killed and many more were injured in Nice, France, as a suspected terrorist drove through a crowd celebrating the Bastille Day holiday.

Early reports say that the 31-year old killer was a French citizen born in Tunisia and was driving a lorry loaded with weapons and hand grenades for about a mile before being shot dead by the police. The attack inspired a risk-off vibe, sending low-yielding currencies like the yen higher across the board.

China’s data dump – Growth for the world’s second largest economy came in at 6.7% in Q2 2016, in line with the previous quarter’s growth and higher than the expected 6.6% uptick. Retail sales, industrial production, new yuan loans, and aggregate financing also showed upside surprises, renewing doubts over the credibility of the reports. In fact, the only blight was the fixed asset investment part, which only grew by 9.0% against the expected 9.4% growth.

But, hey, credibility schmedibility. Market players reacted pretty predictably to the report, as the Asian bourses popped higher along with higher-yielding currencies like the comdolls.

Market Movers:

JPY – Overall risk appetite and the momentum of the “helicopter money” option for Japan boosted the yen crosses higher across the board until the attack on Nice hit the newswires.

EUR/JPY hit a high of 118.41 before slipping down to 117.69 while USD/JPY also fell from a session high of 106.34 to 105.77. Ditto for GBP/JPY, which dropped from 143.24 to 142.00.

AUD – Not surprisingly, the Aussie found support from China’s better-than-expected economic releases. For forex newbies out there, you should know that China is Australia’s largest trading partner. Positive reports and stronger Chinese growth could translate to more demand for Australia’s mined goods.

AUD/USD shot up to a high of .7677 before slipping down to .7634 at the reports of the attack in Nice. Meanwhile AUD/JPY also rose to 81.51 before falling back down to 80.75.

Watch out for:

  • 9:00 am GMT: Italian trade balance (3.27B EUR expected, 4.52B EUR previous)
  • 9:30 am GMT: U.K.’s construction output (-1.1% expected vs. 2.5% previous)
  • 10:00 am GMT: Euro Zone’s final CPI expected to remain at 0.1%
  • 10:00 am GMT: Euro Zone trade balance (25.2B EUR expected vs. 28.0B EUR previous)

See also:

U.S. Session Recap

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