Asian Session Forex Recap – August 12, 2016

  • China’s industrial production (y/y) up by 6.0% vs. 6.2% increase expected and previous
  • China’s fixed asset investment (ytd/y) up by 8.1% vs. 8.9% uptick expected, 9.0% previous
  • China’s retail sales (y/y) up by 10.2% vs. 10.5% expected, 10.6% previous

Forex price action was a mixed bag of nuts, as China’s disappointing economic reports got mixed in with Japanese traders coming back from a holiday.

Major Events:

China’s data dump – The biggest story of the hour was China releasing its industrial production, fixed asset investment, and retail sales figures. And boy, did they disappoint market expectations!

Industrial production, a broad measure of factory output, clocked in a 6.0% growth in July following a 6.2 uptick in June. Fixed asset investment also slowed for the fourth month in a row with only an 8.1% growth in the year to July against expectations of an 8.9% increase. Last but not the least, retail sales came in at 10.2% from a year earlier, lower than the 10.5% annualized rise in June.

Though the National Bureau of Statistics said that the data may have been influenced by flooding and hot weather, analysts mostly took the reports as signals that the central bank should act sooner than later to stimulate growth. If you recall, China’s trade and inflation reports earlier this week didn’t come in so hot either.

Oil rally and overall risk appetite – Japanese traders went back from a holiday yesterday and the first thing they priced in was a strong U.S. equities close from yesterday. Of course, it also didn’t hurt that oil prices rebounded with momentum and fuelled overall risk appetite in the Asian bourses.

Brent crude oil is up by 0.78% to $46.40 while U.S. crude oil is up by 1.10% to $43.97. Meanwhile, Australia’s ASX is up by 0.10%, the Shanghai index is up by 0.61%, Hang Seng is up by 0.72%, and Nikkei is up by 1.08%.

Major Market Movers:

JPY – The low-yielding yen got clobbered at the start of the session, as forex traders extended yesterday’s risk-taking party.

USD/JPY popped up to a high of 102.23 before settling down with a 13-pip lead (+0.13%) at 102.02, while EUR/JPY also hit 113.81 before closing with a 16-pip gain (+0.14%) at 113.65. Even GBP/JPY gained 32 pips (+0.24%) at 132.36.

Comdolls – China’s weaker-than-expected economic reports didn’t sit well with commodity-related currencies though the oil-related Loonie was spared from the bloodbath by further increases in crude oil prices.

AUD/USD slipped by 18 pips (-0.23%) to .7687, NZD/USD fell by 15 pips (-0.21%) to .7199, and USD/CAD inched another 2 pips (-0.02%) lower to 1.2979.

Watch Out For:

  • 6:00 am GMT: German preliminary CPI (0.3% expected, 0.7% previous)
  • 6:00 am GMT: German final CPI expected to remain at 0.3%
  • 6:00 am GMT: German final wholesale price index (0.3% expected, 0.6% previous)
  • 6:45 am GMT: French preliminary NFP (q/q) up by 0.2% vs. 0.3% expected
  • 8:00 am GMT: Italian preliminary GDP (q/q) 0.2% expected, 0.3% previous
  • 8:30 am GMT: U.K. construction output (0.9% expected, -2.1% previous)
  • 9:00 am GMT: Euro Zone flash GDP (q/q) expected to remain at 0.3%
  • 9:00 am GMT: Euro Zone industrial production (0.6% expected, -1.2% previous)

See more:

U.S. Session Recap

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