Asian Session Forex Recap – Sept. 1, 2016

  • Japan’s capital spending (q/y) up by 3.1% s. 5.6% uptick expected, 4.2% growth in Q1 2016
  • Japan’s final manufacturing PMI revised from 49.6 to 49.5
  • China’s manufacturing PMI up from 49.9 to 50.4 in August
  • China’s non-manufacturing PMI slides from 53.9 to 53.5
  • AU private capital expenditures (q/q) falls by another 5.4% vs. 4.0% decline expected
  • AU retail sales flat (0.0%) against 0.3% growth expectations, 0.1% uptick in June
  • China’s Caixin manufacturing PMI down from 50.6 to 50.0 in August

It was all about the yen and the comdolls today, as China, Japan, and Australia all had major economic releases today. Which reports were the biggest forex movers during the session?

Major Events:

China’s PMI reports – One of the biggest stories of the hour came from the world’s second largest economy, as it printed its PMI reports for the month of August. The official manufacturing PMI came in at 50.4, its fastest pace in nearly two years, after dipping to a contractionary reading of 49.9 in July.

A closer look, however, tells us that “light” manufacturing boosted the data and that “heavy” manufacturing, which yields more industrial output, is still in contraction. It also didn’t help that the Caixin reading, a private gauge of factory activity, reflected a slip from 50.6 to 50.0 for the month. Meanwhile, the official services PMI also slid from 53.9 to 53.9.

Analysts took the numbers with a bucket of salt though. See, though all three reports came in above the 50.0 mark and showed expansion, they also believe that the reports may have reflected corrections from July’s unusually weak readings.

Capital expenditure and retail sales from Australia – The Land Down Under also made some waves in the forex markets, as it printed its capex and retail sales reports. Private capital expenditure fell by another 5.4% in Q2 2016 after slipping by the same rate in Q1 2016. Analysts had only expected a 4.0% decline.

Fortunately, investors chose to focus on the third estimate for the 2016/17 CAPEX spending. The report showed that Australia’s biggest companies planned to spend $105.2B, much larger than the $97B figure from the previous estimates.

Meanwhile the retail sales report also missed expectations as it flat-lined in the month of July. Market players had been expecting a 0.3% growth after seeing a 0.1% uptick in June. A closer look suggests that high debt levels and economic uncertainty are making a dent on consumer spending patterns. This is bad news for the government, which is counting on healthy household spending in its budget assumptions.

Major Market Movers:

AUD – The Aussie had a good trading session despite the release of weaker-than-expected CAPEX and retail sales reports. For now, it looks like Aussie players are focusing on the big companies’ better-than-expected CAPEX spending plans for 2016/17.

AUD/USD is up by 22 pips (+0.29%) to .7538, AUD/JPY inched 7 pips higher (+0.09%) to 77.84, and AUD/NZD popped up by 40 pips (+0.39%) to 1.0397.

Watch Out For:

  • 7:15 am GMT: Switzerland’s retail sales (-3.1% expected, -3.9% previous)
  • 7:15 am GMT: Spanish manufacturing PMI (50.8 expected, 51.0 previous)
  • 7:30 am GMT: Switzerland manufacturing PMI (50.5 expected, 50.1 previous)
  • 7:45 am GMT: Italian manufacturing PMI (51.3 expected, 51.2 previous)
  • 7:50 am GMT: French final manufacturing PMI expected to remain at 48.5
  • 7:55 am GMT: German final manufacturing PMI expected to remain at 53.6
  • 8:00 am GMT: Euro Zone final manufacturing PMI expected to remain at 51.8
  • 8:30 am GMT: U.K. manufacturing PMI (49.1 expected, 48.2 previous)

See more:

U.S. Session Recap

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