Asian Session Forex Recap – Sept. 13, 2016

  • AU NAB business confidence rises from 4 to 6 in August
  • China’s industrial production (y/y) accelerates from 6.0% to 6.3% in August
  • China’s fixed asset investment (ytd/y) up by 8.1% vs. 7.9% growth expected
  • China’s retail sales (y/y) shows 10.6% increase vs. 10.2% uptick expected

Forex volatility was concentrated on the yen crosses despite data dumps from both China and Australia. What’s up with that?!

Major Events:

China’s data dump – The world’s second largest economy printed better-than-expected industrial production, fixed asset investment, and retail sales figures today. Industrial production, a broad gauge of factory activity, clocked in its highest reading since March on the back of increased output in electricity, gas and water production, and manufacturing.

Annualized retail sales also beat expectations with a 10.6% increase and was led by increased sales in building materials (+16.3%), office supplies (+13.6%), and automobiles (+13.1%). Last but not the least, fixed asset investment, a proxy for longer-term spending, held steady for another month.

Market players mostly ignored the green shoots in the economy though, likely due to doubts over the accuracy of the reports. Of course, it also doesn’t help that the government just clued in that China’s growth may “double dip” and drop below 6% in 2018. Yipes!

Jawboning from Taro Aso – Japan’s Finance Minister hit the newswires today, saying that the Bank of Japan (BOJ) and Ministry of Finance (MoF) are working closely together to reach the 2.0% inflation target. Remember that it’s the MOF that gives the thumbs up to the BOJ before the central bank launches a currency intervention. Aso also provided a bit of spoiler alert when he warned us to “expect BOJ to make various assessments on policy with the aim of hitting the 2.0% price goal.”

Post-Brainard trading – Asian bourses as well as oil prices started Asian session trading on a weak note after Fed’s Brainard tilted the odds against a Fed rate hike this month. In her speech, the FOMC member pointed to low inflation and spending as reasons to wait before tightening the Fed’s policies. Brent crude oil is still down by 0.68% to $47.99 while U.S. crude oil prices slipped by 0.84% to $45.90

Major Market Movers:

JPY – Whether it was Aso’s jawboning or just a turnaround in risk appetite, the yen ended up with V-shaped patterns across the board and headed lower against its higher-yielding counterparts.

USD/JPY dipped to 101.42 before closing at 101.71 (+0.14%), EUR/JPY dropped to 113.93 before ending the session at 114.27 (-0.11%), and GBP/JPY fell to a session low of 135.19 before recovering to 135.65 (-0.11%).

Comdolls – Not even better-than-expected data releases from China and Australia were enough to keep commodity-related currencies afloat against the dollar.

AUD/USD is down by 17 pips (-0.23%) to .7546, USD/CAD is up by a pip from its 1.3048 open price after falling to 1.3029, and NZD/USD is down by 6 pips (-0.08%) to .7343.

Watch Out For:

  • 6:00 am GMT: German final CPI expected to remain at 0.0%
  • 6:00 am GMT: German final WPI (0.1% expected, 0.2% previous)
  • 7:15 am GMT: Switzerland’s PPI (-0.2% expected, -0.1% previous)
  • 8:00 am GMT: Italy’s industrial production (0.2% expected, -0.4% previous)
  • 8:30 am GMT: U.K. CPI (y/y) (0.7% expected, 0.6% previous)
  • 8:30 am GMT: U.K. core CPI (1.4% expected, 1.3% previous)
  • 8:30 am GMT: U.K. PPI input (0.6% expected, 3.3% previous)
  • 8:30 am GMT: U.K. PPI output expected to remain at 0.3%
  • 9:00 am GMT: ECB’s Draghi to give a speech in Italy. Will he hint of further easing?
  • 9:00 am GMT: German ZEW economic sentiment (2.8 expected, 0.5 previous)
  • 9:00 am GMT: Euro Zone ZEW economic sentiment (6.7 expected, 4.6 previous)

See also:

U.S. Session Recap
London Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!