Asian Session Forex Recap – Oct. 19, 2016

  • AU MI leading index up by 0.1% vs. 0.0% previous
  • China’s Q3 2016 GDP up by 6.7% as expected
  • China’s industrial production rises by 6.1% vs. 6.4% uptick expected, 6.3% previous
  • China’s fixed asset investment up by 8.2% as expected
  • China’s retail sales up by 10.7% as expected vs. 10.6% previous
  • Japan’s all industries activity remains at 0.2% as expected

Forex traders were deep in Chopsville during the Asian session, as they priced in China’s data dump and a bit of dollar weakness.

Major Events:

China’s data dump – The world’s second largest economy grew by 6.7% in Q3 2016 from a year earlier, which matches Q2 2016’s growth and market players’ expectations. On a quarterly basis, the economy grew by 1.8% compared to an upwardly revised 1.9% growth in the second quarter. China’s government is aiming for 6.5% – 7.0% growth in 2016.

The rest of China’s reports printed a mixed picture. Industrial production missed its 6.4% growth estimates with a 6.1% reading in September, while retail sales shot up by 10.7% and beat its 10.6% growth expectations. Meanwhile fixed asset investment showed another 8.2% growth as analysts had expected.

Taken together, the retail sales growth outpacing industrial production supports China’s shift towards consumer spending. In addition, the GDP growth remaining within the government’s targets also opens the door for China’s businesses to curb their excessive financial risks.

Mixed risk sentiment – High-yielding currencies started the session in the green, as they took cues from a strong Wall Street close. The tides turned, however, when China’s GDP report came in line with expectations when comdoll traders positioned for an upside surprise. Meanwhile oil traders continued their bullish run on the back of a surprise draw in the American Petroleum Institute (API) stockpiles report.

Australia’s ASX is up by 0.46%, the Shanghai index is down by 0.05%, Hang Seng is down by 0.30%, and Nikkei is up by 0.09%. Meanwhile Brent crude oil shot up by another 0.93% to $52.16 and U.S. crude oil prices rose by another 0.95% to $50.77.

Major Market Movers:

AUD and NZD – The Aussie and Kiwi both rose in anticipation of a strong Chinese GDP release, but soon lost steam when the report came in line with expectations.

AUD/USD rose to a high of .7691 before ending the session 9 pips higher (+0.12%) at .7673, while NZD/USD went up to .7236 before settling back down to .7212 (-0.28%).

USD – Risk appetite pushed the dollar lower across the board, but dollar pairs soon saw a U-turn when China’s reports painted a mixed picture.

USD/JPY hit a low at 103.65 before closing at 103.77, EUR/USD turned back around from 1.1000 to close at 1.0991, and USD/CHF popped back up from a low of .9875 to end the session at .9891 (-0.09%).

Watch Out For:

See also:

U.S. Session Recap
London Session Recap

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