Article Highlights

  • Chinese trade surplus widened from $60.2B to $60.3B in Sept
  • Chinese imports slumped by 17.7%, exports dropped by 1.1%
  • Australian NAB business confidence index up from 1 to 5 in Sept
  • U.K. headline CPI to show another flat reading in Sept?
  • German ZEW economic sentiment index due
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Retreat, comdolls, retreat! Forex traders weren’t fooled by the razzle-dazzle of China’s stronger than expected trade balance, as the report’s components revealed a massive slump in local demand. The September trade surplus widened from 60.2 billion USD to 60.3 billion USD, but this was simply spurred by a 17.7% slump in imports. Exports fell by only 1.1%, which wasn’t as bad as most analysts expected.

AUD/USD fell to a low of .7293 after the release and is trying to move back above the .7300 handle (-0.73%), NZD/USD dipped to a low of .6652 (-0.64%), and USD/CAD popped up to a high of 1.3060. Not even the improvement in Australia’s NAB business confidence index from 1 to 5 in September was enough to shield the Aussie from getting pummelled by its forex peers, as the downturn in demand from China spells weaker business prospects.

The commodity currencies also retreated to the lower-yielding Japanese yen, with AUD/JPY down 79 pips to 87.57 (-0.90%), NZD/JPY down 64 pips to the 80.00 handle (-0.78%), and CAD/JPY down 51 pips to 91.84 (-0.55%).

More volatility might be coming up in the London trading session, with the British pound eager to take its turn in showing off some moves. The U.K. is set to print its inflation reports starting 9:30 am GMT and might show another flat reading for its headline CPI. The core CPI is expected to show an increase from 1.0% to 1.1% in September while the PPI might indicate a 0.2% rebound in producer input prices.

Also on today’s docket is the German ZEW economic sentiment index, which is expected to fall from 12.1 to 6.8 this month. This might be enough to drag the region’s ZEW index down from 33.3 to 30.1, reflecting a significant drop in optimism among investors and analysts in the region and likely spurring a drop for the euro as well.

Be on the lookout for speeches by BOE MPC members Gertjan Vlieghe at 10:00 am GMT and Ian McCafferty (hawk alert!) at 11:30 am GMT if you’re hoping for more pound action.

U.S. 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!