Article Highlights

  • Japan money supply: 3.0% vs. 3.3% expected and previous
  • PBoC barely makes changes to the yuan fix
  • China’s trade balance surprises to the upside
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Risk appetite was the name of the game during the Asian session, as good news from China encouraged confidence among forex traders.

Major Events:

Good day for Chinese equities – Chinese traders woke up hungry for profits today, as the People’s Bank of China (PBoC), for the fourth day in a row, barely made any changes to yesterday’s yuan fix. This helped kick off the stock market in high spirits, and primed traders for China’s trade report.

China’s trade data –Data printed a few hours ago revealed better-than-expected trade numbers from China. The trade balance report (in yuan terms) clocked in at 382.05B in December, higher than the 339B figure that markets had expected and November’s 343B surplus. In dollar terms we’re looking at a 60.1B surplus (vs. 52.5B expected and 54.1B figure in November).

Even the details spurred on the currency bulls. Imports printed a 4.0% drop from a year ago, lower than the 5.6% drop in November and 7.9% downtick expected. It’s also the smallest annualized decline we’ve seen since December 2014.

Exports was the star of the show though, with its 2.3% y/y improvement against the 3.7% decline we saw in November and the 4.1% fall that analysts had expected. The numbers could be a bit inflated by end-of-year stockpiling, but for now, forex traders are happy to buy high-yielding currencies.

Major Currency Movers:

Comdolls – Not surprisingly, high-yielding currencies like the Aussie and Kiwi took advantage of today’s risk-taking. AUD/USD popped up by 48 pips (+0.69%) while NZD/USD rose by 32 pips (+0.49%). Meanwhile, a slight recovery in oil prices boosted the Loonie and brought USD/CAD down by 32 pips (-0.22%).

JPY – “What goes up must come down” must be the mantra for yen traders today, as the low-yielding currency fell across the board on the back of risk appetite. USD/JPY popped up by 70 pips (+0.59%) while AUD/JPY also saw a 107-pip rise (+1.30%). Even the European currencies gained pips with EUR/JPY rising by 43 pips (+0.34%) and GBP/JPY gaining 137 pips (+0.81%) throughout the session.

Watch Out For:

  • 7:45 am GMT: French CPI (0.1% expected vs. -0.2% last month)
  • 7:45 am GMT: French current account (showed 1.4B EUR deficit last month)
  • 10:00 am GMT: Euro Zone industrial production (-0.2% expected vs. 0.6% last month)

See more:

U.S. Session Forex Recap

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