Article Highlights

  • New Zealand visitor arrivals down by 1.3% vs. 3.8% last month
  • Australia AIG manufacturing index down to 51.5 vs. 51.9 previous
  • Australia MI inflation gauge up by 0.4% vs. 0.2% last month
  • China non-manufacturing PMI down to 53.5 vs. 54.4 in December
  • China Caixin manufacturing PMI improves to 48.4 vs. 48.1 expected, 48.2 previous
  • Japan’s manufacturing PMI adjusted from 52.4 to 52.3
  • Australia’s commodity prices (y/y) down by 25.8% vs. 22.7% decline last month
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A pretty tight start for the brand new trading month, as forex traders caught a bit of risk aversion bug while pricing in last week’s major economic events.

Major Events:

China’s PMIs disappoint – The biggest story of the hour is China printing weaker-than-expected PMI reports. The official manufacturing PMI slid from 49.7 to 49.4 in January, a three-year low for the report. Meanwhile, the services PMI disappointed estimates with its 53.3 reading against the 54.4 figure in December.

Last but not the least is the Caixin manufacturing report, which remained on the contraction zone for the 11th month in a row at 48.4. A closer look reveals that low production requirements are encouraging manufacturers from cutting their purchasing activity. And they say we don’t have proof of weakening demand for Apple products…

Tight trading volatility – Trading was tight during the Asian session, possibly because traders are just starting to piece in how the latest statements from the ECB, BOC, BOJ, Fed, and RBNZ will affect this month’s big trends.

Another possible reason is that traders are waiting on the data dump from the Euro Zone coming up in a few hours (see list below). Equities markets saw action though, with Nikkei (+1.78%) still feeling the post-BOJ quakes and Shanghai (-1.78%) and Hang Seng (-0.87%) suffering from China’s weak data.

Major Currency Movers:

AUD and NZD – The Aussie and Kiwi saw see-saw (heh) trading thanks to China’s reports and lower commodity prices weighing on risk sentiment early in the session.

Both commodity-related currencies eventually recovered a bit with AUD/USD capping the session only 11 pips lower (-0.17%) and NZD/USD only down by 6 pips (-0.09%).

Watch Out For:

  • 3:15 am GMT: Spanish manufacturing PMI (52.5 expected vs. 53.0 previous)
  • 3:30 am GMT: Switzerland manufacturing PMI (51.0 expected vs. 52.1 previous)
  • 3:45 am GMT: Italian manufacturing PMI (54.9 expected vs. 55.6 previous)
  • 3:50 am GMT: French final manufacturing PMI (expected to remain at 50.0)
  • 3:55 am GMT: German final manufacturing PMI (expected to remain at 51.1)
  • 4:00 am GMT: Euro Zone final manufacturing PMI (expected to remain at 52.3)
  • 4:30 am GMT: U.K. manufacturing PMI to dip from 51.9 to 51.8?
  • 4:30 am GMT: U.K. net individual lending (4.9B GBP expected vs. 5.3B GBP last month)
  • 4:30 am GMT: U.K. mortgage approvals to remain at 70K in December?
  • 4:30 am GMT: U.K. money supply (expected to grow by 0.3% vs. 0.4% previous)

See more:

U.S. Session Forex Recap

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

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