Article Highlights

  • Japan’s industrial production revised from -1.4% to -1.7%
  • Japan’s tertiary industry activity down by 0.6% vs. 0.1% uptick expected, 0.9% decline previous
  • Australia’s new motor vehicle sales up by 0.5% vs. 0.1% decline last month
  • China’s trade surplus up to 406.2B CNY vs. 389.01B CNY expected
  • China’s trade surplus rockets to a record high of $63.3B vs. expected $58.85B
  • China’s exports (y/y) down by 11.2% in Jan vs. 1.4% drop in Dec
  • China’s imports (y/y) down by 18.8%
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It was a good trading session for risk takers, as forex traders mostly shrugged off China’s weak trade data and boosted high-yielding currencies across the board.

Major Events:

China’s trade data – Chinese traders are back from a week-long holiday and they got greeted by dismal trade data. Exports from world’s second largest economy fell by a whopping 11.2% from a year earlier in January, much larger than December’s 1.4% decline. With imports also dropping by 18.8%, this puts the dollar-denominated surplus to a record high of $63.3B after December’s $60.1B figure. Market players were only expecting a $58.85B surplus.

Normally a surplus is considered good for the economy. This is not the case if it’s achieved by imports dropping dramatically against exports. Looks like traders have mostly taken the numbers in stride though, as January’s trade numbers do tend to get distorted by pre-Lunar New Year holiday production activities. It also doesn’t hurt that for some, a glaringly weak report could prompt the PBoC to up their stimulus game.

Risk is on like Donkey Kong – Asian session traders started the new trading week on the right side of the bed as they caught up to the U.S. session’s optimism and higher oil prices. As I mentioned in my recap, positive U.S. data and renewed hopes for OPEC to do something about the falling oil prices boosted risk sentiment and capped the day higher for high-yielding bets. Today Nikkei jumped as much as 6.7% while Hang Seng took a break with +2.73% and Australia’s ASX inched 1.28% higher.

Major Currency Movers:

JPY – Any risk-taking day is bound to take its toll on the yen. The low-yielding currency gave up pips to its higher-yielding counterparts with EUR/JPY rising by 40 pips (+0.31%), GBP/JPY jumping by 94 pips (+0.57%), and CHF/JPY inching 11 pips higher (+0.10%).

USD – The Greenback had a mixed trading session, as it gained pips against its fellow low-yielders but gave up pips to the higher-yielding currencies.

EUR/USD slipped by 7 pips (-0.07%) while USD/JPY jumped by 46 pips (+0.38%) and USD/CHF popped up by 24 pips (+0.25%).

Comdolls – The commodity-related currencies mostly shrugged off slightly lower oil prices and China’s weak trade data in favor of a bit of risk-taking.

AUD/USD is up by 46 pips (+0.65%), USD/CAD is down by 42 pips (-0.30%), and NZD/USD is up by 37 pips (-0.56%).

Watch Out For:

  • 10:00 am GMT: Euro Zone trade balance
  • 2:00 pm GMT: Draghi to give a speech in Brussels. Watch out for any more jawboning!

See more:

U.S. Session Forex Recap

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