Article Highlights

  • Japan’s current account surplus up from 1.48T JPY to 1.93T JPY in October
  • Japan’s final quarterly GDP revised lower from 0.5% to 0.3%
  • U.K. RICS house price balance up from 23% to 30% in November
  • Australia’s trade deficit widens from 1.27B AUD to 1.54B AUD in October
  • Australia’s trade deficit widens from 1.27B AUD to 1.54B AUD in October
  • Japan’s Economy Watchers Sentiment up from 46.2 to 48.6
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The dollar gave up pips to its counterparts on a bit of risk-taking as well as profit-taking from long dollar trades. Here’s what’s up in the forex scene!

Major Events:

Downward revision to Japan’s GDP –Data from the Cabinet Office revealed downward revisions to Japan’s quarterly growth figures. If you recall, the government recently adopted a new base year for calculating GDP. Analysts say the new method, which includes research and development as capital expenditure for the first time, added 19.2 trillion yen to capital expenditure in fiscal 2015, versus an 18.5 trillion yen contribution in the previous fiscal year.

The economy is now estimated to have grown by 1.3% in Q3 2016 compared to a year earlier, way lower than the initial 2.2% reading. On a quarterly basis, the GDP has only grown by 0.3%, also lower than the initial 0.5% growth printed.

Capital expenditures took the most hits from the revisions, now at -0.4% from 0.0%, while net exports now only contribute 0.3% to the GDP, lower than its 0.5% contribution in Q2 2016. Last but not the least, private consumption, which makes up around 60% of the economy, grew by 0.3%, higher than initial estimates of a 0.1% growth.

Australia’s trade balance – Japan isn’t the only one feeling the pinch from weak data. Australia printed a 1.54B AUD trade deficit in October, wider than the 1.27B AUD shortfall in September and analyst estimates of a 0.80B AUD deficit for the month.

A closer look tells us that imports shot up by 2.0% while exports only grew by 1.0%. Having a déjà vu? That’s because we’ve also seen this pattern in Australia’s current account and previous trade balance releases.

Overall, not a good start for Australia’s Q4 2016 growth figures. Remember that the Aussie managed to limit its losses even after a huge Q3 2016 GDP miss because investors (and the RBA) are counting on a rebound in Q4 2016. Now that it looks like the economy won’t get any boost from trade activities, then the odds of Australia dipping into recession just got higher. Duhn duhn duhn.

China’s trade balance – Rounding up today’s data disappointment is China and its trade figures. Reports released earlier show a trade surplus of 298B CNY in November, narrower than October’s 325B CNY figure. In dollar terms, this translates to a surplus of $44.6B, down from $49.1B in the previous month.

Apparently, imports shot up by a whopping 13.0% in November, up from 3.2% in October, while exports jumped “only” jumped up by 5.9% from a year earlier after growing by 3.2% in October. In dollar terms, this is equivalent to a 6.7% uptick for imports and only a 0.1% uptick for exports.

Asian market players were nonetheless pretty satisfied with the numbers, as high import levels from China mean more moolah for its biggest trading partners.

Overall dollar weakness – The Greenback took a step back against its major counterparts ahead of today’s ECB monetary policy announcement and after U.S. bond yields took a step back during yesterday’s U.S. session.

That didn’t stop the Asian bourses from rising though! Australia’s A SX 200 is up by 1.20%, Hang Seng is up by 0.64%, the Shanghai index is up by 0.03%, and Nikkei is up by 1.45%.

Major Market Movers:

USD – The dollar lost a few pips from its counterparts on the back of risk-taking and a bit of profit-taking from long dollar trades.

EUR/USD is up by 17 pips (+0.16%) to 1.0776, USD/JPY slipped by 57 pips (-0.50%) to 113.29, GBP/USD is up by 26 pips (+0.21%) to 1.2648, and USD/CHF is down by 16 pips (-0.16%) to 1.0059.

JPY – The yen gained ground across the board as it was dragged higher by USD/JPY’s price action. Of course, it also didn’t help that Japan’s GDP was revised lower, which may have caused a bit of risk aversion in the Asian market scene.

EUR/JPY is down by 42 pips (-0.34%) to 122.07, GBP/JPY is down by 42 pips (-0.29%) to 143.29, and AUD/JPY is also down by 16 pips (-0.19%) to 84.96.

Watch Out For:

  • Italy on Immaculate Conception Day bank holiday
  • 7:30 am GMT: France’s final non-farm payrolls (q/q) expected to remain at 0.3%
  • 1:45 pm GMT: ECB’s monetary policy decision (Read Forex Gump’s trading guide here)

See also:

U.S. Session Recap
London 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!