Article Highlights

  • AU HIA new home sales up by 6.1% after 8.5% decline in October
  • S&P affirms New Zealand’s AA+ rating and “stable” outlook
  • China’s Q4 2016 GDP up by 6.8% from a year earlier vs. 6.7% uptick expected
  • China’s industrial production (y/y) rises by 6.0% vs. 6.1% expected, 6.2% previous
  • China’s fixed asset investment up by 8.1% vs. 8.3% expected and previous
  • China’s retail sales (y/y) up by 10.9% vs. 10.7% expected, 10.8% previous
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It was a pretty volatile trading session for forex traders, as they priced in China’s latest GDP release, Janet Yellen’s speech, and await Trump’s inauguration.

Major Events:

China’s data dump – The biggest story of the hour is the world’s second largest economy printing a bunch of tier 1 reports.

First is the quarterly GDP, which showed a 1.7% increase from Q3 2016 and a 6.8% uptick from a year earlier. This brings 2016’s GDP growth to 6.7% as easy monetary policy and fiscal stimulus helped buoy the economy. Though it’s the slowest growth in 26 years, it’s still almost right smack in the middle of the 6.5% – 7.0% official target.

Retail sales added to the good news, as it grew by 10.9% in 2016. This is higher than November’s 10.8% annualized growth and analysts’ expectations of a 10.7% uptick. It wasn’t all sunshine and butterflies though.

Industrial production missed expectations with only a 6.0% increase from last December, lower than November’s 6.2% growth and the expected 6.1% improvement. Even more significantly, fixed asset investment slowed down to an annualized growth of 8.1% in December from November’s 8.3% uptick.

For now, it seems like Aussie traders are willing to give China’s latest releases the benefit of the doubt as they celebrate China’s not-so-awful growth rate.

Yellen’s not-so-hawkish speech – Fed head honcho Janet Yellen didn’t do the dollar any favors when she gave a speech at the Stanford Institute of for Economic Policy Research. Just before China printed its reports, Yellen said that she thought it “prudent” for the Fed to “gradually adjust” its monetary policy over time to help keep inflation low and jobs plentiful.

The sentiment is less hawkish than analysts had anticipated especially since most of her colleagues have not shied away from forecasting aggressive rate hikes this year.

Not surprisingly, the dollar slid a bit lower across the board following her statements. Then again, it could also be due to Asian session players taking out their long dollar trades ahead of Trump’s inauguration.

Major Market Movers:

USD – The Greenback lost pips across the board thanks to apprehension ahead of Trump’s inauguration and a less-hawkish-than-expected speech by Janet Yellen.

EUR/USD climbed by 27 pips (+0.25%) to 1.0686, USD/JPY slid by 19 pips (-0.17%) to 114.61, GBP/USD popped up by 29 pips (+0.24%) to 1.2366, and USD/CHF inched 29 pips (-0.29%) lower to 1.0044.

AUD – The Aussie made pips against its major counterparts after China printed its GDP report.

AUD/USD is up by 27 pips (+0.36%) to .7583, AUD/JPY is up by 19 pips (+0.22%) to 86.93, and AUD/CAD shot up by another 19 pips (+0.19%) to 1.0083.

Watch Out For:

  • 8:00 am GMT: German PPI (0.4% expected, 0.3% previous)
  • 10:30 am GMT: U.K. retail sales (-0.1% expected, 0.2% previous)

See also:

U.S. Session Recap
London Session Recap

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Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!