Article Highlights

  • China’s markets out on Spring Festival holiday
  • U.K. BRC shop price index down by 1.7% vs. 1.4% decline in December
  • Japan’s final manufacturing PMI revised lower from 52.8 to 52.7
  • New Zealand PM Bill English calls for national elections on September 23, 2017
  • China’s manufacturing PMI slips from 51.4 to 51.3 vs. 51.2 reading expected
  • China’s non-manufacturing PMI ticks higher from 54.5 to 54.6
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The New Zealand dollar took more hits on the back of a weak jobs report, while the yen slipped back a bit against its higher-yielding counterparts on a recovery from USD/JPY.

Major Events:

China’s PMI releases – Data released earlier today revealed that China’s manufacturing sector had cooled down a bit in January. The official manufacturing PMI slipped from 51.4 to 51.3 for the month, but still beat analyst estimates of a 51.2 reading.

Details reveal that large manufacturers continue to outperform, while small firms continued to weaken. In addition, readings for output, new orders, and input prices edged lower for the month.

Market players aren’t too worried, though. For one thing, a 51.3 reading is still way above the 50.0 expansionary mark, with January’s data mostly taken as a signal that the manufacturing sector is merely consolidating.

It also helped that the services sector PMI came in at 54.6 against December’s 54.5 reading, which suggests that the progress in the service sector offset the slowdown in the manufacturing and construction sectors.

Overall, traders took the downtick with a grain of salt and barely reacted to the manufacturing PMI miss.

All eyes on the upcoming FOMC statement – Forex price action was a mixed bag of nuts, as Asian session market players stayed on the sidelines ahead of the FOMC statement release later today.

Another possible reason for the lack of volatility is that traders are still making sense of Trump’s latest political moves. See, while market players are waiting on Trump’s tax reform, deregulation, and fiscal stimulus projects, a lot of them can’t help but get jittery over the more immediate concerns like his protectionist stance on trade and his tendency to jawbone the Greenback.

In a few hours, the Fed will release its first policy decision since the start of the year. FOMC members have indicated that they’re willing to raise their rates by as many as three times this year, but traders will be looking (very closely) for clues of Yellen and her team possibly managing expectations amidst recent, data misses from Uncle Sam.

Nikkei took comfort in the slight yen weakness against the dollar and shot up by 0.25% while Hang Seng, in its first day back since the weekend, fell by 0.71%. Meanwhile, Australia’s A SX 200 is also up by 0.51% thanks to China’s not-so-awful PMI releases.

Major Market Movers:

NZD – The New Zealand dollar continued to take hits after New Zealand’s headline numbers from its quarterly employment report surprised to the downside.

NZD/USD fell by a whopping 77 pips (-1.05%) to .7265 while NZD/JPY dropped by 56 pips (-0.68%) to 82.20 and AUD/NZD shot up by 74 pips (+0.72%) to 1.0404.

JPY – A bit of recovery from USD/JPY encouraged yen bears to come out of the woodwork.

USD/JPY is up by 44 pips (+0.39%) to 113.14, GBP/JPY is up by 46 pips (+0.32%) to 142.26, and EUR/JPY shot up by 35 pips (+0.29%) to 122.12.

Watch Out For:

  • 6:30 am GMT: Australia’s commodity prices (y/y)
  • 8:00 am GMT: U.K. Nationwide house price index (0.0% expected, 0.8% previous)
  • 9:15 am GMT: Spanish manufacturing PMI (55.1 expected, 55.3 previous)
  • 9:30 am GMT: Swiss manufacturing PMI (56.1 expected, 56.0 previous)
  • 9:45 am GMT: Italian manufacturing PMI (53.3 expected, 53.2 previous)
  • 9:50 am GMT: French final manufacturing PMI expected to remain at 53.4
  • 9:55 am GMT: German final manufacturing PMI expected to maintain 56.5 reading
  • 10:00 am GMT: Euro Zone final manufacturing PMI expected to remain at 55.0
  • 10:30 am GMT: U.K. manufacturing PMI (55.9 expected, 56.1 previous)

See also:

U.S. Session Recap
London Session Recap

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