Article Highlights

  • AU home loans up by 0.4% vs. 1.0% uptick expected, 1.3% growth in November
  • China’s trade surplus pops up from 275B CNY to 355B CNY in January
  • Japan’s tertiary industry activity slips by 0.4% vs. 0.1% decline expected, 0.3% uptick in November
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Risk appetite was the name of the game during the Asian forex trading session, thanks to optimism over Trump’s tax plans and a better-than-expected tier 1 report from China.

Major Events:

Big league wins for China – China capped the trading week with a one-two punch, as it scored two points in the markets today.

For starters, the Financial Times cited two sources saying that Trump made his first official phone call with Chinese President Xi Jinping. Word around the hood is that Trump has pinky-sworn to respect the “One China” policy, an agreement that recognizes China’s sovereignty over Taiwan. If you recall, Trump caused diplomatic tensions last December by insinuating that the U.S. would mark the One China policy as N/A.

China’s second victory for the day came in the form of its January trade numbers, which showed a surplus of 355B CNY against December’s 275B CNY figure. In dollar terms, this translates to a surplus of $50.35B, which is lower than last year’s $56.67B reading but still surpasses estimates of a $47.90B surplus.

A closer look tells us that exports jumped by 15.9% from a year earlier against December’s 0.6% annualized gain and the expected 5.2% uptick, while imports rocketed by a whopping 25.5% from December’s 10.8% growth and against the expected 15.2% increase.

In dollar terms, exports rose by 7.9% from a year earlier. This is higher than November’s 6.2% decline and the expected 3.3% increase. Meanwhile, imports popped up by 16.7%, much higher than December’s 3.1% growth and the estimated 10.0% increase.

Analysts are taking the report with a bucket of salt, though. After all, China’s trade numbers in January tend to be a wee bit inflated due to its Lunar New Year holidays. Still, the strong numbers come at a tricky time especially since Trump is not shying away from calling out Uncle Sam’s trade competitors.

Overall risk appetite – The Asian bourses clocked in gains, as they tracked their U.S. counterparts. If you recall, U.S. equities marked new record highs during the U.S. session after Trump promised “phenomenal” tax-related announcements over the next two to three weeks. He also hinted of more deregulation though he hasn’t specified if it’s specific to the aviation sector or the U.S. economy in general.

Either way, the markets did their happy dances today. Nikkei jumped by 2.25% and Australia’s A SX 200 is up by 0.94%. China’s markets also followed suit with the Shanghai index up by 0.43% and Hang Seng popping up by 0.55%.

Even oil prices joined the bandwagon. U.S. crude oil prices is up by 0.2% to $53.09 while Brent crude is up by 0.1% to $55.70.

Major Market Movers:

JPY – Risk appetite and decreased uncertainty over Trump and Abe’s meeting over the weekend dragged the yen lower across the board.

USD/JPY is up by 37 pips (+0.33%) to 113.69, GBP/JPY is up by 62 pips (+0.44%) to 142.21, and EUR/JPY jumped by 45 pips (+0.37%) to 121.22.

AUD – Higher commodity prices and a better-than-expected Chinese trade data kept Aussie bulls in play for most of the session.

AUD/USD is up by 21 pips (+0.27%) to .7651, AUD/JPY jumped by 53 pips (+0.61%) to 86.98, and EUR/AUD slipped by 35 pips (-0.25%) to 1.3938.

Watch Out For:

  • 8:45 am GMT: French industrial production (-0.6% expected, 2.2% previous)
  • 8:45 am GMT: French preliminary non-farm payrolls (q/q) expected to remain at 0.3%
  • 10:00 am GMT: Italian industrial production (0.1% expected, 0.7% previous)
  • 10:30 am GMT: U.K. manufacturing production (0.3% expected, 1.3% previous)
  • 10:30 am GMT: U.K. goods trade balance (-11.5B GBP expected, -12.2B GBP previous)
  • 10:30 am GMT: U.K. construction output (1.1% expected, -0.2% previous)
  • 10:30 am GMT: U.J. industrial production (-0.2% expected, 2.1% previous)

See also:

U.S. Session Recap
London Session Recap

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