Article Highlights

  • NZ credit card spending rises by 2.5% in January vs. 1.0% expected, 0.0% previous
  • Japan’s preliminary GDP (q/q) up by 0.2% vs. 0.3% expected and previous
  • Japan’s preliminary GDP price index slips by 0.1% vs. 0.2% decline expected and previous
  • USD/JPY ticks higher over lack of currency-related discussions from Trump and Abe
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The dollar started the week on the right side of the charts, as optimism over Trump’s “phenomenal” tax plans and a lack of jawboning over the weekend.

Major Events:

Japan’s GDP – Data released earlier saw the world’s third largest economy expanding by 0.2% in Q4 2016, missing expectations of a 0.3% uptick. Still, the report marked the fourth consecutive quarter of growth.

On an annualized basis, Japan’s economy had grown by 1.0% in Q4 2016, slightly lower than the 1.4% uptick in Q3 2016 and below expectations of a 1.1% growth.

A closer look tells us that external demand added 0.2% to the GDP. Exports of goods and services also shot up from 2.1% to 2.6% while imports grew by 1.3% and marked its first growth in a year.

Government spending also grew from 0.3% to 0.4% and non-residential investments popped up from -0.3% to 0.9%. However, domestic spending was flat after inching 0.3% higher in Q3 while public investments slipped by 1.8% (from -0.7% in Q3) and private residential investment contracted by 0.1%.

The report printed a mixed picture overall, as it hinted of slowing economic growth and highlighted the government’s struggle to get consumers to contribute to economic activity.

Relief over Trump-Abe weekend meeting – The Asian bourses had a good start to the week as they tracked Wall Street’s record close last Friday. If you recall, market bulls came out of the woodwork when Trump announced that he would reveal “something phenomenal in terms of tax” over the “next two to three weeks.” Nothing like a good cliffhanger to get viewers – or in this case, market players – to stay tuned!

It also didn’t hurt that there were no talks of currency manipulation and trade imbalances during Shinzo Abe’s visit to the U.S. See, Asian investors were worried that Trump would call out Japan for its “unfair” trade practices and generally cause uncertainty among Uncle Sam’s Asian trading partners.

Last but not the least, Asian market players played catch-up to the rise in oil prices after OPEC showed that its quota policing is doing its job.

Nikkei shot up by 0.50% and Australia’s A SX 200 is up by 0.66%. Meanwhile, the Shanghai index is also up by 0.63% and Hang Seng is up by 0.52%.

Market Movers:

JPY – The yen lost a couple more pips across the board after Abe’s meeting with Trump yielded no negative talks about currency manipulation.

USD/JPY is up by 35 pips (+0.31%) to 113.92, EUR/JPY inched 24 pips higher (+0.20%) to 120.96, and GBP/JPY shot up by 61 pips (+0.43%) to 143.32.

Watch Out For:

  • 8:00 am GMT: German wholesale price index (0.3% expected, 1.2% previous)

See also:

Last Week’s Top Forex Movers

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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