Article Highlights

  • NZ PPI input (q/q) up b y1.0% vs. 0.9% expected, 1.5% previous
  • NZ PPI output (q/q) shoots up by 1.5% vs. 0.6% expected, 1.0% previous
  • Japan posts bigger-than-expected trade deficit on higher oil prices and weaker global demand
  • U.K. Rightmove house price index up by 2.0% vs. 0.4% previous
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The dollar’s price action was a mixed bag of nuts, as it gained ground against low-yielders like the yen and franc, but lost pips against the comdolls and the European currencies. What’s up with that?!

Major Events:

New Zealand’s producer prices – Data printed earlier saw producer output prices in New Zealand advancing by 1.5% in Q4 2016. Meanwhile, input prices also saw a 1.0% uptick from the previous quarter.

A closer look tells us that the drive higher was mainly due to higher farm-gate milk prices for dairy cattle farmers (+13%) and higher prices for product manufacturers (+14%). Prices for whole milk powder also rose, as speculators calmed down and the supply and demand took over.

Producer output prices in the mining (+13%) and construction (+1.6%) industries also improved. On the input side, prices were mainly pushed higher by higher-than-expected farm-gate milk prices, as well as the 5.7% increase in petrol and 8.5% jump in diesel prices.

On an annualized basis, producer output prices is up by 2.5%, while input prices clocked in a 2.3% gain.

Japan’s trade dataTrade numbers from the world’s third largest economy disappointed expectations, as it showed a wider deficit than analysts had expected. Japan’s trade deficit clocked in at 1.1T JPY, much higher than the 625.9B JPY shortfall that market players had expected.

Apparently, exports only rose by 1.3% from a year earlier (against 5.0% growth expectations) thanks to China’s New Year celebrations making a dent on demand for Japanese exports. Of course, it also didn’t help that jitters ahead of Trump’s meeting with Abe limited activity for Japan’s exporters.

Meanwhile, imports rocketed by 8.5% from a year earlier and marked the first increase since December 2014. We don’t have far to look for the culprit. Higher oil prices pushed imports higher after OPEC members and some non-members agreed to cut their production.

Investors are mostly shrugging off Japan’s trade data miss and chalking the bad numbers up to seasonal factors. The fact that exports have grown for the second consecutive month continues to herald strong trends for Japan’s trading sector even as threats of protectionism continue to limit optimism.

Market Movers:

USD – The dollar’s price action was a mixed, as it gained on the low-yielding currencies but lost to the higher-yielders.

USD/JPY shot up by 23 pips (+0.20%) to 113.12 and USD/CHF inched 5 pips higher (+0.05%) to 1.0032 but USD/CAD slipped by 10 pips (-0.08%) to 1.3091 and GBP/USD popped up by 4 pips (+0.03%) to 1.2414.

JPY – With not a lot of other major data on the docket, traders focused on Japan missing its trade expectations.

EUR/JPY jumped by 29 pips (+0.24%) to 120.05, GBP/JPY popped up y 32 pips (+0.23%) to 140.41, and AUD/JPY rose by 17 pips (+0.20%) to 86.77.

Watch Out For:

  • 8:00 am GMT: German PPI (0.3% expected, 0.4% previous)
  • 12:00 pm GMT :German Bundesbank monthly report
  • 12:00 pm GMT: U.K. CBI industrial order expectations

See also:

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