Article Highlights

  • NZ visitor arrivals up by 1.9% vs. 1.3% decline in December
  • AU quarterly company operating profits up by 20.1% vs. 8.0% uptick expected, 1.5% previous
  • All eyes on Trump’s speech on Tuesday
  • 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:

Australia’s company profits – Data printed earlier today saw Australia’s company profits skyrocketing by a whopping 20.1% in Q4 2016, up from an upwardly revised 1.5% uptick in Q3 and way better than the expected 8.0% improvement. This marks not only the fastest increase since Q2 2010, but is also the highest growth rate on record. This also puts annual profits up to a nice 26.2%. Wowza!

Apparently, higher commodity prices boosted mining profits (+49%) while a good reporting season for listed companies helped lift financial and insurance profits (+109% vs. -40% in Q3). Real estate profits didn’t slack either, as it shot up by 11.3% after falling by 0.5% in Q3.

The figures support the RBA’s conviction that the negative GDP reading that we saw in Q3 2016 were due to temporary factors. However, market players are taking the numbers with a bucket of salt.

For starters, inventories only rose by 0.3% for the quarter and 1.6% annually, which could still drag a bit on the GDP report due on Wednesday.

The wage component of the report also showed a decline of 0.5% in Q4 and only an uptick of 1.0% over the year. Bad news for the RBA, which is already feeling iffy about Australia’s labor market.

For now, it seems like the economy is on track to avoid a technical recession as the RBA had predicted. The question is, how will companies choose to reinvest their profits? Will more profits lead to more investments and jobs? Or just fatter wallets for Australia’s companies?

Mixed risk sentiment – With not a lot of major data on the docket, the Asian bourses traded on cautious optimism at the start of the week.

We don’t have far to look for the reason. Tomorrow night, POTUS Trump is scheduled to give a speech in front of a joint session of Congress. U.S. Treasury Secretary hinted on Sunday that Trump will use the event to drop some hints on his plans to cut taxes for the middle class, simplify the tax system, and make American companies more competitive in the global markets.

Some market players aren’t convinced, however. Specifically, they’re worried that Trump’s speech will either be too vague or underwhelm the markets altogether. The uncertainty over the tone of his speech, as well as jitters over the top-tier reports scheduled this week, caused mixed risk sentiment in the Asian markets.

Nikkei is down by 0.69%, Australia’s A SX 200 is down by 0.25% and the Shanghai index is down by 0.27%. Hang Seng swam against the tide though, as it rose by 0.08%.

Oil prices also started the week strong with U.S. oil prices climbing by 0.35% to $54.18 while Brent crude is up by 0.41% to $56.54.

Market Movers:

AUD – The Aussie gained pips across the board at the release of Australia’s strong Q4 company profits, but soon fell victim to overall risk sentiment and lost some of its gains against its lower-yielding counterparts.

AUD/USD is back to .7688 after falling to a session low of .7663, AUD/JPY recovered to 86.26 after dipping to 85.85, while AUD/NZD just straight up gained 13 pips (+0.12%) to 1.0683.

Watch Out For:

  • 9:00 am GMT: Spanish flash CPI (3.3% expected, 3.0% previous)
  • 10:00 am GMT: Euro Zone M3 money supply and private loans

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