Article Highlights

  • U.K. Gfk consumer confidence slips to -6 as expected vs. -5 reading in January
  • Japan’s preliminary industrial production down by 0.8% in January vs. 0.4% uptick expected, 0.7% in December
  • Japan’s retail sales (y/y) up by 1.0% vs. 0.9% expected, 0.7% growth in December
  • NZ ANZ business confidence slips from 21.7 to 16.6 in February
  • AU current account improves to -3B AUD as expected vs. 10.2B AUD deficit in Q3 2016
  • AU private sector credit dips from 0.7% to 0.2% vs. 0.5% expected
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Mixed economic reports from Japan pushed the yen higher across the board, while overall risk appetite and jitters ahead of Trump’s speech before the Congress weighed on the dollar. Here’s what happened during the forex trading session!

Major Events:

Japan’s economic reports – The world’s third largest economy printed mixed economic results today, as retail sales surprised to the upside while industrial production numbers missed analyst expectations.

Retail sales shot up by 1.0% from a year earlier in January, beating December’s 0.7% uptick and expectations of a 0.9% growth. On a monthly basis, this translates to a 0.5% growth and the third consecutive monthly gains for the report. Naturally, the report supported speculations that Japan’s consumer spending is finally gaining traction amidst limited wage growth and shaky business confidence.

Meanwhile, Japan’s industrial production slipped by 0.8% in January and marked its first decline in six months. Not only did it underperform against December’s 0.7% growth and the expected 0.3% increase, but it also marked the sharpest monthly decline since May 2016.

Apparently, production of cars, engines, and other transport equipment (-4.7%) was the biggest drag after shipments of cars to the U.S. took hits during the month. Unfortunately, this only highlights the Japanese economy’s dependence on external demand for growth.

The immediate future isn’t looking too bright either. A survey by the Ministry of Economy, Trade and Industry showed that manufacturers are seeing a 3.5% output increase in February before dropping by a faster 5.0% in March. Duhn duhn duhn.

Overall risk appetite – Asian bourses tracked their U.S. counterparts after a pre-game speech by Trump hinted at “big” plans for infrastructure spending. If you recall, U.S. equities clocked in its 12th consecutive daily highs ahead of Trump’s awaited speech before Congress later today.

So, despite jitters over the impact of Trump’s announcements, Asian equities still managed to eke out gains today. Nikkei is up by 0.64%, Hang Seng is up by 0.05%, the Shanghai index is up by 0.28%, and Australia’s A SX 200 is up by 0.27%.

Market Movers:

USD – The Greenback lost pips against some of its major counterparts thanks to overall risk appetite and a bit of profit-taking ahead of Trump’s speech scheduled today.

EUR/USD is back up to 1.0586 after slipping to a session low of 1.0569; USD/CHF is down by 7 pips (-0.07%) to 1.0084, and AUD/USD finished the session at .7684 after dipping to .7668.

JPY – The yen gained pips across the board on the back of better-than-expected retail sales report from Japan. The downtrend then got momentum after the industrial production report cast doubts on the sustainability of the growth of the world’s third largest economy.

USD/JPY is down by 17 pips (-0.15%) to 112.62, EUR/JPY is down by 22 pips (-0.18%) to 119.23, and GBP/JPY dipped by another 37 pips (-0.26%) to 139.99.

Watch Out For:

  • 6:00 am GMT: Japan’s housing starts (3.3% expected, 3.9% previous)
  • 8:45 am GMT: France’s consumer spending (0.6% expected, -0.8% previous)
  • 8:45 am GMT: France’s preliminary CPI (0.4% expected, -0.2% previous)
  • 8:45 am GMT: France’s preliminary GDP (q/q) (0.4% expected, 0.2% previous)
  • 9:00 am GMT: Switzerland’s KOF economic barometer (102.2 expected, 101.7 previous)
  • 11:00 am GMT: Italian preliminary CPI (0.1% expected, 0.2% previous)

See also:

U.S. Session Recap
London Session Recap

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