Article Highlights

  • Japan’s monetary base (y/y) up by 21.4% vs. 23.2% growth expected, 22.6% previous
  • AU building approvals rose by 1.8% in January vs. 0.1% decline expected, 2.5% drop in December
  • AU trade surplus drops to 1.30B AUD vs. 3.82B AUD expected, 3.33B AUD previous
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Dollar domination was the name of the game during the Asian session, as forex traders continued to price in the likelihood of a March rate hike from the Fed.

Major Events:

Australia’s trade data – Stop the party! Data printed from the Land Down Under earlier today showed the economy’s trade surplus surprisingly shrinking in January. Not good, especially after Australia avoided a technical recession earlier this week.

Australia’s trade surplus narrowed to 1.30B AUD in January, down from December’s 3.33B AUD surplus and missing the 3.80B AUD expected figure. This marks the smallest surplus since October 2016, as exports fell while imports shot up during the month.

A closer look tells us that exports slowed down by 3% even though a lot of Australia’s commodity exports maintained their strong prices. Bad weather is to blame, apparently, along with the decrease in Chinese demand due to the Lunar New Year celebrations. Meanwhile, imports rose by 4% on the back of higher demand for consumption good (+7%).

Recall that Australia avoided a technical recession yesterday after it printed a 1.1% growth in Q4 following Q3’s 0.5% GDP decline. Exports had popped up by 2.2% during the quarter and contributed 0.5% to the economy’s growth, while imports also gained 1.4% and subtracted 0.3% to the GDP computation.

Dollar domination – With not a lot of major catalysts, Asian session forex traders turned their focus back to the scrilla. Specifically, more and more traders are joining the March-rate-hike bandwagon after Fed voting members worked so hard to convey their hawkishness. Brainard – a known dove – is the latest on the list after she shared that raising rates would be appropriate “fairly soon.”

Asian bourses also joined the party especially after U.S. equities marked new highs yesterday. Nikkei is up by 0.95% and hit its highest level since December 2015 while the Shanghai index clocked in a 0.03% gain, Hang Seng shot up by 0.36%, and Australia’s A SX 200 rose by 1.22%.

Market Movers:

USD – The dollar continued to rake in pips as more traders are convinced that the Fed will pull off its first interest rate hike in March.

EUR/USD slipped by 12 pips (-0.11%) to 1.0531, USD/JPY shot up by another 25 pips (+0.22%) to 113.95, and USD/CHF inched 12 pips higher (+0.12%) to 1.0104.

AUD – A downside surprise in Australia’s trade numbers summoned Aussie bears faster than it took Lady Gaga to replace Beyonce Coachella 2017.

The prospect of another weak quarter for Australia dragged AUD/USD 21 pips lower (-0.27%) to .7652 while GBP/AUD also shot up by 42 pips (+0.26%) to 1.6047 and AUD/NZD fell by 21pips (-0.20%) to 1.0725.

Watch Out For:

  • 7:45 am GMT: Switzerland’s GDP (0.5% expected, 0.0% previous)
  • 8:00 am GMT: German import prices (0.5% expected, 1.9% previous)
  • 8:00 am GMT: Spanish employment change (5.2K expected, 57.3K previous)
  • 9:15 am GMT: Switzerland’s retail sales (y/y) (-2.0% expected, -3.5% previous)
  • 10:00 am GMT: Italian monthly unemployment rate expected to remain at 12.0%
  • 10:30 am GMT: U.K. construction PMI expected to remain at 52.2
  • 11:00 am GMT: Euro Zone CPI flash estimate expected to remain at 1.8%
  • 11:00 am GMT: Euro Zone core CPI flash estimate expected to remain at 0.9%
  • 11:00 am GMT: Euro Zone PPI (0.5% expected, 0.7% previous)
  • 11:00 am GMT: Euro Zone unemployment rate expected to remain at 9.6%

See also:

U.S. Session Recap
London Session Recap

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