- NZ building consents up by 0.8% vs. 7.9% decline in December
- AU MI inflation gauge slips by 0.3% vs. 0.6% gain in January
- AU retail sales up by 0.4% as expected vs. 0.1% decline previous
- AU ANZ job ads down by 0.7% vs. 3.9% growth in January
Risk aversion was the name of the game during the Asian session, as forex traders priced in new geopolitical jitters and a bit of profit-taking from last week’s dollar rally.
Australia’s retail sales – Consumer activity is off to a strong start in Australia, as retail spending rose by 0.4% in January. That’s the highest growth since October 2016, yo!
The growth rate was a welcome one especially after it printed a 0.1% decline in December – its first dip since 2015. If you recall, consumer spending makes up more than half of Australia’s economic activity.
A closer look tells us that sales went up for a lot of industries:
Household goods retailing (from -2.3% to +1.4%)
Cafes, restaurants, and takeaway food services (from 0.2% to 1.1%)
Food retailing (from 0.2% to 0.5%)
Other retailing (from -0.2% to 0.1%)
Meanwhile, sales in clothing, footwear and personal accessories (from +1.4% to -0.4%), and departmental stores (from +0.3% to -0.5%) showed declines.
Some analysts are taking the report with a grain of salt, though. For one thing, Australia’s Bureau of Statistics also reported that the trend estimate only rose by 0.2% for the month, a tad lower than November and December’s 0.3% uptick.
Geopolitical jitters triggered – Who needs economic reports when we’ve got plenty of geopolitical risks to worry about? Here are reasons why risk appetite took hits across the board during the Asian session:
North Korea fired missiles – And no, it’s not because Kim Jong-Un listened to a Katy Perry song. Military authorities from South Korea, Japan, and the U.S. all confirmed that North Korea had fired four ballistic missiles just after 7:30 AM local time from the Tongchang-ri region.
Japan’s defence minister Tomomi Inada said that three of the missiles landed in Japan’s economic zine. Specifically, they fell 300 – 350 kilometers from Japan’s Oga peninsula in the Akita prefecture.
The move is seen as North Korea’s reaction to the joint military exercises between South Korea and the U.S. known as “Foal Eagle,” which is expected to run from March 1 to April 30. It also didn’t help that Japan’s media had reported over the weekend of U.S. Secretary of State Rex Tillerson’s trip to Japan, South Korea, and China this month to talk about North Korea.
South Korea’s acting President Hwang Kyo-ahn and Japan’s Shinzo Abe have condemned North Korea’s move, saying that it’s a violation of U.N. Security Council resolutions. Japan’s Chief Cabinet Secretary Yoshihide Suga also shared that it’s a “grave threat to national security” though he added that there were no immediate reports of damage to ships or aircraft in the area.
Plot thickens for SoKor vs. China tensions – Earlier today South Korea’s Trade Minister Joo Hyung-hwan expressed his “deep concern” over Beijing’s measures to limit tourism activity in Korea and warned that the government’s response to China’s actions towards South Korean companies “will be strengthened.”
If you recall, China gave verbal orders to its local tour operators to stop offering trips to South Korea after the latter’s government had secured land for a U.S. missile-defense system.
Profit-taking from dollar rally – With Yellen all but announcing a rate hike in March, forex traders are looking at other factors that could affect the dollar. The Donald, for example, made waves over the weekend when he accused former President Obama of wiretapping him in the last days of the campaign period.
Confidence over the Greenback’s uptrend also took hits when traders started to doubt Trump’s ability to fulfill his fiscal policy plans especially since he has yet to complete his Cabinet members. Last but not the least is your classic buy-the-rumor, sell-the-news scenario after Yellen’s hawkish speech.
U.S. stock futures dipped by 0.4%, an uncommonly strong move, during the Asian session.
JPY – WIth the dollar losing some of its shine, the low-yielding yen mopped up most of the risk aversion flows.
USD/JPY closed 31 pips (-0.27%) lower than its session high, while AUD/JPY also fell by 20 pips (-0.23%) to 86.21 and EUR/JPY also slipped by 11 pips (-0.09%) to 120.74.
- 9:10 am GMT: Euro Zone retail PMI
- 9:30 am GMT: Euro Zone Sentix investor confidence (18.8 expected, 17.4 previous)
- 11:30 am GMT: U.K.’s MPC member Charlotte Hogg to speak at the University of Lincoln
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!