Article Highlights

  • Japan’s average cash earnings up by 0.5% vs. 0.3% uptick expected, 0.5% previous
  • U.K. RICS house price balance shoots up to 24% vs. 23% expected, 24% previous
  • China’s CPI (y/y) slips to 0.8% vs. 1.9% expected, 2.5% previous
  • China’s PPI (y/y) up by 7.8% vs. 7.6% expected, 6.9% previous
  • Japan’s preliminary machine tool orders (y/y) jumps by 9.1% vs. 3.5% in January
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Ho-hum. Forex price action was as exciting as watching water boil, as a lack of economic catalysts kept Asian session traders in the sidelines ahead of the ECB statement.

Major Events:

China’s CPI and PPI reports – China’s factory gate prices accelerated by 7.8% from a year earlier in February, which is greater than the expected 6.9% uptick and marks the fastest acceleration since September 2008.

We don’t have far to look for the cause. The improvement in producer prices was mostly due to the 36.1% increase from the mining industry, the biggest jump since 2010. Meanwhile, raw materials also jumped by 15.5% and oil refiners and chemical producers also saw upticks.

But while China’s producer prices could lead to higher global prices, it’s currently not doing much for domestic consumer prices.

China’s CPI clocked in at 0.8% from a year earlier in February, which is less than half of the expected 1.9% increase and is much smaller than January’s 2.5% uptick. Analysts are taking the numbers with a grain of salt though, as food prices have significantly declined from their pre-Lunar New Year levels in late January (the holidays started in early February).

Overall, analysts are still expecting higher producer prices to eventually translate to higher consumer prices in China even though the government is expected to tighten its monetary and housing policies to moderate prices.

Dollar maintains its gains – Asian session traders took cues from their U.S. counterparts and pushed the dollar even higher across the board today. If you recall, Uncle Sam printed a strong ADP report yesterday, which hints at a possibly strong NFP release on Friday.

Nikkei, buoyed by a weaker yen (due to stronger USD/JPY), inched up by 0.17% while a miss in China’s CPI headline numbers helped drag the Shanghai index down by 0.85% and Hang Seng down by 0.98%. Heck, even Australia’s A SX 200 is down by 0.36%!

Market Movers:

USD – The dollar gained pips across the board thanks to yesterday’s strong ADP report and a bit of profit-taking ahead of the ECB statement and NFP release.
EUR/USD is down by 18 pips (-0.17%) to 1.0530 and USD/CHF is up by another 12 pips (+0.12%) to 1.0157.

It also snuck in pips against the comdolls with AUD/USD falling by another 25 pips (-0.33%) to .7512, NZD/USD slipping by 12 pips (-0.17%) to .6900, and USD/CAD inching 5 pips higher (+0.04%) to 1.3498.

Watch Out For:

  • 6:30 am GMT: French final non-farm payrolls expected to maintain 0.4% growth
  • 6:45 am GMT: Switzerland’s unemployment rate expected to remain at 3.3%
  • ECOFIN meetings for European Council members’ Finance Ministers

See also:

U.S. Session Recap
London Session Recap

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In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

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