Article Highlights

  • AU NAB business confidence down from 10 to 7 in February
  • China’s industrial production (y/y) up from 6.0% to 6.3% vs. 6.2% expected
  • China’s fixed asset investment (ytd/y)up from 8.1% to 8.9% vs. 8.2% expected
  • China’s retail sales (y/y) slips from 10.9% to 9.5% vs. 10.5% expected
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With a lot of top-tier reports coming up this week, Asian session forex traders mostly kept calm and carried on while pricing in a couple of lower-tier economic releases.

Major Events:

Australia’s business confidence surveys – Data from the Land Down Under revealed that business confidence had taken a step back in February compared to the previous month.

A monthly survey by the National Australia Bank (NAB) showed business conditions slipping from a 10-year high of 16 to an index reading of 9 while business confidence also slipped from 10 to 7 for the month.

The NAB wasn’t too surprised about the setback since it had already flagged last month’s surges as “temporary.” Still, the fall in business conditions was seen in ALL components of the index (sales, profitability, employment) while NAB remains convinced that retail sales trends “warrant close monitoring.”

Last but not the least, the office shared that the longer-term picture is more concerning. Apparently, the contribution from LNG exports, temporarily higher commodity prices and the residential construction boom are fading and are putting even more pressure on the labour market. Somebody holler at the RBA!

China’s data dump – Reports printed from the world’s second largest economy painted a mixed picture.

Value-added industrial output, which is widely recognized as a proxy for economic growth, shot up by 6.3% in the first two months of the year compared to a year ago. This is not only higher than the 6.0% growth in December, but also exceeded expectations of a 6.2% uptick. For newbies out there, China’s National Bureau of Statistics (NBS) usually combines January and February’s numbers to fully account for the bumps in the Lunar New Year celebrations.

Investments in factories, buildings, and other fixed assets also saw increases, this time rising by a nice 8.9% from a year earlier. Analysts had expected an 8.2% bump after seeing an 8.1% uptick in December.

Retail sales was the only party pooper, as it came in at 9.5% when analysts had expected a 10.5% surge after seeing a 10.9% increase in December.

Overall, the reports suggest that the government’s fiscal policy stimulus is doing its job at preventing sharper declines from the economy’s growth drivers. One month doesn’t make a trend though, so we’ll have to see if consumer spending continues to underperform and present bigger challenges for the government’s plans to shift to a consumer-driven economy in the next couple of months.

Market Movers:

USD – The dollar gained a couple more pips against its major counterparts, as Asian session traders mostly stayed on the sidelines ahead of major reports scheduled this week.

GBP/USD fell by another 21 pips (-0.17%) to 1.2204, USD/JPY hit a session high of 114.98 before settling down to 114.80, and USD/CHF crawled 7 pips higher (+0.07%) to 1.0076.

AUD – The Aussie got knocked back across the board after Australia printed weaker-than-expected business survey results. Luckily, profit-taking soon ensued and the comdoll eventually recovered some or all of its intraday losses.

AUD/USD hit bottom at .7449 before recovering to .7459, AUD/JPY slipped to 86.71 before closing at 86.77, while AUD/NZD straight up dropped by 18 pips (-0.17%) to 1.0924.

Watch Out For:

  • 10:00 am GMT: German ZEW economic sentiment (13.2 expected, 10.4 previous)
  • 10:00 am GMT: German final CPI expected to remain at 0.6%
  • 10:00 am GMT: Euro Zone industrial production (1.2% expected, -1.6% previous)
  • 10:00 am GMT: Euro Zone ZEW economic sentiment (19.3 expected, 17.1 previous)

See also:

U.S. Session Recap
London Session Recap

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