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Asian session traders caught up to the anti-dollar sentiment from the previous week, so the yen became the strongest contender amidst the risk aversion in the market.

  • Australia and New Zealand markets out on Easter Monday holiday
  • China’s GDP grows by 6.9% from a year earlier in Q1 2017
  • China’s industrial production rises by 7.6% vs. 6.2% expected, 6.3% in February
  • China’s fixed asset investment up by 9.2% so far in 2017 vs. 8.8% expected, 8.9% previous
  • China’s y/y retail sales jumps by 10.9% vs. 9.7% expected, 9.5% in February

Major Events:

China’s data dump – The biggest story of the hour is the world’s second largest economy dumping a bunch of tier 1 economic data.

The much-awaited GDP report reflected a quarterly uptick of 1.3% (down from 1.7% in Q4 2016) but saw a 6.9% gain from a year earlier in Q1 2017.

This is not only higher than the expected 6.8% growth and the government’s target of “around 6.5%” for 2017, but it also reflects the second consecutive acceleration for the report. A closer look tells that that the usual economic smokestacks – real estate and government spending – once again fueled the economy for the first quarter.

Other broad indicators also printed better-than-expected figures.

Retail sales clocked in a 10.9% gain from a year earlier in March, up from February’s 9.5% uptick. Sales rebounded for automobiles (-1.0% to 8.6%) while garments (6.1% to 6.4%), office supplies (13.4% to 17.2%), home appliances (5.6% to 12.4%), furniture (11.8% to 13.8%), building materials (12.9% to 17.8%), and telecoms (10.7% to 11.6%) saw improvements.

Industrial production, a broad measure of factory output, jumped by 7.6% from a year earlier in March. This is not only faster than February’s 9.5% uptick but also represents the fastest pace in four years. Manufacturing (6.9% to 8.0%), electricity, gas, and water production (8.4% to 9.7%) saw upticks while mining production (-3.6% to -0.8%) declined.

Last but not the least is the fixed asset investment, a proxy for long-term business spending, increasing by 9.2% from the start of the year in March. The report clocked in an 8.9% growth during the January-February period.

Apparently, investment from state firms popped up by 13% while investment from the central government fell by 7.1%. Still, domestic-funded investment rose by 10% while foreign investments only inched 0.3% higher.

Overall, investors cheered China clocking in a good start to the year, which hasn’t happened in the last couple of years.

Overall risk aversion – Concerns over U.S. Vice President Mike Pence’s visiting Korea’s demilitarized zone (DMZ) and jitters ahead of France’s Presidential elections this weekend kept Asian bourses pressured for most of the Asian session.

Nikkei, which was further pulled by a strong yen, is down by 0.01% after hitting a five-month low while Australia’s A SX 200 also dipped by 0.74%. Meanwhile, the Shanghai index (-1.17%) and Hang Seng (-0.21%) also saw losses despite China’s better-than-expected economic data.

Risk aversion didn’t steer forex players into the dollar, however. Thanks to Trump jawboning the currency, the yen mopped up most of the currency demand while other major currencies also clocked in gains against the Greenback.

Market Movers:

JPY – Asian session traders caught up to the anti-dollar sentiment from the previous week, which made the low-yielding yen the strongest contender amidst the overall risk aversion.

USD/JPY dropped by 44 pips (-0.41%) to 108.32, EUR/JPY fell by 24 pips (-0.21%) to 115.00, CHF/JPY dropped 37 pips (-0.34%) to 107.80, and GBP/JPY plummeted by 41 pips (-0.30%) to 135.85.

The comdolls also lost against the yen with AUD/JPY falling by 17 pips (-0.21%) to 82.18 after hitting a session low of 82.00 while CAD/JPY declined by 24 pips (-0.29%) to 81.43 and NZD/JPY inched 8 pips lower (-0.11%) to 76.08.

Watch Out For:

  • French, German, Italian, Swiss, and U.K. banks closed for Easter Monday holidays