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Lots of reports, so little volatility! Asian session traders mostly shrugged off economic data as they wait for the “Super Thursday” events.

  • U.K. RICS house price balance dips from 22% to 17% in May
  • Japan’s final Q1 2017 GDP downgraded from 0.5% to 0.3%
  • Japan’s current account balance at 1.81T JPY vs. 1.62T JPY expected, 1.73T JPY previous
  • Australia’s trade balance 0.56B AUD vs. 1.91B surplus expected, 3.17B previous
  • China’s trade balance (in CNY) 282B vs. 336B surplus expected, 262B previous
  • China’s trade balance (in USD) 40.8B vs. 47.5B expected, 38.1B previous
  • Japan’s Economy Watchers Sentiment index up from 48.1 to 48.6 in May
  • North Korea fires ground-to-ship missiles between Japan and Korea’s waters

Major Events/Reports

Japan’s Q1 GDP revised lower

The yen started the session on a weaker note against its major counterparts after Japan’s final GDP showed downward revisions.

The economy only grew by 0.3% in Q1 2017, much lower than the 0.5% growth initially reported. This translates to an annualized growth rate of 1.0% (down from 2.2%) following Q4 2016’s 1.2% uptick.

Private capital expenditure shot up by 0.6% (from 0.2%) and contributed 0.1% to GDP. Unfortunately, it wasn’t enough to offset losses in private consumption.

Private consumption, which makes up about 60% of the economy, was revised to show 0.3% growth (down from 0.4%). Meanwhile, changes in business inventories subtracted 0.1% to GDP and underscored the fragility of Japan’s exports-led expansion.

Australia’s trade numbers disappoint

The Aussie also started the session on the wrong side of the charts after Australia’s trade surplus disappointed market expectations.

Australia’s seasonally-adjusted trade surplus narrowed down from an upwardly revised 3.17B AUD in March to 0.56B AUD in April. This is weaker than the expected 1.95B surplus and marks the narrowest surplus in six months.

The value of exports fell by 8% in April after flood damage to the rail lines caused a 45% drop in coal, coke and briquette shipments. Meanwhile, the value of imports fell by 1.0%.

While the report is hardly a surprise (we already saw the same trends in the GDP report), it still caused a few bad moments for the Aussie bulls.

Overall risk aversion…not

There were a couple of headlines that could’ve dragged higher-yielding currencies lower today. For starters, North Korea fired another set of missiles, this time four land-to-ship types that landed between the shores of Japan and South Korea.

The launch comes a day after President Moon Jae-in’s government announced that it would suspend the deployment of the U.S. missile defense system that had also caused tensions between South Korea and China.

Traders mostly shrugged off the news, though, likely because it’s already the fourth test since Moon took office in May. The missiles were also not the ballistic type, which pose threats from longer ranges.

Tensions in Qatar could’ve also added to risk aversion after CNN reported that the country has placed its military forces “on the highest state of alert” over fears of an imminent military action.

The Qatari Ministry of Defense reportedly also sent a letter to Saudi, UAE and Bahraini governments, saying they would fire on any naval ships from those countries that enter into its waters. This comes after Saudi Arabia and a few countries of the Gulf Cooperation Council cut diplomatic ties with Qatar over its supposed support for terrorism.

Fortunately for risk-takers, uncertainty ahead of the “Super Thursday” events (read: U.K. elections, ECB statement, Comey testimony) kept Asian session traders on the sidelines.

Major Market Mover(s):

AUD

The Aussie had a bad start thanks to a disappointing Australian trade balance report, but the tides soon turned after China printed its own trade data and a bit of profit-taking took place.

AUD/USD fell to a session low of .7524 before recovering to .7543; AUD/NZD fell to 1.0453 before shooting back up to 1.0478, and GBP/AUD jumped to 1.7221 before settling back down to 1.7177.

Watch Out For:

  • U.K. to hold Parliamentary elections
  • 5:45 am GMT: Switzerland’s unemployment rate expected to remain at 0.3%
  • 6:00 am GMT: German industrial production (0.6% expected, -0.4% previous)
  • 6:45 am GMT: French trade balance (-5.9B expected, -5.4B previous)
  • 7:15 am GMT: Switzerland’s CPI (0.0% expected, 0.2% previous)
  • 7:15 am GMT: Switzerland’s CPI (0.0% expected, 0.2% previous)
  • 11:45 am GMT: ECB to publish its monetary policies