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Not even China’s data dump was able to fire up volatility ahead of the FOMC’s awaited policy decision.

  • NZ current account balance up from -2.42B NZD to 0.24B NZD surplus in Q1 2017
  • NZ food price index up from -0.8% to 2.4% in May
  • AU Westpac consumer sentiment down from -1.1% to -1.8%
  • China’s industrial production (y/y) remains at 6.5% vs. 6.4% expected
  • China’s fixed asset investment (ytd/y) down from 8.9% to 8.6%
  • China’s retail sales (y/y) remains at 10.7% vs. 10.8% expected
  • Japan’s revised industrial production remains at 4.0% vs. 4.1% expected

Major Events/Reports

New Zealand’s current account

Data printed early in the Asia session showed that the difference between what foreigners earn from New Zealand and what New Zealanders earn from abroad widened in the three months to 2017.

New Zealand’s clocked in a current account surplus of NZ$244 million in Q1 2017, which is better than the downwardly revised NZ$ 2.4 billion deficit in Q4 2017. This translates to an annualized deficit of NZ$8.1 billion, or 3.1% of the country’s GDP. Yikes!

A closer look tells us that lower dairy exports and commodity prices as well as higher car and machinery imports contributed to the narrower-than-expected surplus. Foreign investment also dropped as profits from international subsidiaries declined.

Interestingly, the biggest movement was the increase in the services balance, which jumped from a surplus of NZ$1.1B to NZ$2.7B in Q1 2017. This underscores the shift in New Zealand’s income trends from exports to service-related businesses like tourism.

China’s data dump

With not a lot of data scheduled for release, investors took closer look at China’s industrial production, retail sales, and fixed asset investment reports.

Retail sales grew by 10.7% from a year earlier in May, unchanged from April’s uptick but just above the expected 10.6% growth.

It’s worth noting that vehicle sales posted its first back-to-back drop since 2015 after the government rolled back a tax incentive that boosted care sales output last year. Meanwhile, online shopping saw strong growth. Sales hit 2.47T CNY in the first five months, 32.5% higher than the previous year.

Factory output also came in unchanged, growing by 6.5% from a year earlier against expectations of a 6.3% increase.

Last but not the least is the urban fixed asset investments, which slowed down from 8.9% in the four months to April to 8.6% in May against expectations of an 8.8% improvement.

Details reveal that investment by state-owned firms fell by 12.6% after rising by almost 14%, while private investment also decelerated from 6.9% to 6.8% in the five months to May. Overall, the figures suggest more tightening in public spending as private spending somewhat stabilizes.

Lower oil prices

Oil prices slid lower today, as pressure from higher OPEC and U.S. oil output weighed on the commodity.

A report printed by the Organization of Petroleum Exporting Countries (OPEC) showed that oil production rose by about 336,100 barrels per day (bpd) to 32.1 million bpd.

Libya and Nigeria, who are both exempted from OPEC’s production cut deal, led the gains while Iraq also showed higher production levels. In fact, only Saudi Arabia, Angola, Kuwait, and Qatar are producing below levels that they’ve agreed to in November.

Adding to the oil glut pressure is a report by the American Petroleum Institute (API) which showed that U.S. crude stocks have risen by 2.8 million barrels in the week ending June 9. Not good especially when market players were expecting a decrease of 2.7 million barrels.

  • Brent crude oil fell by 0.90% to $48.28 while
  • U.S. crude oil prices also dropped by 1.03% to $45.98.

Major Market Mover(s):

AUD

The Aussie took advantage of China’s generally positive data releases throughout the session. Of course, it also didn’t hurt that gold prices shot up ahead of today’s FOMC statement.

AUD/USD is up by 6 pips (+0.08%) to .7544, AUD/JPY is up by 11 pips (+0.13%) to 83.02, and GBP/AUD is down by 25 pips (-0.15%) to 1.6895.

Watch Out For:

  • 6:00 am GMT: German final CPI (0.5% expected, -0.2% previous)
  • 8:30 am GMT: U.K.’s employment numbers (read Forex Gump’s trading guide here)
  • 9:00 am GMT: Euro Zone’s employment change (q/q) to remain at 0.3%?
  • 9:00 am GMT: Euro Zone industrial production (0.5% expected, -0.1% previous)