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It’s 2-0 for Asian session dollar bulls this week, as forex traders extended their parties across the board ahead of this week’s major market movers.

  • Japan’s household spending (y/y) slips by 0.1% vs. 1.6% growth expected, 1.7% previous
  • Japan’s unemployment rate unexpectedly edges up from 2.7% to 2.8% in December
  • Japan’s retail sales (y/y) jumps by 3.6% vs. 2.1% expected and previous
  • Australia’s NAB business confidence rises from 7 to 11 in December
  • BOJ’s core CPI (y/y) improves from 0.6% to 0.7% vs. 0.5% expected
  • Tons of European mid-tier data on tap

Major Events/Reports:

Japan’s data dump

Data from the world’s third largest economy mostly printed to the downside. However, that didn’t stop the bulls from stampeding towards the low-yielding yen amidst overall risk aversion.

Japan’s household spending surprisingly softened in December, even as annualized retail sales jumped higher than market players were expecting.

Meanwhile, unemployment rate inched up to 2.8% in December, which is a tad higher than the 2.7% reading expected. The jobs-to-applicants ratio improved, however, clocking in at 1.59 (from 1.56 in November) and marking its highest reading since January 1974.

Overall, the mixed numbers support claims that improvements in the labor market have a long way to go before it supports economic recovery.

Dollar domination

It was all about the dollar for forex market players today, thanks partly to positioning/profit-taking ahead of this week’s FOMC statement and Trump’s first State of the “Uniom” address.

Word around the forex hood is that the POTUS is likely to talk about his market-friendly policies regarding lowering trade barriers for American exports; infrastructure plans, and endorsement of a strong dollar.

Of course, it also helped that U.S. 10-year Treasury yields hit 2.733% today, the highest since April 2014.

Overall risk aversion

Whether it was profit-taking, reaction to the dollar’s strength, or worries over the impact of major central banks tightening their monetary policies, risk aversion reigned supreme today among Asian bourses, commodity prices, and high-yielding currencies.

  • Nikkei is down by 1.64% to 23,242.2;
  • Australia’s ASX 200 is down by 0.58% to 6,002.5;
  • Shanghai index is down by 0.74% to 3,496.999, and
  • Hang Seng is down by 0.83% to 32,693.4.

The dollar’s rise took a toll on dollar-denominated assets. Oil, in particular, took heavier hits as traders also fussed over rising U.S. oil output.

  • Gold slipped by 0.15% to $1,337.90;
  • Brent crude oil is down by 0.46% to $69.08, and
  • U.S. oil prices is down by 0.73% to $65.02.

Major Market Mover(s):

JPY

Overall risk aversion and PM Adviser Hamada hinting that the “yen could strengthen” in the short-term boosted the low-yielding currency across the board.

USD/JPY is down by 0.22% to 108.71;
EUR/JPY is down by 0.21% to 133.61;
GBP/JPY is down by 0.39% to 152.73, and
CHF/JPY is down by 0.15% to 116.03.

AUD

The high-yielding Aussie took hits across the board as risk aversion gripped the markets.

AUD/USD is down by 0.11% to .8083;
AUD/JPY is down by 0.34% to 87.87;
AUD/NZD is down by 0.28% to 1.1019, and
AUD/CHF is down by 0.18% to .7573.

CAD

The oil-related Loonie also had trouble gaining ground as lower oil prices and overall risk aversion brought bears out from their hibernation.

USD/CAD is up by 0.07% to 1.2346;
CAD/JPY is down by 0.24% to 88.05;
NZD/CAD is up by 0.24% to .9055, and
EUR/CAD is up by 0.07% to 1.5287.

Watch Out For:

  • 6:30 am GMT: France’s flash GDP (q/q) to remain at 0.6%?
  • 7:00 am GMT: Switzerland’s trade balance (2.54B CHF surplus expected, 2.63B CHF previous)
  • 7:45 am GMT: France’s consumer spending (y/y) (1.6% expected, 1.2% previous)
  • London session: Germany’s preliminary CPI (-0.5% expected, 0.6% previous)
  • 8:00 am GMT: Switzerland’s KOF leading indicator (110.8 expected, 111.3 previous)
  • 8:00 am GMT: Spain’s flash GDP (q/q) (0.7% expected, 0.8% previous)
  • 9:30 am GMT: U.K.’s mortgage approvals (66K expected, 65K previous)
  • 9:30 am GMT: U.K.’s net individual lending (4.8B GBP expected, 4.9B GBP previous)
  • 10:00 am GMT: Euro Zone’s preliminary flash GDP to maintain its 0.6% growth?
  • 10:00 am GMT: Euro Zone’s economic confidence (116.2 expected, 116.0 previous)
  • 10:00 am GMT: Euro Zone’s consumer confidence
  • 10:00 am GMT: Euro Zone’s industrial sentiment (8.9 expected, 9.1 previous)
  • 10:00 am GMT: Euro Zone’s business climate (1.68 expected, 1.66 previous)