Concerns over the U.S.-China trade relations and emerging market economies remained, but that didn’t stop currency bulls from making pips rain today.
- Australia’s AIG services index slips from 53.6 to 52.2 in August
- Australia’s GDP pops up by 0.9% vs. 0.7% uptick seen, 1.1% previous
- China’s Caixin services PMI down from 52.8 to 51.5 in August
Australia’s GDP report
One of the biggest stories in the forex space is Australia printing its fastest GDP in SIX YEARS.
Data from the Land Down Under showed growth rising by 0.9% in Q2 2018, which is way faster than the 0.7% uptick that many had expected. Not only that but Q1 2018’s growth was also revised higher from 1.0% to 1.1%!
On an annualized basis, the economy had grown by 3.4%. This is not only faster than the expected 2.8% increase, but it’s also better than the previous quarter’s 3.1% reading. Heck, it’s the fastest annualized growth seen since Q3 2012!
Details tell us that it was mostly domestic demand and foreign trade that boosted the economy.
Final consumption expenditure rose by 0.7% and contributed 0.4% to the GDP, with household spending heating up from 0.5% in Q1 to 0.7%. Government spending also inched 0.1% higher and contributed 0.2% to the GDP, while exports added 0.2% to growth.
Overall, today’s strong numbers support the RBA’s current stance that we’ll sooner see a rate hike than a rate cut from the central bank.
Mixed market trading
Asian session equity players took cues from their U.S. counterparts and let cautiousness rule today’s trends.
And why not? Global trade concerns remain with the U.S. set to resume its NAFTA negotiations with Canada today and word around the hood is that the latter won’t budge as easily as markets had initially priced in.
Meanwhile, traders are staying away from riskier assets ahead of Thursday when the public comment period on China’s tariffs is scheduled to end.
See, the Donald has hinted that he will impose 25% tariffs on another $200B worth of China’s goods on top of the tariffs on $50B worth of products already in place.
Last but not the least is the lack of reassurance from the emerging market sector. This time around, investors are pricing in South Africa’s descent to recession and continued increase in Turkey’s unsustainable inflation.
- Nikkei is down by 0.37% to 22,613.5
- A SX 200 is down by 0.77% to 6,233.5
- Shanghai index is down by 0.92% to 2,725.256
- Hang Seng is down by 1.65% to 27,512.1
Commodity prices missed the risk aversion train, however, thanks to a bit of profit-taking after the previous sessions’ losses.
- Gold is up by 0.23% to $1,193.42
- Brent crude oil is up by 0.10% to $77.93
- U.S. WTI is up by 0.03% to $69.37
Major Market Mover(s):
A much better-than-expected GDP report from Australia energized the Aussie bulls and the comdoll ended up erasing a chunk of its losses from the previous sessions.
AUD/USD is up by 18 pips (+0.26%) to .7192; AUD/JPY is up by 31 pips (+0.39%) to 80.22; EUR/AUD is down by 13 pips (-0.08%) to 1.6122; AUD/NZD is up by 37 pips (+0.34%) to 1.0975, and GBP/AUD is down by 26 pips (-0.16%) to 1.7881.
While global trade and growth-related concerns remained in the forex space, the Aussie’s strong growth along with a bit of profit-taking helped traders take on more risks that led to losses for the safe haven yen.
USD/JPY us up by 10 pips (+0.09%) to 111.54; CHF/JPY is down up 30 pips (+0.26%) to 114.55; EUR/JPY is up by 28 pips (+0.22%) to 129.33; CAD/JPY is up by 15 pips (+0.18%) to 84.65, and GBP/JPY is up by 23 pips (+0.16%) to 143.44.
Watch Out For:
- 7:15 am GMT: Spain’s services PMI (52.1 expected, 52.6 previous)
- 7:45 am GMT: Italy’s services PMI (53.2 expected, 54.0 previous)
- 7:50 am GMT: France’s final services PMI to remain at 55.7?
- 7:55 am GMT: Germany’s final services PMI to remain at 55.2?
- 8:00 am GMT: Euro Zone final services PMI expected to maintain 54.4 reading
- 8:30 am GMT: U.K.’s services PMI (53.9 expected, 53.5 previous)
- 9:00 am GMT: Euro Zone’s retail sales (-0.1% expected, 0.3% previous)