Price action was a mixed bag of nuts during the Asian session, as traders digested economic reports and themes that dominated the start of the week.
- NZ manufacturing sales (q/q) up from 0.7% to 1.8% in Q2 2018
- Japan’s current account surplus narrows down from 1.76T JPY to 1.48T JPY
- Japan’s bank lending up by 2.2% from a year ago in August
- Japan’s final GDP adjusted higher from 0.5% to 0.7%
- Japan’s final GDP price index remains at 0.1%
- China’s CPI (y/y) higher from 2.1% to 2.3% vs. 2.1% expected
- China’s PPI (y/y) lower from 4.6% to 4.1% as expected
- Japan’s Economy Watchers sentiment improves from 46.6 to 48.7
Japan’s GDP revised higher
Japan’s GDP was revised from 0.5% to 0.7% in Q2 2018, which is a lot stronger than the 0.2% contraction that we saw in Q1 2018.
On an annualized basis, the world’s third largest economy grew by 3.0%. That’s much faster than the initial 1.9% reading and the expected 2.6% uptick!
A closer look tells us that it was mostly the increase in capital spending that boosted growth. Higher activity in transport and postal services as well as electrical and chemical industries lifted the data point by 3.1%, its fastest growth since 2015. Wowza!
Overall, today’s release showed that capital expenditure continues to prop up the economy even as Japan saw blows from a string of natural disasters.
Mixed risk sentiment
Global trade continued to hog the spotlight after Trump threatened to implement higher tariffs on $267B worth of Chinese goods ON TOP OF the $200 billion worth that’s already expected to be implemented over the next couple of days.
The Asian bourses started the session on a weak note, but Nikkei and A SX 200 saw some profit-taking and eventually closed mid-day trading in the green.
- Nikkei is up by 0.23% to 22,358.7
- A SX 200 is up by 0.60% to 6,153.5
- Shanghai index is down by 0.63% to 2,685.297
- Hang Seng is down by 0.89% to 26,733.9
Commodity prices were also mixed with gold taking hits from a bit of dollar demand while oil bulls cheered the two less oil rigs reported by Baker Hughes last Friday AND Iran’s sanctions scheduled to take effect in November.
- Gold is down by 0.28% to $1,193.09
- Brent crude oil is up by 0.31% to $77.25
- U.S. WTI is up by 0.58% to $68.16
Major Market Mover(s):
The high-yielding Kiwi took hits on renewed U.S. dollar demand after Uncle Sam printed a stronger-than-expected NFP report last Friday. Of course, it also didn’t help that Asian session traders are starting to price in higher U.S. tariffs on more Chinese goods.
NZD/USD is down by 16 pips (-0.25%) to .6517; NZD/JPY is down by 16 pips (-0.22%) to 72.35; NZD/CHF is down by 8 pips (-0.13%) to .6319; EUR/NZD is up by 33 pips (+0.19%) to 1.7715; GBP/NZD is up by 57 pips (+0.29%) to 1.9815, and AUD/NZD is up by 32 pips (+0.30%) to 1.0906.
The Loonie failed to take advantage of higher oil prices as traders focused on trade-related matters instead. For newbies out there, you should know that Canada has yet to reach trade deals with the U.S. even after days of anticipation-filled meetings.
USD/CAD is up by 16 pips (+0.12%) to 1.3183; CAD/JPY is down by 8 pips (-0.10%) to 84.21; AUD/CAD is up by 15 pips (+0.16%) to .9369, and GBP/CAD is up by 27 pips (+0.16%) to 1.7022.
Watch Out For:
- 8:30 am GMT: Euro Zone Sentix investor confidence (13.8 expected, 14.7 previous)
- 8:30 am GMT: U.K.’s GDP (0.2% expected, 0.1% previous)
- 8:30 am GMT: U.K.’s manufacturing production (0.2% expected, 0.4% previous)
- 8:30 am GMT: U.K.’s goods trade balance (-11.7B GBP expected, -11.4B GBP previous)
- 8:30 am GMT: U.K.’s index of services (3m/3m) to remain at 0.5%?
- 8:30 am GMT: U.K.’s industrial production (0.2% expected, 0.4% previous)