It’s time to get back on the grind, forex fellas! If you’re still feeling a bit hungover from the holidays, lemme help you get up to speed with this roundup of data points released over the past few days.
1. U.S. Final GDP
Nope, there ain’t no stoppin’ Uncle Sam! Even though analysts had been expecting to see a downgrade from 2.1% to 1.9% in the U.S. Q3 GDP reading, the final result printed a pretty decent 2.0% economic expansion for the period. Components of the report indicated that consumer spending stayed strong while inventories were revised to show slightly smaller gains.
In addition, the latest GDP report revealed that consumer prices excluding food and fuel rose at a faster pace than previously estimated, alleviating some concerns about subdued inflation.
2. New Zealand Trade Balance
New Zealand also had its share of good news, as the economy printed a stronger than expected trade balance for November. Instead of showing the projected 812 million NZD shortfall, the trade deficit came in at 779 million NZD, smaller than October’s 905 million NZD deficit.
Both imports and exports grew in November, reflecting a pickup in domestic and international demand. Purchases of capital goods accounted for a huge chunk of total imports, offsetting declines in the value of crude oil purchases, while export gains were led by meat and fruit shipments.
3. Canadian retail sales and GDP
In contrast, the Canadian economy just couldn’t seem to catch a good break. Its latest economic figures all came in the red, with its monthly GDP reading falling flat in October after posting a 0.5% contraction in the previous period.
Aside from that, consumer spending was weak on both fronts, as headline retail sales printed a bleak 0.1% uptick instead of the projected 0.4% rise while core retail sales showed absolutely no growth at all.
4. Crude oil inventories
Fortunately for the Loonie, its forex losses were limited when the U.S. printed its latest crude oil inventories data and reported a drop in stockpiles. Oil prices and the positively-correlated Canadian dollar managed to bounce when inventories fell by 5.9 million barrels, easing fears of an oversupply.
5. Japanese spending and inflation reports
It was a mixed forex bag for Japan, as CPI readings came in slightly better than expected while spending data turned out to be a disappointment. The national core CPI came in at 0.1% instead of staying flat while the Tokyo core CPI came in line with expectations of a 0.1% uptick for November.
Household spending shrank by 2.9% year-over-year in November, worse than the estimated 2.1% slump and the previous 2.4% drop, while retail sales fell by an annualized 1.0% in the same month versus the projected 0.1% dip. Preliminary industrial production was also dismal, as it showed a sharp 1.0% tumble in November.
Another thing worth noting about the Japanese economy is that the BOJ recently decided to increase its ETF purchases to 300 billion JPY starting April 2016. Of course BOJ officials were quick to clarify that this doesn’t constitute additional QE, but Governor Kuroda did say that this move is aimed at stimulating investment activity.
6. Chinese PMI
Official PMI readings from China weren’t so bad, although forex traders are still holding out for the other non-government versions of the reports due this week. So far, the manufacturing PMI showed a meager improvement from 49.6 to 49.7 in December while the non-manufacturing PMI rose from 53.6 to 54.4.
In a nutshell, it looks like the U.S. dollar is still on a relatively strong forex footing at the start of this year, especially since the Fed just got the ball rolling with its tightening cycle. Meanwhile, the Aussie and the Kiwi might be able to put up a good fight and recoup some of its earlier forex losses now that trade prospects are looking less downbeat.
As for the Loonie, the forex outlook is still a bit grim since oil prices might be poised to fall further while Canadian fundamentals are also shaky. Japan isn’t faring too well either, and the BOJ’s surprise ETF program announcement suggests that central bank officials are starting to worry.
Got any new forex trade ideas from these latest batch of reports? Don’t be shy to share ’em in our comments section below!