Aussie Holds Highs Off Chinese Data

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Market Drivers April 15, 2016

CNY data beats
EZ Trade Balance in line
Nikkei -0.37% Dax 0.55%
Oil $41/bbl
Gold $1231/oz.

Europe and Asia:
CNY GDP 6.7% vs. 6.7%
CNY IP 6.8% vs. 6.7%
Retail Sales 10.5% vs. 10.5%
EUR Trade Balance 20.2B vs. 21.9B

North America:
CAD Manufacturing Sales 08:30
USD Empire 8:30
USD U of M 10:00

It’s been a very quiet night of trade in FX market with most of the majors contained to ultra narrow ranges. In fact EUR/USD has been in 25 pip zone for the past 24 hours as pair remains in equilibrium for the time being.

The main event risk of the night came from China which released a slew of economic reports including GDP, Industrial Production and Retail Sales. Every data point either beat or met expectations with IP rising to 6.8% from 5.9% eyed while GDP printed at 6.7% as expected.

The increase in new yuan loans which was triple from the month prior suggests that expansionary credit may have pumped some activity into China slowing economy as growth remained steady. Still many analysts are skeptical of Chinese official figures which appear to be much smoother than other economic data series from G-20 nations.

Some analysts have pointed out that China’s rail traffic which may be a much better measure of not only manufacturing but consumer activity as well has declined significantly and may be on track to collapse to levels not seen since 2007. Given such contrary data sets it’s hard to imagine that growth remains at 6.7% pace. Still the currency markets accepted the news at face value and Aussie remained bid, hitting a high of 7734 in Asian session trade and holding comfortably above the 7700 figure in European dealing.

In North America today the main data driver will the U of M Consumer survey expected to print at 91.9 versus 91.0 the month prior. USD/JPY has held firm above the 109.00 despite a slew of negative news this week, suggesting that the pair is grossly oversold and in need of a bounce. Therefore any positive news could spur some buying in the pair but 110.00 will likely remain stiff resistance for now and currency markets continue to consolidate.

Boris Schlossberg
Managing Director

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