Market Drivers for September 10th, 2013
Chinese data beats fueling USD/JPY gains
Euro weighed by weak French IP
Nikkei 1.54% Europe 1.20%
Europe and Asia:
AUD NAB Business Confidence 6 vs. -3
CNY Retail Sales 13.4% vs. 13.3%
CNY IP 10.4% vs, 9.9%
CNY FA Investment 20.3% vs. 20.2%
EUR FR IP -0.6% vs. 0.7%
CAD Housing Starts 8:30
USD JOLTS 10:00
Currency markets were generally quiet in Asian and early European trade today, but AUD/USD and USD/JPY outperformed, boosted by stronger than expected Chinese economic data and some mild relief that the Syrian conflict may find a diplomatic solution.
AUD/USD rose in late Asian trade after Chinese numbers beat their mark. Chinese Retail Sales rose 13.4% versus 13.3% eyed, Industrial Production increased 10.4% versus 9.9% forecast and Fixed Asset investment expanded by 20.3% versus 20.2% anticipated.
Overall the data from China showed that the country’s economy continues to expand at a healthy despite widespread concerns that it would slow markedly in H2 of this year. The news bodes well for global growth in general and for Australia in particular as it suggests that Chinese demand for Australian resources is likely to remain high for the foreseeable future.
The Aussie climbed to a high of 9288 before encountering some profit taking ahead of the key 9300 level. Over the past several days the pair has shown relative strength as sentiment towards the unit had changed and it appears now to have formed a formidable base at the 8900 level. If it can clear the resistance above 9300 the Aussie could make a sprint towards 9500 as short covering kicks in, especially if the long anticipated slowdown in China never materializes.
USD/JPY was also well bid today popping above the 100.00 level in early European trade. The easing of tensions on the Syrian conflict, with President Obama signaling that he is open to a diplomatic solution provided the catalyst for the risk on move. If US can indeed avoid a military confrontation in Syria, the downward pressure on USD/JPY could ease considerably and could push the pair towards the 100.50 level as the day proceeds.
With no major economic data on deck in North America, the currency markets may once again look to equities for directional clues. If the news from Washington continues to suggest that a diplomatic resolution is possible, risk on flows could continue into North America trade.