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Fundamental Forex Analysis

Sluggish China GDP offsets trade deal optimism; UK Retail Sales eyed

The overnight upbeat risk tone steadied in Friday’s Asian trading after sluggish Chinese Q4 GDP growth numbers offset the US-China trade deal and strong US Retail Sales data led optimism. Consequently, the Asian equities eased from multi-month highs while the US Treasury yields and S&P 500 futures trimmed gains. Meanwhile, Gold prices jumped back on the bids and regained $1550 and beyond. Oil prices, on the other hand, consolidated Thursday’s 1% recovery rally.

Across the G10 fx space, most majors witnessed thin trading ranges, as the US dollar index steadied at higher levels seen after US consumer spending reported solid advance last month. USD/JPY hit an eight-month high at 110.29 in early Asia before having eased to near 110.20/15 region. The Aussie briefly regained the 0.69 handle on upbeat Chinese Industrial Production and Retail Sales data but failed to resist above the last, in the face of unimpressive growth figures. Meanwhile, the Kiwi posted small gains below 0.6650 despite a contraction in New Zealand’s Business PMI for December. The Canadian dollar came under pressure vs. the greenback this session amid the retreat in oil prices. USD/CAD rose back above the 1.3050 level.

Among the European currencies, EUR/USD consolidated the downside below 1.1150 while GBP/USD traded on the back foot below 1.3100. USD/CHF traded with minor gains around 0.9650 region.  

Main Topics in Asia

EU’s Hogan: Had ‘very good’ talks with USTR Lighthizer

US-China deal could upend the way nations settle disputes – WSJ

President Trump to nominate Shelton, Waller for Fed board

Market is being overly hasty in pricing BOE rate cut – BNY Mellon

China’s GDP steadies at 6.0% YoY in Q4 vs. +6.0% expected

China NBS Chief Ning: Economy showed positive changes in Q4, especially in Nov and Dec

BOK’s Lee: Fiscal policy would be much more effective than monetary policy in solving structural issues

Japan PM Abe says he seeks a year of stability and growth

US military: Eleven US troops injured in Jan. 8 Iran missile attack in Iraq – Reuters

Asian stocks: Mildly bid after China’s top-tier economics

UN Chief Economist Harris: China-US trade deal helps reduce some uncertainties

Japan’s Nishimura hopes US-China initial trade deal will have positive impact on global and Japan’s economies

Key Focus Ahead       

With the highly anticipated Chinese Q4 GDP release out of the way, the attention now turns towards the EUR macro calendar that kicks-off with the Swiss Producer Price Index (PPI) at 0730 GMT. Next of relevance remains the Eurozone Current Account data due at 0900 GMT ahead of the bloc’s Final Consumer Price Index (CPI) data, dropping in at 1000 GMT. The focus also remains on the UK Retail Sales data for December slated for release at 0930 GMT.

The NA session also remains a busy one, with the US Housing Starts and Building Permits data due at 1330 GMT, followed by the Industrial Production and Michigan Preliminary Consumer Sentiment Index scheduled at 1415 GMT and 1500 GMT respectively. The US JOLTS Job Openings and Fedspeak will be also closely watched for fresh dollar trades. Oil traders will look forward to the Baker Hughes US Oil Rigs Count data at 1800 GMT.

EUR/USD retains heavy tone despite upbeat China data

The single currency remains under pressure on Friday even though China’s Industrial Production experienced a bounce in December. A deeper slide may be seen in EUR/USD if the US Industrial Production for December, due at 14:15 GMT, blows past expectations.

GBP/USD on the backfoot below 1.3100 ahead of UK Retail Sales

GBP/USD snaps three-day winning streak on Friday. Brexit challenges, USD recovery seem to disappoint the cable buyers. Traders await monthly UK Retail Sales data for fresh impulse.

Gold: MACD offers bearish signal for first since November

A gold price indicator is offering a bearish signal for the first time in nearly two months. While the MACD has turned bearish, the candlestick arrangement on the daily chart is indicating the price pullback from six-year highs above $1,600 may be over.

US Michigan Consumer Sentiment Preview: No change is good

The US consumer sentiment expected to be unchanged in January. Current conditions to fall slightly, expectation to rise the same. Labor market strength remains key to consumer sentiment.

 

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