ForexLive Asia FX news wrap: China exports collapsed in Jan., got worse in Feb.

$100 bills

Forex news for Asia trading Tuesday 8 March 2016



It was a risk off mood in Asia today with the yen higher, AUD lower and regional equities on the slide too.

Early data from NZ (Truckometer, a proxy for GDP growth) and then Australia (consumer sentiment for the week) were positive.

Japanese final Q4 GDP confirmed the gloomy preliminary figure had a few weeks ago. with poor GDP, slipping inflation (the deflator dropped from 1.8% in Q3 to 1.5% in Q4), and disappointing personal consumption. Capex was at least one brighter spot.

The Japanese government announced a meeting of PM Abe, Bank of Japan (BOJ) Governor Kuroda and cabinet ministers for mid-March, which cut a few point out of the yen, but USD/JPY soon dropped to a new session low and down to 112.80 and surrounds.

RBA Deputy Governor Lowe spoke, without making much in the way of impact. We then got business confidence and conditions from Australia, which both came in quite positive. But there was no respite for the AUD/USD, it had dropped away a little and it continued lower.

Chinese stock markets opened lower and kept falling, along with other regional exchanges.

China trade balance data came out later than we've come to expect it, maybe they were trying to polish it so it didn't look so bad. But, no luck, exports collapsed (see bullets, above for the details). Given the February data is subject to volatility around Chinese New Year, the January and February data is often combined to 'smooth out' some the variation. Doing so this time isn't much help, though, January exports were also terrible.

About the only thing to fall back on to maybe help say its not all so bad is the oft-levelled crticism at Chinese data that it is fictional, all just made up. We didn't hear much of that at all today (we rarely do when the data is bad, a phenomenon I've mentioned quite a few times. Its a curious bias.). But, for instance, the data today showed China's imports from HK were up 88% - a very extreme result and probably an indication of capital outflow rather than trade flow.

Something to bear in mind.

Regardless, once we got the China data out of the way the yen stopped appreciating, the AUD found a bottom, and stocks started to bounce too. Perhaps some shorts ahead of the Chinese data were in covering their profits. I'm saying no more on that.

EUR, CHF and GBP were not where the activity was today.

Gold popped but has since come back to be barely changed on the session. Oil gave back some of its overnight gains.

Regional equities

  • Nikkei -1.24%
  • Shanghai -1.62%
  • HK -0.91%
  • ASX -0.66%

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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