Overnight price action was dictated primarily by the release of economic data out of China, which came in below forecasts – including fourth quarter GDP reaching its lowest mark since 1990, industrial production, fixed assets and retail sales figures. This resulted in a strong knee-jerk reaction in AUDUSD, initially falling to 0.6835, followed by a robust move up which currently sees the pair trading above 0.69 as reports began surfacing regarding further easing from the PBOC. Meanwhile, the Yen had a similar knee-jerk reaction during the overnight session, initially strengthening then weakening, with USDJPY currently trading around the 118 handle following comments from Bank of Japan’s Kuroda stating that the central bank will continue easing until their 2% inflation target is stable. Lastly, the CAD is seeing a relief rally, after reaching extreme overbought conditions in addition to oil prices trading slightly higher this morning, with USDCAD currently trading around 1.4450. Volatility should spill over into the European session, as the UK gets set to release inflation date, which is expected to remain unchanged, while Germany is expected to show that economic sentiment fell last month. NZD traders should be on the lookout for the bi-weekly dairy auction which begins at 12:00GMT and is expected to remain under pressure, in addition to tonight’s release of inflation figures which are expected to have dipped back into deflation territory. |
