Today was certainly not the exciting day that most envisioned due to the heavy hitting line up of top tier data from down under as well as China. The day began early, with New Zealand’s RBNZ leaving rates unchanged at 2.50% as expected, but the following comments from Governor Bollard were translated as dovish, sending the NZD/USD from 0.7060 to 0.7030, in a swoop, but to eventual lows near 0.6975 as the session progressed. AUD/NZD benefitted from the poor response to the commentary, posting 50 pip gains on its way to 1.3080 highs. Australian employment data followed, with the 5.3% unemployment rate expected, but employment posting a flat number of 0.2K vs. the 15.2K expected. The data was taken in stride however as forecasts have been beaten over the past five months by the G10 leading economy, keeping the AUD/USD choppy between 0.9115 and 0.9155.
China pumped out a bunch of data, including CPI, PPI, and retail sales which all posted modest gains. Industrial production followed, which posted a weaker 12.8% vs. the projected 19.5%. The data failed to make the market impact that was expected, nudging the yen higher as a 16 month high in China’s inflation led many to believe that the economy was overheating and thus on the road to a tighter monetary policy. Due to the timid move to risk aversion, EUR/JPY dropped 60 pips to 123.00, GBP/JPY shed 70 pips to 134.90 and AUD/JPY lost 60 pips to 82.25. USD/JPY fell from its comfortable range near 90.50 to touch 90.20 on a low, but this pair as well as the crosses were all able to regain footing and were off of lows by the session’s end. EUR/USD hardly budged today, sticking in between 1.3630 and 1.3660 for the day.
Looking ahead, we have the SNB rate decision late in London’s session, followed by US trade balance and unemployment claims. The week in Asia ends peacefully with New Zealand’s retail sales.
