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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Asia Day Ahead: Yen strengthened, China’s economic data on watch

The Asian session looks set to round off the week with some calm, following the fourth straight day of gains in Wall Street overnight.

China Source: Getty images

Asia Open

The Asian session looks set to round off the week with some calm, with Nikkei -0.26%, ASX +0.71% and KOSPI +0.24% at the time of writing. This follows after the fourth straight day of gains in Wall Street overnight, in what seems to be a strong overturn of the early-September jitters. Tech stocks regained ground, while the higher-than-expected read in the US producer price index (PPI) failed to dent the risk rally much, as components that feed into the Federal Reserve (Fed)’s preferred inflation gauge (Personal Consumption Expenditures (PCE) Price Index) were soft.

Nevertheless, it may still be too early to declare a decisive victory over inflation just yet, which suggests that the Fed will tread carefully in easing its policies next week (25 basis point (bp) cut) and likely lean to its data-dependent stance for subsequent moves. Inflation remains above target, overall US producer prices saw a slight pick-up in pace, while the recent “supercore” consumer prices were little tamed as well.

The Japanese yen strengthened in today’s session, with the USD/JPY back to eye for its December 2023 low, which seems to explain why Japanese equities’ gains are capped in today’s session. The Bank of Japan (BoJ) is not expected to make any rate move at its meeting next week, but there may be some hawkish pricing brewing for policymakers to lay the groundwork for further rate hikes in December and beyond. You can read more about our preview here: https://www.ig.com/sg/news-and-trade-ideas/bank-of-japan--boj--preview--clues-to-be-sought-on-the-timing-fo-240911

China’s economic data on watch

The day ahead will leave China’s new loan data on watch, which is expected to show a bounce from July’s blip but remained low on relative terms at 1.02 trillion yuan. Weak credit demand amid the subdued spending among consumers and businesses may be reinforced, which may continue to put eyes on China authorities for more support in order to meet its gross domestic product (GDP) growth target this year. Time seems to be running short, and failure to meet its own growth target may send a signal to markets that its policy hands are tied in uplifting growth, which may offer little reassurances for investors.

We will have its ‘data dump’ over the weekend as well, with further weakening expected across all three fronts. Industrial production is expected to ease to 4.7% year-on-year from 5.1% prior, retail sales may edge lower to 2.5% from 2.7% prior, while fixed asset investment may tick lower to 3.5% from 3.6% prior.

ASX 200 eyes for a new record high

Attention in today’s session may revolve around the ASX 200, with all eyes on whether it can push to a new record high. The broader upward trend remains in place, with the index trading above various trend indicators (moving averages (MAs), daily Ichimoku Cloud), but will have to face off against its August resistance at the 8,171 level.

A new record close could validate the fact that buyers are in strong control, which could pave the way towards the 8,300 level where an upward channel trendline may stand. Failure to cross the August high could call for a breather towards the 7,936 level, which is likely to offer some support for a formation of a new higher low before eyeing its next attempt.

Australia 200 Cash Source: IG charts

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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