Daily brief: Australian dollar down on soft Chinese data, yen up after Japan GDP report
Chinese economic data inspires a risk-off mood in currency markets; Japanese yen higher after Q2 GDP report reveals slower deflation and S&P 500 futures warn negativity might spread to broader markets.
Australian dollar sank alongside its New Zealand counterpart as China reported a round of disappointing economic figures. Besides each other, the East Asian giant is the two Oceanic nations’ top export market, and weakness there can echo back along the trade route.
Industrial production grew 3.8 percent on-year in July, undershooting expectations of a 4.6 percent rise. Retail sales added 2.7 percent over the same period, falling short of the 5 percent forecast. Capital investment marked the weakest rise since November 2021 at 5.7 percent. Economists had penciled in a gain of 6.1 percent ahead of the release.
Earlier in the day, the Japanese yen rose despite lackluster second-quarter GDP data. Output rose at an annualized rate of 2.2 percent, short of the 2.5 percent baseline forecast. An unexpected rise in the GDP deflator – a measure of inflation – may have inspired the currency.
The index showed prices fell -0.4 percent on-year, marking the slowest deflation since the first quarter of 2021. It was projected to fall -0.8 percent after slipping -0.5 percent in the first quarter. That may have inspired speculation about the possibility of a less-dovish Bank of Japan (BOJ) at some point on the horizon.
Such thinking appeared to be short-lived, however. The priced-in three-year BOJ policy path implied in rates markets has not budget from last week. A return from negative territory on the benchmark lending rate is not expected until at least the second quarter of next year.
The yen continued to move higher all the same however, finding fresh fuel in China’s downbeat data offering. Weakness in the world’s second-largest economy appeared to inspire a broader risk-off tone, at least in the G10 FX space. The Japanese unit tellingly rose with the safety-minded US dollar.
Asia-Pacific bourses managed to brush off negativity, tracking up 0.6 percent on average in afternoon trade. European shares are also indicated to open in the green. Futures tracking the bellwether S&P 500 index are pointing lower however, warning resilience in equities may be fleeting.
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.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
