Forex news for Asia trading Thursday 19 January 2017

China data today:

  • China Q4 GDP: 6.8% y/y (expected 6.7%, prior 6.7%)
  • China Dec. data: Industrial Prodn: 6.0% m/m (exp. 6.1%), Retail sales 10.9% m/m (exp 10.7%)
  • China data recap: Economy "propelled by robust consumption"
  • China 2016 power output up 4.5% y/y - Stats bureau
  • If you have any doubt about China's economic data, let this put your mind at rest

For the week, the PBOC injected 1130bn yuan via OMOs into money markets. That's a record injection for a week.

And:

  • BOJ Dep Gov Nakaso, speaking on monetary policy and financial stability
  • Reports of multiple shots fired in Australia's 2nd largest city
  • Fed's Yellen Q&A: Heading towards unsustainable deficits
  • USD a little lower ... we await China Q4 GDP (and other data)
  • Japan fin min Aso: Undesirable for currencies to fluctuate rapidly
  • China Q4 GDP due at the top of the hour (& other data) - watch for early leaks
  • S&P affirms New Zealand's rating, outlook remains stable
  • PBOC sets USD/CNY central rate at 6.8693 (vs. yesterday at 6.8568)
  • Fed's Yellen: 'Prudent' to adjust stance of monetary policy gradually
  • Australia data - HIA New Home Sales (Nov.): +6.1% m/m (prior -8.5%)
  • ICYMI: Tintin and the Brexit plan
  • China think-tank on Trump - his harsh rhetoric, its just bluster
  • Japan: Reuters Tankan Manufacturing Index +18 in January (vs. Dec. 16)
  • The US economy, policy outlook is no more uncertain than usual
  • An alternative look at Australian employment data (you know this is not good, right?)
  • Trade ideas thread - Friday 20 January 2017
  • Fed's Williams: Makes sense for Fed to take foot off pedal, given progress on economy

What do you get if you mix together easy monetary policy, fiscal support and a property boom? A cracking good GDP result, that's what. China Q4 GDP came in today at 6.8%, to give a full year 2016 GDP of 6.7% growth, pretty much bang in the middle of the 6.5 to 7% official target.

Yes, at 6.7% for the year that's the slowest since 1990, but as China's economy grows larger and larger and larger you will not see continued higher GDP growth rates. Simple fact.

While GDP beat, December data was not so great. Industrial production and fixed asset investment for December came in at a miss; on the other hand December retail sales were a solid beat. The churlish will call it a bad day for China data, the sanguine a good day. But, as is often the case, its somewhere between those two extremes.

What does seem likely though, is that 2017 will not see quite so supportive policies from China; that's not say authorities there will take their eye of the ball, they won't, but they will use the stabilisation in the economy to lean more towards reform and reducing the risks from the build up in debt, this is an ongoing cycle in China. While I'm on the big picture, the party congress scheduled for Q4 2017 will keep the pressure on authorities to not let growth slip too far.

We also had Federal Reserve Chair Yellen speaking a little before the China data, and in the middle of her Q&A over the data release. While Yellen was speaking we saw the USD weaken, no too dramatically but some decent moves nonetheless. Yellen did not say anything too much different from her speech earlier this week, so it's questionable that he words were the cause of the move but they could well have played a role.

EUR/USD has gained around 30 or so points from its earlier lows, AUD moved up a similar points amount.

USD/JPY traded higher earlier in the session, above 115.10 before giving way down under 114.60 eventually. Cable has been a winner on the session, up 40 or so points.

Apart from the Chinese data and Yellen's speech/Q&A news and data flow was light.

Regional equities:

  • Nikkei -0.10%
  • Shanghai +0.54%
  • HK -0.62%
  • ASX -0.58%

Have a great weekend all.