Daily FX Trading Review: Japan Prints Mixed Economic Data – Sept 30, 2014

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Daily FX Trading Review: Japan Prints Mixed Economic Data - Sept 30, 2014

The yen saw a round of mixed data from Japan yet it managed to rally against the dollar in the past few FX trading hours. Household spending was weaker than expected at -4.7% versus the -3.5% consensus while industrial production also missed the mark as it showed a 1.5% decline instead of the projected 0.2% rebound. The unemployment rate improved from 3.8% to 3.8% and retail sales showed a stronger than expected 1.2% gain versus the estimated 0.4% uptick.

The US dollar seemed to have trouble extending its gains in the latter FX trading sessions, as traders started to book profits off their long positions at the end of this month and quarter. Data from the US has been mostly in line with expectations, as the personal spending and income reports showed 0.5% and 0.3% gains respectively. The core PCE price index marked another 0.1% gain instead of staying flat, but pending home sales fell short of consensus with a 1.0% decline. US Chicago PMI and CB consumer confidence reports are due today, with both slated to post small declines.

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The euro put up a decent fight in yesterday’s FX trading sessions, as it held on to the 1.2700 handle to the dollar. Data from the euro zone was better than expected, as Germany reported a flat reading instead of a 0.1% decline for its preliminary CPI and Spain showed a 0.2% drop instead of the projected 0.3% decline for its flash CPI reading. German retail sales and French consumer spending reports are due today and another set of strong figures might be enough to keep the euro afloat.

The pound also held its ground in recent FX trading, despite the lack of strong data from the UK yesterday. In fact, the UK mortgage approvals report fell short of expectations as it showed a 64K reading instead of the projected 66K figure. Earlier today, the GfK consumer confidence showed a -1 reading instead of the estimated drop from 1 to 0. UK current account and Nationwide HPI are due today and weak figures could lead to pound weakness.

The franc moved sideways to the euro but weakened to the dollar, even as there were no reports released from Switzerland. The Swiss KOF economic barometer is due today and it is slated to dip from 99.5 to 99.1, which might lead to more franc weakness.

The comdolls had a weak run in the previous FX trading day, with NZD mostly weighed lower by the confirmation of RBNZ intervention. The Australian dollar also followed suit, as there were no reports to keep it afloat yesterday. Earlier today, the Chinese HSBC final manufacturing PMI was downgraded from 50.5 to 50.2. Geopolitical tension stemming from the protests in Hong Kong are also weighing on risk sentiment and higher-yielding commodity currencies for now.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.