Daily FX Trading Review: Weak Chinese Data Pushed AUD Pairs Down – Sept 15, 2014

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Daily FX Trading Review: Weak Chinese Data Pushed AUD Pairs Down - Sept 15, 2014

The comdolls were in a weak FX trading spot last Friday and most gapped down over the weekend, as Chinese data came in mostly weaker than expected. Industrial production in China is up by 6.9% instead of the estimated 8.8% increase while fixed asset investment marked a mere 16.5% gain instead of the projected 16.9% increase. Retail sales was also slightly weaker than expected. Earlier today, Australia reported a 1.8% decline in new motor vehicle sales.

The US dollar regained ground to most of its major FX trading counterparts, as traders started positioning ahead of this week’s FOMC statement. Data from the US economy came in stronger than expected, with headline retail sales marking a 0.6% gain and the core version of the report showing a 0.3% increase. This was stronger than the estimated 0.3% uptick and 0.2% rise respectively while the previous month’s figures were upgraded. Preliminary UoM consumer sentiment was also stronger than expected, as the index climbed from 82.5 to 84.6 and reflected increased optimism. Empire State manufacturing index and industrial production data are due today.

FX Trading Fundamentals

The euro struggled to hold steady around 1.2950 against the dollar last week, as the shared currency got a bit of FX trading support from stronger than expected industrial production and employment change figures. Industrial production marked a 1.0% gain versus the estimated 0.6% uptick while employment change showed a 0.2% increase for the previous quarter, higher than the projected 0.1% rise. Euro zone trade balance is due today and a higher trade surplus is eyed.

The pound continued to weaken against the dollar but managed to hold on to its current FX trading levels against the yen on Friday, as UK construction output stayed flat. Profit-taking may have played a huge role in price action, as traders closed positions ahead of this week’s top-tier UK events. There are no major ones lined up for today but tomorrow has the UK CPI while Wednesday has the BOE minutes and UK jobs figures on tap. Thursday will have the Scottish referendum and UK retail sales release. Earlier today, the Rightmove HPI marked a 0.9% rebound for September.

The franc had been moving uneasily as traders are anticipating FX trading intervention from the SNB this week. The currency lost further ground to the euro then recovered slightly to the dollar last week. Swiss PPI is due today and a 0.2% uptick is eyed to follow the previous flat reading, with a weaker than expected result likely to weigh on the franc.

The yen continued to weaken to the dollar and its major FX trading counterparts as the Japanese economy showed further signs of weakness. There are no reports lined up today as Japanese banks are on holiday, leaving yen pairs at the mercy of risk sentiment.

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.