Daily FX Trading Update: Japanese Inflation Figures Fall Short – Jan 30, 2015

Daily FX Trading Update: Japanese Inflation Figures Fall Short - Jan 30, 2015

The US dollar was able to advance against most of its FX trading counterparts when risk aversion extended its stay in the currency market. Traders are also increasing their long dollar bets after the FOMC retained its hawkish bias earlier this week. Data from the US economy was mixed, as the initial jobless claims showed a better than expected 265K reading versus the projected 301K figure while the pending home sales report marked a 3.7% decline. For today, the US advanced GDP reading is due and another strong figure might lead to more gains for the dollar. Analysts are expecting to see a 3.0% growth figure for Q4.

The euro recovered slightly in recent FX trading, despite weaker than expected data from Germany. The preliminary CPI showed a 1.0% decline instead of the projected 0.8% drop while the unemployment change report showed a mere 9K drop in joblessness. Apart from that, the previous month’s reading was downgraded to show a smaller decline in unemployment. German retail sales and French consumer spending figures are up for release today, with the former likely to show a 0.4% gain and the latter to print a 0.3% uptick. Also up for release are the Spanish flash GDP and CPI figures, along with the euro zone CPI flash estimates.

FX Trading News

The pound suffered a selloff in recent FX trading even though the UK printed stronger than expected data. CBI realized sales fell from 61 to 39, stronger than the estimated 31 figure, while the Nationwide HPI showed a 0.3% uptick as expected. Earlier today, the UK GfK consumer confidence figure also surprised to the upside with an improvement from -4 to 1, higher than the projected -2 reading. UK net lending to individuals and mortgage approvals are up for release today.

The franc was still under selling pressure yesterday, as the rumored SNB intervention continued to weigh on the currency. There have been no reports released from Switzerland yesterday while today has the KOF economic barometer due. This could fall from 98.7 to 94.8, showing a weaker economic assessment and outlook.

The yen let go of its recent FX trading wins as inflation and spending reports from Japan fell short of expectations. The national core CPI fell from 2.7% to 2.5%, lower than the projected drop to 2.6%, while the Tokyo core CPI logged in its sixth consecutive monthly decline. Household spending slumped 3.4% instead of posting a mere 2.3% drop, as inflation-adjusted wages marked its 17th consecutive monthly decline. Data on housing starts is still up for release and a 14.6% decline is expected.

The comdolls had another round of selling in yesterday’s FX trading as risk aversion weighed on equities and higher-yielding currencies. Data from New Zealand showed further weakness, as visitor arrivals fell 1.3% and building permits showed a 2.3% drop. Later today, Canada will release its monthly GDP reading and possibly show a 0.1% decline.

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.