Japan shares boosted by GDP rebound

 

Index at eight-week high

The Japanese economy expanded 1.4% on an annualized basis in the fourth quarter of 2018, matching economists’ estimates. The positive growth snapped two consecutive months of contraction and helped to avoid a technical recession. Domestic demand was a major driver of the rebound, rising 0.6% while business spending beat estimates with 2.4% growth rather than 1.8%.

The JP225 index advanced to its highest since December 18 as it nears the 61.8% Fibonacci retracement of the December drop at 21,346. The 100-day moving average sits at 21,586 and has capped prices since December 4.

 

JP225 Daily Chart

Source: OANDA fxTrade

 

China’s January trade numbers finally released

After waiting for a few days, we finally got to see China’s trade data for January. Conspiracy theorists may note the coincidence of the timing of the release and the start of trade talks. The trade surplus with the US shrank to $27.3 billion in the month from $29.9 billion in December. Overall exports rose 9.1% y/y while imports declined 1.5% y/y, both coming in better than economists’ estimates. In response the Aussie rose, though AUD/USD only managed 8an 8 tick rally as a knee-jerk reaction.

New Zealand gives US dollar birds

Waiting for the next trade talk soundbite

Other markets traded mixed during the Asian session, with traders waiting for any comments or headlines out of Beijing as the US-China trade talks officially kick off today. Having breached the 55-day moving average at 110.70 to the upside yesterday, USD/JPY struggled for momentum to attempt to crack the 200-day moving average at 111.32. Trading was confined to a tight 110.87-111.06 range and is now at 111.01.

 

USD/JPY Daily Chart

Source: OANDA fxTrade

 

The Kiwi continues to benefit from the comments yesterday from RBNZ Governor Orr’s comments on monetary policy, but failed to advance beyond yesterday’s peak. The Aussie is still riding the kiwi’s coat tails, with nothing locally to drive the antipodean currency.

 

German growth to slow

Economists are expecting GDP growth in Germany to slow to +0.7% y/y in the fourth quarter, which would be the slowest growth since Q2 2017. Money markets are implying only a 36% chance of an ECB rate hike by the end of this year, and that could drop if the slowdown is deeper. Shortly after we see the first revision of Euro-zone GDP growth for the same period, though no change is expected either on a quarterly or annualized basis from the +0.2% and +1.2% initial prints, respectively.

German GDP Growth Chart

Source: MarketPulse

The rest of today’s data slate has US retail sales for December (a delayed release due to the US government shutdown) and producer prices for January.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.