China data beats forecasts

 

China data leads to a risk-on feeling

In the broader market, now that the Phase 1 US-China trade deal has been agreed in principle, markets have traded positively during this morning’s Asian session. US indices have advanced between 0.05% and 0.29%, with the US30 index the under-performer while the Australia200 index was top of the league with gains of over 1%.

The positive vibes were partly driven by China’s retail sales and production data for November, which both came in above forecast. Sales grew 8.0% y/y, better than the 7.6% expected and the fastest growth rate in five months. Industrial production rose 6.2% y/y, the fastest pace since June, and well above economists’ expectations of 5.0%.

On the currency front, in usual fashion, the Australian dollar was firmer, the Japanese yen weaker, as investors embraced risk. AUD/USD rose 0.05% to 0.6878 while USD/JPY gained 0.03% to 109.38.

AUD/USD tested the 200-day moving average at 0.6911 on Friday but failed to close above it. That moving average in now at 0.6910 and has capped prices on a closing basis since March 2018.

 

AUD/USD Daily Chart

Source: OANDA fxTrade

 

Markets like a clearer Brexit outlook

The pound looks set to extend last Friday’s gains to a second day after investors reviewed the implications of the Conservative Party’s resounding win at Thursday’s election. One conclusion seems to be that an orderly exit from Europe may actually happen on January 31, which is probably the best future outlook we have seen in months. Indeed, PM Johnson has said he wants a parliamentary vote on Brexit before Christmas in order to get it done by the deadline.

The pound hasn’t yet reached the lofty heights of Friday’s high at 1.3516 versus the US dollar, the highest since May 2018, and is still facing some tough resistance at the 55-month moving average at 1.3416. That moving average has contained prices on a closing basis since October 2014. GBP/USD is now at 1.3389.

 

GBP/USD Monthly Chart

Source: OANDA fxTrade

Flash PMIs dominate

Today is the day for the Markit flash PMI numbers for December from around the globe. Analysts are anticipating improvements for Germany, Euro-zone and the UK with a slight deterioration seen for the US.

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.