This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
AUD/USD is quite subdued at the moment after finally breaking below 0.94, pressured by disappointing data out of China yesterday. With China’s money supply growth slowing significantly, along with a 19% drop on aggregate financing levels, investors are quite nervous about today’s Q1 GDP print. There have been plenty of reports highlighting the risk of China growth falling short. Today’s GDP reading due out at 12:00pm AEST is expected to show 7.3% growth, while industrial production is anticipated to be up 9% on-year. We also have fixed asset investment and retail sales data due out; should this data miss expectations tomorrow, this could well be the trigger for some stimulus. As a result, interpretation of the data will be key for today’s trade.
AUD looking vulnerable
AUD/USD will be a key pair to watch today given the significant event risk the China data presents. The pair has reversed recent gains significantly over the past 24-hours after the RBA minutes showed it remains happy to maintain a dovish stance. I feel the data today will be a binary event for the AUD and could result in a big move. While the short-term uptrend remains intact with a channel forming, profit taking threatens to see this uptrend tested in the near term.
USD/JPY back above 102
USD/JPY has seen some volatility this morning with a sharp recovery from 101.50 seeing the pair trade back above 102. The pair has been threatening to break back above 102 and near-term momentum is certainly to the upside. There is a bit of resistance at current levels which have been tested on a number of occasions this month. A convincing break above 102.05 would open up the pair to potential further gains in the near term. BoJ Governor Kuroda will be on the wires later today. He is likely to reinforce that he remains ready to act should the economy veer off its path to the 2% inflation target. On the USD side of the equation we have building permits, housing starts and industrial production data due out. Meanwhile Fed members Stein and Fisher will be on the wires along with Fed chair Janet Yellen.