Chinese Data Bad, Japanese Data Good

Chinese Data Bad, Japanese Data Good
Chinese Data Bad, Japanese Data Good
Wall Street traded modestly higher in early trade on Friday, but ended the day with losses as investors started to come to terms with the potential slowdown in the Federal Reserve’s monetary stimulus program. Early in the day, some negative sentiment was generated by a report from the ISM Chicago which showed that its Chicago business barometer tumbled to 51.6 in June from 58.7 in May. Selling pressure waned not long after the open, however, with a better than expected reading on consumer sentiment helping to limit the downside for the markets. Thomson Reuters and the University of Michigan reported that their consumer index for June was upwardly revised to 84.1 from the preliminary reading of 82.7

Over the weekend, Federal Reserve Member Stein indicated that Fed tapering could begin in September. This should shake up currency markets Monday morning. Also this morning there were conflicting data releases on Chinese manufacturing. The official government PMI release showed slight increase above expectations and a final print over the 50 divider point, while the more reliable HSBC report printed below 50 and missed expectations reporting at 48.9. Traders are trying to make sense of these reports this morning. The Aussie dollar fell to come near a 34 month low and is trading at 0.9173 with traders eyeing tomorrows RBA meeting. Its close neighbor the kiwi seems to be marching to its own drummer this Monday, while trading near record lows, the kiwi dollar climbed to trade at 0.7761 gaining 18 pips.

Also in an Asian Pacific region the Japanese yen continues to fall closer to the 100 mark trading at 99.29 this morning as strong economic data supports the aggressive monetary stimulus program started in April by the Bank of Japan. This morning the all-important Tankan index printed above expectations showing a turnaround in the economy. The mood among Japan’s large manufacturers improved sharply in the three months to June, the Bank of Japan’s tankan survey showed Monday, as it hit its highest level in more than two years. The closely watched quarterly survey was the first compiled since the BOJ adopted monetary easing on an unprecedented scale in early April, one of Prime Minister Shinzo Abe’s three main policies, collectively known as “Abenomics.”

The US dollar is trading flat this morning with positive sentiment as the US economy is showing strong signs of recovery. The US dollar index is trading at 83.38 as traders are watching the Fed closely and listening to every word of FOMC members as they given their speeches across the country. Traders are looking for insight into the possibility of tapering and when this might occur. Speculators will be eyeing this week’s nonfarm payroll report due on Friday which is a key factor in the Fed’s analysis.

The euro is trading at 1.3021 gaining a few pips this morning on market shifts as there has been little supportive data or news flow, except from the ECB where officials have been spending the week talking up the euro ahead of their meeting scheduled for Thursday. 

Leave a Reply

Your email address will not be published. Required fields are marked *