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DailyFX Asia AM Digest: Volatility Incoming with Australian Jobs, Chinese GDP Data Due

DailyFX Asia AM Digest: Volatility Incoming with Australian Jobs, Chinese GDP Data Due

Research, Research Team


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The US Dollar (via DXY Index) failed hold onto its early-session gains on Wednesday, closing lower after a round of US weaker than expected housing data. Hurricanes Harvey and Irma will have had a materially negative impact on Q3’17 GDP, with the Atlanta Fed, New York Fed, and St. Louis Fed all downgrading their Q3 US GDP estimates after Wednesday’s data.

Ahead of the Tokyo open, pairs like USD/CHF and USD/JPY continued to push higher as the US Treasury 2-year yield rose to its highest level of the year, and its highest level since 2008. AUD/USD and NZD/USD were barely changed on Wednesday, and have moved little since Monday’s close.

DailyFX Economic Calendar: Thursday, October 19, 2017 – Asian-Pacific Releases

The Asian-Pacific calendar remains in focus this week, with Thursday being particularly important in terms of data releases – there are several ‘high’ importance due out in the coming session. With the focus on Australian labor data and Chinese growth data, the Australian Dollar has greater potential for high volatility during Thursday trading.

According to Bloomberg News consensus forecasts, the Australian employment increased by +15.0K in September after gaining+54.2K in August. The report for August was solid, with full time employment increasing by +40.1K over the period; the composition of jobs shifted from to more full time and fewer part time. Additionally, the unemployment rate is expected to hold at 5.6%.

Despite the steadily improved state of the labor market, uneven economic data appears to be a wrinkle in the outlook for the Reserve Bank of Australia, which noted recently that wage pressures aren’t strong enough to provoke a rate hike any time soon. At the start of this week, interest rate expectations (per overnight index swaps) show only a 2.4% chance of a hike by December 2017.

The Chinese economy is forecast to have grown by +6.8% on an annualized basis in Q3’17, essentially the same rate of growth seen during 2016 and 2017 overall. Once again, for 2018, the Chinese government is targeting the economy to grow between +6.5% and +7.0%.

DailyFX Webinar Calendar: Thursday, October 18 and 19, 2017

IG Client Sentiment Index Chart of the Day: AUDJPY

Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page

AUDJPY: Retail trader data shows 52.9% of traders are net-long with the ratio of traders long to short at 1.12 to 1. The number of traders net-long is 10.3% higher than yesterday and 33.5% higher from last week, while the number of traders net-short is 4.5% higher than yesterday and 11.4% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUDJPY-bearish contrarian trading bias.

Five Things Traders are Reading

  1. “GBP/USD Technical Analysis: Clinging to Longer-Term Support Zone” by James Stanley, Currency Strategist
  2. “Crude Oil Price Analysis– Pullback to Offer Opportunity” by Michael Boutros, Currency Strategist
  3. “Long Positions Leave Mixed Trading Bias on Australian Dollar” by Dylan Jusino, DailyFX Research
  4. “Gold Rebound Unravels as Fed Officials Endorse Three Hikes for 2018” by David Song, Currency Analyst
  5. “USD Stretches Towards Resistance: Yen, Aussie to Offer Opportunity” by James Stanley, Currency Strategist

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.