Intraday Market Thoughts

Onto China GDP and more Yen Talk

by Adam Button
Apr 15, 2013 0:02

Chinese data on GDP, industrial production and retail sales is substantial risk as trading begins for the week. Ahead of the data, the moves so far have been small with the yen gaining a few pips and the kiwi edging lower. Weekly CFTC data showed a surprising lack of fresh interest in yen shorts. After 3 Premium gold shorts hit all targets on Friday, 3 new gold shorts were added on the day, which remain unfilled. See those trades and the essential 4 charts on silver and gold here

Last week's Chinese trade data was surprisingly strong and that points to some upside risks in today's data, which is due at 0200 GMT. The most important number is Q1 GDP, which is expected up 2.0% in the quarter. Industrial production is forecast to rise 10.1% y/y and retail sales forecast to climb 12.5% y/y.

By any measure, the Chinese economy continues to roar but signs of accelerating growth could reinvigorate the Australian dollar rally after Friday's stumble.

Last week ended with a quick fall in USD/JPY on a combination of profit taking and reaction to US Treasury saying it will 'closely monitor' Japan in the currency manipulation report. The headlines came in a thin late-Friday trading and the market may have overreacted.

The phrase 'closely monitor' tends to illicit a strong reaction from traders because it's tends to be a central bank hint at action. In this case, the text seems rather satisfied with the BOJ policies and it concludes by saying, “We will closely monitor Japan's policies and the extent to which they support the growth of domestic demand.”

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -51K vs -66K prior JPY -78K vs -78K prior GBP -70K vs -65K prior AUD +78K vs +84K prior CAD -65K vs -63K prior NZD +25K vs +18K prior CHF -10K vs -12K prior

US Dollar Index longs at 504K vs 54K prior

 The thing that stands out is the lack of fresh JPY shorts. The prior number was before the BOJ decision and even though overall shorts are at a high level, it's not extreme. This suggests that some speculators may have missed the first wave in USD/JPY and will be buying dips.

Act Exp Prev GMT
Industrial Production (FEB) (m/m)
-0.1% 0.3% Apr 15 4:30
Industrial Production (FEB) (y/y)
-5.8% Apr 15 4:30

Latest IMTs