Market Brief: Asian Stocks, Aussie Down on Bad News

Summary:
• Disappointing data from China and Australia sent stocks and the Aussie lower in today's Asian session, while the Japanese yen benefitted from risk aversion.

Asian stocks and commodity currencies begin Thursday’s trading in the bears’ territory as Chinese and Australian data disappointed forecasts.

As of this writing, the Hang Seng Index is down over 0.70% to 26,365.92 while the Nikkei is over 170 points in the red at 23,141.55.

The Australian dollar was the biggest loser among the major currencies. AUDUSD is down over 37 pips, trading below support at the 0.6800 psychological handle. The New Zealand dollar comes in second as it gives up some of its gains from yesterday. NZDUSD is down by almost 20 pips from its open price at 0.6390.

Disappointing Chinese and Australian Data

Early this morning, economic reports from China were released. Industrial production for October printed at 4.7% and missed forecasts for a 5.5% growth rate. Retail sales also disappointed at 7.2% versus the 7.8% consensus. Fixed asset investment grew by 5.2% from a year ago which was less than the 5.4% forecast.

These numbers only added to the market’s risk averse sentiment as they confirm concerns that the ongoing trade war is adversely affecting the world’s second-largest economy.

Meanwhile, in The Land Down Under, employment figures sorely missed expectations. Data for October showed a decline in job growth by 19,000 when an uptick of 16,200 was estimated. This number translated to an increase in the unemployment rate from 5.2% in September to 5.3% in October.

Economic Reports For Today

For today’s calendar, a few economic reports from are scheduled to come out:

• Germany’s Q3 GDP at 7:00 am GMT is eyed at -0.1%. A negative reading would mean that the euro zone’s largest economy has incurred back-to-back quarters of contraction and that it has entered a technical recession. Data shows that the economy contracted by 0.1% in the second quarter.
• UK retail sales report is expected to show a 0.2% uptick in consumer spending.
• US PPI at 1:30 pm is forecasted at 0.3% to indicate that prices of raw materials used by producers picked up in October.

Fed Reserve Chairman Jerome Powell is also scheduled to speak at the House Budget Committee at 3:00 pm GMT. However, the consensus is for him to maintain the Fed’s current not-so-dovish tone. Last night, he described the central bank’s current monetary policy as “appropriate.”

USDJPY Outlook

The Japanese yen benefitted slightly from risk aversion early in today’s trading. USDJPY hit new weekly lows at 108.61 following reports from China. Currently, the currency pair is trading within a consolidation and I would even argue that it has formed a bearish flag in the hourly time frame.

If risk aversion dictates market sentiment today, we could see a down side break and USDJPY could trade lower to test support at the 108.00 level. On the other hand, the currency pair could face resistance around 108.90. There is a confluence at this price level of the 100 SMA and 200 SMA and the falling trend line from the highs of November 12 and November 13.Download our latest quarterly market outlook for our longer-term trade ideas.