CFD Markets News and Forecasts — 10-03-2024

The final reading of the Japanese Gross Domestic Product (GDP) for the fourth quarter (Q4) grew 0.1% QoQ versus 0.3% expected and -0.1% prior, the Cabinet Office showed on Monday.

Furthermore, the Annualized GDP expanded by 0.4% versus the 1.1% expansion expected and the 0.4% contraction prior.

Market reaction

Following the Japanese growth numbers, the USD/JPY pair is down 0.20% on the day to trade at 146.46. 

About Japan’s Gross Domestic Product (GDP)

The Gross Domestic Product (GDP), released by Japan’s Cabinet Office on a quarterly basis, is a measure of the total value of all goods and services produced in Japan during a given period. The GDP is considered as the main measure of Japan’s economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.

According to Jiji Press, the Bank of Japan (BoJ) is considering ending its yield curve control programme and instead indicating in advance the amount of government bonds it plans to purchase. 

Key quotes 

Market reaction

At the time of writing, USD/JPY is trading 0.16% lower on the day at 146.82. 

China’s inflation, as measured by the Consumer Price Index (CPI), rose by 0.7% YoY in February from a 0.8% decline in January. The market consensus was for a rise of 0.3%. 

On a monthly basis, Chinese CPI inflation climbed 1.0% MoM in February versus a 0.3% increase seen in January, above the market consensus of 0.7%. 

China’s Producer Price Index (PPI) dropped 2.7% YoY in February, as against a 2.5% decline in January. The data came in weaker than the market expectations for a 2.5% decline in the reported period.

Market reaction

At the time of writing, AUD/USD holds lower ground near 0.6618, down 0.03% on the day.

• AUD/USD trades on a weaker note near 0.6620 in Monday’s early Asian session. 
• US Nonfarm payrolls increased by 275K in February; Unemployment Rate rose more than expected to 3.9%.
• Chinese CPI rose for the first time in six months, coming in at 0.7% YoY in February vs. -0.8% prior. 

The AUD/USD pair trades with a mild negative bias above the 0.6600 psychological mark during the early Asian session on Monday. The pair edges lower due to the modest rebound of the US Dollar (USD) to 102.75 after retreating to 102.40. Investors will closely watch the US Consumer Price Index (CPI) and Retail Sales data this week for fresh impetus. At press time, AUD/USD is trading at 0.6620, unchanged for the day. 

The US Nonfarm Payrolls rose by 275K in February from 229K in January, better than the expectation of 200K. Meanwhile, Average Hourly Earnings arrived at 4.3% YoY, below the estimation and the previous reading of 4.4%. The Unemployment Rate climbed to 3.9% from 3.7% in January. 
 
The Federal Reserve Chair Jerome Powell said last week during his semiannual testimony that the labor market is relatively tight, but supply and demand conditions have continued to come into better balance. The markets believe that the Fed will need more data to be confident that the supply of labor is recovering. According to the CME FedWatch Tool, traders have nearly fully priced a June rate cut and almost 100 basis points (bps) by year-end.

On the other hand, the Chinese Consumer Price Index (CPI) climbed for the first time in six months due to spending linked to the Lunar New Year. China rose 0.7% YoY in February from a 0.8% decline in January, above the market consensus of a 0.3% increase, the first monthly rise since August 2023. The Producer Price Index (PPI) fell 2.7% YoY in February, compared to expectations and the previous January’s reading of a 2.5% decline. The Chinese CPI inflation data provides some relief to the world's second-largest economy and lifts the China-proxy Australian Dollar (AUD). 

Looking ahead, market players will keep an eye on the US February CPI and Retail Sales on Tuesday and Thursday this week, respectively. On the Aussie docket, the Westpac Consumer Confidence for March will be due on Tuesday. These events could give a clear direction to the AUD/USD pair.