AUDUSD, H4
The Aussie outperformed today after data showed exports made a 1.1 percentage point contribution to Q1 GDP, up from a zero contribution in the previous quarter and above the consensus view for a 0.7 percentage point outcome. This sent economists scurrying to upgrade GDP forecasts ahead of tomorrow’s release of growth data for the March quarter. AUDUSD was showing a 0.9% gain 0.7245, having logged an eight-day peak at 0.7250. Elsewhere, USDJPY has settled in the low 111s, below yesterday’s one-month peak at 111.40. Japanese data were encouraging today, with April industrial production unexpectedly rising 0.3% m/m, despite the activity-affecting earthquakes that struck in that month. Household spending also declined less than expected. The data supports the view that the Japanese economy will continue on a slow-growth plane; but with deflation threating the consensus for the BoJ to expand monetary policy by July is likely to remain a strong-conviction view. With the Fed on course for a second rate hike, I remain bullish of USDJPY (Target 2 111.90 still in play), especially as Chinese stock markets having posted their longest winning streak since 2012. EURUSD rose to a two-session peak at 1.1154 amid a bout of dollar selling, since drifting back around the 1.1130 area.
Janne Muta
Chief Market Analyst
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