Solid retail sales data coupled with flat inflation in the US began the move to risk, accelerating GDP together with CPI data out of China helped to solidify the move in Asia. Markets were decidedly optimistic heading into the much awaited Chinese data slated for today, and early leaks of results were confirmed with China’s Q1 GDP posting a 11.9% as opposed to the forecast of 11.8%. This data represented the fastest pace of growth in China in over three years for the world’s third largest economy, and the forex markets saw risk moves peak on the news. Today’s fine display of economic resilience in China further fueled the fire that a Yuan revaluation could be in the works in the near future.
As China is the largest importer of raw materials from Australia, the AUD/USD was firm; topping 0.9360 on the day, AUD/JPY just fell short of an 87.45 high as well. The EUR/USD reached 1.3665 highs in Asia on the back of the risk appetite as well as earlier comments out of Federal Reserve Chairman Bernanke who continued the current mantra of US rates remaining low for “an extended period”. Yen crosses topped out early in the day, EUR/JPY near 127.65, and GBP/JPY over 145.00, but the optimism faded as profit taking pulled some of the risk pairs back to opening levels. GBP/USD did not fade however, as the pair broke a seven week high of 1.5520 late in the session in reaction to a report that the UK Conservative Party was currently in the driver’s seat with a 12 point lead over the incumbent Labour Party for the upcoming election. EUR/GBP looked haggard at 0.8790 lows as of this writing. USD/JPY remained pegged in another day of range trading, this time between 93.20 and 93.50.
Although the data front looks weak in the London session, later in the US we are presented with Unemployment Claims, Industrial Production, and the Philly Fed Manufacturing Index.