Data out of China that was not as bad as expected helped to break the risk adverse trend today in Asia although just temporalily. A dismal day in New York that saw equities and risk both fall as retail sales came in softer than expectations and the FOMC painted a gloomy picture for the near future of the US economy, carrier over into Asia today. Asian equities opened the day in the red, as risk currencies slid lower ahead of the long awaited tranche of Chinese data that would constitute the risk event of the session. EUR/USD dipped to 1.2707 and the AUD/USD fell to 0.8778 lows as the market waited for Chinese GDP, CPI, PPI, Industrial Production and Retail Sales.

While data came in weaker, (CPI 2.9% versus 3.3%, GDP 10.3% versus 10.5%, PPI 6.4% versus 6.8%, Industrial Production 13.7% versus 15.2% and finally Retail Sales 18.3% versus 18.8%), it was not as horrible as was expected and risk flew higher despite the poor showing. Most risk pairs hit their session highs following the data, with the EUR/USD hitting 1.2763, AUD/USD touching 0.8846, and the EUR/JPY tapping a 112.81 pinnacle. While the data was mostly in line with market expectations, the elation was short lived as the results ultimately pointed to slower growth out of China. This slowing of growth in China coupled with the FOMC lowering the US economic forecast was too much to take for risk as equities remained weak and the current currency highs eroded to eventual fresh session lows.

Markets will now shift their focus to the fragility of the US economy and tomorrow’s upcoming PPI and unemployment data due at 12:30GMT. That data will be followed by Philly Fed Manufacturing Index at 14:00GMT.