Summary:

• Japanese yen outperforms in G10 after a bleak session seen across Asian markets and despite a miss in GDP
• Australian dollar drops the most in early trading following disappointing wage growth
• AUDUSD continues its downtrend, further declines seem to be only a matter of time

The Asian session has brought widespread declines where the Japanese NIKKEI (JAP225 on xStation5) has been by far the worst performing index losing more than 1.5% just a while before the close. Consequently the JPY has gained a foothold snubbing the feeble GDP release which came overnight. Furthermore, the Japanese currency seems to be shored up by waning risk sentiment worldwide alike as Wall Street ended the day with moderate losses following falls in Europe. Asia has followed this scenario thereafter as all major indices are down at the time of writing.

Japan’s GDP growth disillusioned in the third quarter as household outlays decreased. Source: Macrobond, XTB Research

The preliminary GDP release showed a mediocre 0.3% qoq in the third quarter while 0.4% qoq had been anticipated. The breakdown is yet more depressing as household expenditure shrank 0.5% qoq falling short of the estimate pointing to a 0.4% qoq fall. Business spending grew just 0.2% qoq against the forecast at 0.3% qoq. On the other hand net exports added the most to growth in the past quarter  rising 0.5% qoq. Even as it was the seventh consecutive quarter with growth above zero, the rate slowed down in the last three months despite a continued upswing seen across the European economies. All in all the outlook for the Japanese economy hasn’t changed suggesting that the BoJ is still a long way off from its objective.

Moving on the Australian wage data was released overnight which missed the forecasts across the board. The wage price index came in at 2% yoy and 0.5% qoq against the estimates indicating 2.2% yoy and 0.7% qoq respectively. On top of that the Westpac consumer confidence gauge slipped from 101.4 to 99.7 in November. By and large, these releases should leave the Australian dollar exposed to further losses ahead as the RBA ought to feel comfortably with the current settings of monetary policy boding no changes in rates in the foreseeable future. In effect the Australian dollar is falling against the greenback as much as 0.55% in early trading.

The Australian dollar keeps sliding following a miss seen in wage growth. Source: xStation5

Technically the AUDUSD has marked its fresh lows opening up space for yet deeper slides ahead. Notice that the pair has strictly respected a descending trend line implying that sellers ought to prevail until this line is broken durably to the upside. As for now one may argue that the ongoing move could eye 0.7500 as its closest target to tick.