Economic Data Sends The Shanghai Higher

Asian markets moved higher as economic data cheered sentiment. The data helps shore up signs that China is beginning to stabilize as well as Japan.

China’s annual consumer inflation (CPI) rose to 2.6 percent last month. This was in line with expectations. Produce prices fell 1.6 percent. They fell 2.3 percent in July. Data showed that trade numbers rose higher than expected, up 7.2 percent from a year ago.

In Japan, revised GDP data for April through June showed the world’s third largest economy grew at 0.9 percent. We expected 0.6 percent. Capitol expenditure rose 1.3 percent in the same period. This is the first rise in six financial quarters.

STOCKS
The Nikkei 225 is up over two percent and above 14,160. The USD/JPY climbed above the $100 mark for a brief time as well. A weakening yen is good for Japanese equities. The Shanghai Composite has now hit a three week high. The Kospi, in South Korea, has now hit a three month high. The Australian benchmark crawled up 0.2 percent on the day.

U.S. markets had a volatile session on Friday. They were higher after the NFP report, then moved lower after Putin said he would still arm the Syrian regime. Then they moved higher again with the DJIA testing 15,000. Then they moved back lower. The DJIA traded in a wide 220 point range all day.

The DJIA lost 18 points to close at 14,922.50, and traded from a low of 148 points to a high of 15,000. For the week, the index climbed 0.76 percent. The S&P500 was virtually flat but for the week it rose 1.36 percent. The NASDAQ Composite was up 1.22 points and nearly 2 percent for the week.

CURRENCIES
The USD/JPY (99.66) the yen moved higher today as it briefly broke above the $100 handle. This comes on good economic news as well as that Japan won the bid for the 2020 Olympics. The dollar jumped 50 pimps so far and is at 99.66. We could test 100.00 today with a break above targeting 110.00. Please see chart below.

The AUD/USD (0.9195) is also moving higher on good economic data out of China. Where China goes, the Aussie goes. We could test 0.9500 next as we are looking bullish here. The EUR/USD (1.317) is gaining confidence as the dollar weakens. Right now the market is trading quietly as we see resistance at near this level. The next level resistance is at 1.3200.

COMMODITES
Gold (1388.10) moved lower to a low of 1329.4 4before recovering a bit. We are below 1,400. We have seen the precious metal move up nine percent over the last three weeks. Brent Crude Oil (110.28) as tensions in the Middle East are propping up prices. We could still test 114.95 this week.

TODAY’S OUTLOOK
Data out of China and Japan will help sentiment early on, however the growing realization that the Fed will taper back its asset purchasing program will weigh heavily on today’s markets.

As for economic data, we have a fairly quiet day. The U.S. Congress will return from recess today. On the agenda is whether or not to give President Obama permission to strike Syria. A yes vote will be bad for global markets.