Forex Today: China trade data - A beat, ECB in spotlight

An eventful Asian session today, with the Australian trade data coming out weaker-than forecasts, while the Chinese imports and exports data outperformed, lifting overall market sentiment. While JPY traders shrugged-off softer Japanese Q3 final GDP release.

Focus now remains on the upcoming ECB monetary policy decision, with a slight tweak expected in the QE program. The central bank is widely expected to announce an extension of the QE program beyond 2017.

Analysts at ANZ noted, “EUR/USD vols imply an uncertain outcome to December's ECB meeting despite a baseline view that current QE will be extended by six months. Whilst modest broad-based growth is in place and headline inflation is recovering, there is no evidence of a pickup in core inflation yet. The focus for the market will also be on any adaptations to current QE rules and, critically, any guidance or hints on when tapering may start.”

Main topics in Asia

NZ Half Year Economic and Fiscal Update 2016

In today's NZ half year economic and fiscal update of 2016, New Zealand sees 2016/17 net debt at 24.3 pct of gdp, with a budget forecast of 25.6 pct of GDP. 

Fonterra says total farmer payout this year likely to be $6.40/kgMS

According to NZ Hearld, Fonterra Cooperative Group has told shareholders at its annual meeting in Darfield today that the farmer payout this season will be $6.40 per kilogram of milk solids.

Australian Oct trade position was materially weaker than expected - Westpac

Andrew Hanlan at Westpac notes his afterthoughts following the release of Australian trade deficit figures, which disappointed widening by $0.2bn to $1.5bn. Exports came in at +1.4%, while imports at+2.3%.

China’s Nov trade data (USD terms): Exports and imports surprise positively

Following the release of China’s trade balance for November, in yuan terms, the China customs published the data in USD terms, showing that both the country exports as well imports surprised markets to the upside.

Key focus for the day ahead

EUR/USD fails once again near 1.0785 ahead of ECB

The EUR/USD pair paused its steady upward path and now consolidates near upper bound of today’s trading range, as investors eagerly await the ECB policy decision due later in the session ahead.

ECB to announce a six-month extension of its QE programme – Danske Bank

Today, all focus will be on the long-awaited ECB meeting and Research Team at Danske Bank expects the ECB to announce a six-month extension of its QE programme and maintain monthly purchases at EUR80bn.

ECB: Draghi to ever so gently open the door to tapering - TDS

Research Team at TDS, suggests that today’s ECB meeting looks to be potentially the most market moving since the March decision, as the ECB has a number of issues to address, and overall, TDS thinks it would be much easier to disappoint rather than over-deliver relative to consensus.