China GDP Statistics – Monday Alert!

China’s numbers are due on Sunday night and I feel it prudent to give everyone a very, very serious heads up as to the implications and ramifications in equities markets come Monday morning.

Look out below as the GDP numbers out of China are more than likely going to disappoint. This has “ugly” written all over it  as coupled with a likely string of “disappointing earnings reports” to follow out of the U.S – the combination could prove to be one for the books.

We’ve known this for some time now, and considering that my short-term tech went “short $SPX” on Thursday afternoon, and has also signalled “long JPY” for Monday morning – the rubber meets the road here again on Kong’s ability to forecast / see this stuff coming long before the crowd.

I am at complete odds as to why the entire planet isn’t already in complete “duck for cover” “risk off mode” but then on the other hand…… not really that surprised. Ben’s got your back right? Oh boy.

The plan is to “get ahead of this stuff” not “react to it”.

In any case….we here at Forex Kong we’ll know exactly what’s up late Sunday evening, and will continue positioning accordingly.

Check the real-time tweets etc.

Reading the Tea Leaves: Currency Implications of China’s Economic Reality Check

The JPY Safe Haven Play Everyone’s Missing

While the masses continue to sleepwalk through what’s shaping up to be a classic risk-off scenario, the Japanese Yen is sitting pretty as the ultimate beneficiary of this pending chaos. My technical indicators don’t lie – when China stumbles, capital flows don’t mess around with half measures. We’re looking at a potential violent unwind of carry trades that have been funding everything from emerging market debt to cryptocurrency speculation. The USD/JPY has been testing resistance at the 150 handle for weeks now, but once these Chinese numbers hit and reality sets in, we could see a rapid descent toward 145 or even lower. The Bank of Japan’s intervention threats suddenly look a lot less relevant when global risk appetite evaporates overnight. Smart money isn’t waiting for confirmation – they’re already rotating into Yen-denominated assets before the herd figures out what’s happening.

The Dollar’s False Dawn and What Comes Next

Here’s where it gets interesting, and where most retail traders are going to get their heads handed to them. The initial knee-jerk reaction will likely see some Dollar strength as panicked investors flee to perceived safety, but this move will be short-lived and shallow. The Fed’s recent dovish pivot has fundamentally altered the Dollar’s appeal as a safe haven, and Powell’s crew has painted themselves into a corner with their inflation rhetoric. When Chinese GDP disappoints and drags global growth expectations into the gutter, the Dollar’s gonna get sold hard against the Yen and Swiss Franc. Watch EUR/USD closely here – while the Euro’s got its own structural problems, the ECB hasn’t completely capitulated like the Fed has. We could see a grinding higher move in EUR/USD as Dollar weakness accelerates, particularly if European PMI data holds up better than expected relative to the U.S. manufacturing recession that’s been brewing.

Commodity Currencies: The Bloodbath Nobody Sees Coming

If you’re long Australian or Canadian Dollars right now, you better have your exit strategy mapped out because this Chinese data is going to obliterate commodity demand expectations. The AUD/USD has been hanging around the 0.67 level like it’s got some kind of divine support, but when China’s construction and manufacturing sectors show their true colors, iron ore and copper prices are going to crater. We’re talking about a potential move down to 0.64 or lower on AUD/USD, especially if the RBA starts getting cold feet about their hawkish stance. The Canadian Dollar’s not going to fare much better – oil demand expectations are going to get revised down hard when the reality of Chinese economic weakness hits home. USD/CAD could easily blast through 1.37 and head toward 1.40 as energy sector optimism gets crushed under the weight of reduced Asian consumption forecasts.

Positioning for the Week Ahead: Execution Over Emotion

The beauty of seeing this setup develop is having the luxury of positioning before the amateur hour crowd figures out what’s happening. My short SPX position is just the beginning – the real money is going to be made in the currency markets where leverage amplifies these macro moves. I’m eyeing short positions in AUD/JPY and CAD/JPY as the perfect storm trades – combining Yen strength with commodity currency weakness for maximum impact. The cross-currency moves are where fortunes get made during these risk-off episodes, not in the vanilla major pairs that everyone’s watching. EUR/JPY could see a significant breakdown below 160 if European data starts showing contagion effects from Chinese weakness. The key is staying nimble and not getting married to positions as volatility spikes and normal correlations break down. This isn’t the time for heroic position sizing or hoping the central banks ride to the rescue – this is about reading the macro landscape correctly and executing with precision. The next 72 hours are going to separate the professionals from the pretenders, and those Sunday night Chinese numbers are just the opening act of what could be a very educational week for overleveraged bulls.