BabyPips.com Asian Session Recap

Trading Discussion News and Economy
23

Asian Session Recap: Oil Jumps as OPEC Rejects Output Hike, JPY Higher on Risk Aversion

China, Japan, and South Korean markets might be out on holidays, but that didn’t stop the rest of market players from making assets move in the last couple of hours.

  • Chinese, Japanese, and South Korean markets out on holidays
  • OPEC: output increase is “highly unlikely” unless there are supply and demand surprises
  • China cancels trade talks with U.S. reps

Major Events/Reports:

OPEC in no hurry to boost output

In a Joint Ministerial Monitoring Committee (JMMC) in Algiers on Sunday, Saudi Oil Minister Khalid al Falih basically said “supply secured” and talked down the notion of increasing OPEC and non-OPEC production to reduce prices.

If you’re just tuning in, you should know that Donald Trump put pressure on OPEC last Thursday when he tweeted that “The OPEC monopoly must get prices down now!”

twitter

But in a presser, Al Falih said that “I do not influence prices.” Instead, he emphasized the group’s focus on supply and demand.

He shared that “The markets are adequately supplied,” adding that “[g]iven the numbers we saw today, that (an output increase in 2019) is highly unlikely unless we have surprises on the supply and demand.”

China cancels trade talks

Over the weekend the Wall Street Journal cited “people briefed on the matter” and revealed that Chinese officials have canceled their mid-level talks following the U.S.’ decision to slap tariffs on more Chinese goods.

Recall that Treasury Secretary Steven Mnuchin had issued an invitation two weeks ago asking for a fresh round of talks this month.

But just last week the Trump administration announced a 10% tariff on $200B worth of Chinese goods scheduled to take effect today. Not only that, but the dues will increase to 25% at the end of the year.

Word around the hood is that Vice Commerce Minister Wang Shouwen was set to lead the talks before Vice Premier Liu makes a follow-up trip to Washington. WSJ’s sources say that both the September 27 and 28 trips have now been called off.

Meanwhile, a White House official confirmed that “there are no meetings on the books right now,” though the POTUS “wants us to continue to engage to try to achieve a positive way forward.”

Mixed commodity prices

Commodity prices were mixed, with gold taking a step back on a bit of dollar strength while OPEC members rebuffing talks of supply increases boosted crude oil benchmarks:

  • Gold is down by 0.26% to $1,196.60 per troy ounce
  • Brent crude oil is up by 1.51% to $79.86 per barrel
  • U.S. WTI is up by 1.29% to $71.60 per barrel

Major Market Mover(s):

AUD

News of China canceling its scheduled trade-related negotiations with U.S. dragged the Aussie lower against its major counterparts.

AUD/USD is down by 18 pips (-0.24%) to .7268; AUD/JPY is down by 17 pips (-0.21%) to 81.83; EUR/AUD is up by 37 pips (+0.23%) to 1.6153; GBP/AUD is up by 48 pips (+0.27%) to 1.7991, and AUD/CAD is down by 11 pips (-0.12%) to .9396.

GBP

There were no direct catalysts for the pound’s strength, though some traders could have taken profits after last Friday’s bloodbath.

GBP/JPY is up by 9 pips (+0.06%) to 147.24; GBP/CHF is up by 15 pips (+0.12%) to 1.2547; GBP/NZD is up by 29 pips (+0.15%) to 1.9601, and GBP/CAD is up by 18 pips (+0.11%) to 1.6905.

Watch Out For:

  • 8:00 am GMT: German IfO business climate (103.2 expected, 103.8 previous)
  • 8:30 am GMT: BOE’s Financial Policy Committee (FPC) statement
  • 10:00 am GMT: U.K.’s CBI industrial order expectations (5 expected, 7 previous)

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24

Asian Session Recap: Franc Lower, Dollar Higher Ahead of FOMC Statement

Not a lot of fresh catalysts rocked the market boats, but the return of Asia-based traders as well as themes from the previous session livened up volatility in the last couple of hours.

  • Japan’s services producer price index up by 1.3% in August vs. 1.1% expected and previous

  • Trump and Moon Jae-in sign renegotiated free trade agreement

Major Events/Reports:

BOJ’s meeting minutes

It seems like more and more Bank of Japan (BOJ) members are now calling for a more sustainable way to stimulate consumer prices.

In their meeting minutes printed earlier, we saw that some members now believe that it’s “necessary to
pay close attention to the side effects” of monetary easing if they want to extend their plans.

Public confidence in the BOJ’s commitment to inflation is key, it seems.

A clearer forward guidance was brought on the table, while “conducting market operations and asset purchases in a more flexible manner” and allowing long-term yields to “move upward and downward to some extent” also received support.

Overall, the minutes supported the BOJ’s recent efforts in making its easy policies more sustainable. Of course, it will probably be up to Governor Kuroda to make sure that markets don’t see their latest biases as signs of tightening or tapering.

Trade-related updates

In a presser earlier today, China’s Vice Commerce Minister Wang Shouwen shared that it’s difficult to hold negotiations with the U.S. putting a “knife to China’s neck.”

The remarks followed the release of Beijing’s white paper detailing that “[n]egotiations cannot be conducted under the threat of tariffs, or at the cost of China’s right to development.”

Meanwhile, Trump has just signed a re-negotiated trade deal with South Korea that includes lifting a cap on U.S. car exports that don’t meet Korea’s safety standards and extending the period of a 25% tariff on Korean trucks.

Analysts point out that the new United States-Korea Free Trade Agreement (KORUS) terms are actually cosmetic but, hey, a win is a win, right?

Low key risk-taking in the markets

There were no new bombshells during the Asian session, but the return of Chinese, Japanese, and South Korean traders from a long weekend might have pushed the Asian bourses higher across the board:

  • Nikkei is up by 0.17% to 23,910.9

  • A SX 200 is up by 0.03% to 6,186.6

  • Shanghai index is up down by 0.76% to 2,776.332

  • Hang Seng is down by 1.62% to 27,499.4

Commodity prices were also a bit more predictable, with gold dipping some on a bit of dollar strength while crude oil prices extended their gains after OPEC shrugged off pressure to flood the market with more oil supplies.

  • Gold is down by 0.04% to $1,198.26 per troy ounce

  • Brent crude oil is up by 0.04% to $81.41 per barrel

  • U.S. WTI is up by 0.07% to $72.24 per barrel

Major Market Mover(s):

CHF

There were no direct catalysts for the franc, but a “jump” in USD/CHF’s prices ahead of the FOMC statement might have pulled franc pairs up amidst a relatively quiet trading session.

USD/CHF is up by 21 pips (+0.21%) to .9664; EUR/CHF is up by 18 pips (+0.16%) to 1.1345; GBP/CHF is up by 15 pips (+0.12%) to 1.2663; CHF/JPY is down by 14 pips (-0.12%) to 116.76, and NZD/CHF is up by 7 pips (+0.11%) to .6414.

USD

The dollar inched higher against its major counterparts ahead of tomorrow’s FOMC statement where the Governor Powell and his team are widely expected to raise their interest rates by another 25 basis points.

EUR/USD is down by 8 pips (-0.07%) to 1.1739; GBP/USD is down by 14 pips (-0.11%) to 1.3103; USD/JPY is up by 8 pips (+0.07%) to 112.85; AUD/USD is down by 11 pips (-0.14%) to .7242, and NZD/USD is down by 7 pips (-0.10%) to .6637.

Watch Out For:

  • 5:35 am GMT: BOJ Governor Kuroda to give a speech

  • 6:00 am GMT: Germany’s wholesale price index (0.2% expected, 0.0% previous)

  • 8:40 am GMT: BOE MPC member Vlieghe to give a speech in London

This post first appeared here:

25

Asian Session Recap: Strong Reports and Risk Appetite Boost NZD and AUD

The Kiwi was king of pips thanks to a positive (or at least less negative) data release from New Zealand. Meanwhile, risk appetite boosted the Aussie along with the New Zealand dollar.

  • NZ ANZ business confidence improves from -50.3 to -38.3 in September

  • BOJ’s core CPI (y/y) remains at 0.5% vs. 0.6% expected

Major Events/Reports:

New Zealand’s data releases

There were no other top-tier reports on tap, so traders had more time to digest New Zealand’s data releases.

The country’s trade data set a bearish tone at the start of the session when it printed the widest monthly trade deficit on record.

See, exports jumped by 9.9% from a year ago, in August, which is still slower than the 13.9% increase in imports.

This led to a 1.484M NZD trade deficit, higher than the 1.174M NZD gap that we saw in July.

Luckily for the bulls, traders were more interested in the ANZ business confidence report, which jumped from -50 to -38 for the month of September.

The 12-point bounce is supported by improvements in employment intentions and profit expectations. In fact, nearly all activity indicators rebounded for the month (investment intentions slipped).

Since business sentiment is a closely-watched indicator for New Zealand’s economic activity, today’s release provided some relief for the Kiwi bulls.

Overall risk appetite

The lack of market-changing catalysts encouraged Asian session bulls to extend the risk-friendly environment from the previous trading sessions.

Of course, it also didn’t hurt that the Fed is widely expected to share its hawkishness later today. Meanwhile, concerns over the U.S.-China trade war were offset by confidence in the Chinese government’s stimulus.

  • Nikkei is up by 0.20% to 23,988.0A SX 200 is down by 0.03% to 6,189.6

  • Shanghai index is up by 1.27% to 2,816.431

  • Hang Seng is up by 1.64% to 27,950.7

Commodity prices also joined the bullish bandwagon, with crude oil getting extra lift from the U.S. session’s rallies.

  • Gold is up by 0.03% to $1,201.67 per troy ounce

  • Brent crude oil is up by 0.39% to $81.79 per barrel

  • U.S. WTI is up by 0.11% to $72.13 per barrel

Major Market Mover(s):

NZD

The New Zealand dollar started the session on weak footing, but a better-than-expected business confidence report turned and an improvement in risk sentiment turned things around for the comdoll.

NZD/USD is up by 26 pips (+0.39%) to .6674; NZD/JPY is up by 29 pips (+0.38%) to 75.38; GBP/NZD is down by 78 pips (-0.40%) to 1.9746; EUR/NZD is down by 67 pips (-0.38%) to 1.7632, and AUD/NZD is down by 8 pips (-0.08%) to 1.0895.

AUD

Australia didn’t print economic data today, but overall risk appetite in the markets boosted the comdoll against its major counterparts.

AUD/USD is up by 21 pips (+0.30%) to .7271; AUD/JPY is up by 23 pips (+0.27%) to 82.12; EUR/AUD is down by 46 pips (-0.28%) to 1.6183; GBP/AUD is down by 53 pips (-0.29%) to 1.8125, and AUD/CHF is up by 18 pips (+0.25%) to .7013.

Watch Out For:

  • 8:00 am GMT: Credit Suisse economic expectations

  • 8:30 am GMT: U.K.’s gross mortgage approvals (39.7K expected, 39.6K previous)

  • 10:00 am GMT: U.K.’s CBI realized sales (18 expected, 29 previous)

This post first appeared here:

26

Asian Session Recap: CAD Slips on NAFTA Concerns, EUR Ahead of Italy’s Budget Event

There were no fresh catalysts on the docket, so Asian session traders mostly took cues from the previous trading sessions and priced in their bets ahead of today’s events.

  • RBNZ keeps rates at 1.75%, policies steady as expected

  • China’s industrial profits slip to five-month low in August

  • NZ farmer confidence falls for the first time since early 2016

Major Events/Reports:

NZ farmer confidence at negative levels

A report printed earlier saw New Zealand’s net farmer confidence falling to -3% in Q3 2018, down from +2% in Q2.

Turns out, dairy farmers led the pessimism amidst the slide in dairy prices since the last quarterly survey.

Rabobank New Zealand General Manager for Country Banking Hayley Gourley revealed that most of the concerns stem from uncertainty over the dairy market outlook as well as the government’s recent policy changes.

It’s not all gloom and doom, however, as the report also showed sheep and beef farmers remaining in “positive territory” for the period.

China’s industrial profits slip to five-month low

Profits of China’s major industrial companies rose by 9.2% from a year earlier in August, which is slower than the 16.2% uptick we saw in July.

In fact, today’s release marked the fourth monthly deceleration AND the slowest growth seen in five months!

The National Bureau of Statistics (NBS) cited weaker demand for raw materials and industrial products as business expansions slowed amidst the government’s deleveraging efforts.

It also didn’t help that the weaker revenue was met with higher factory prices.

Overall, today’s numbers don’t fare well for China’s prospects in case it escalates its trade war with the U.S.

Mixed risk sentiment

The Asian bourses followed the lead of their U.S. counterparts, pricing in even tighter policies from the Fed.

ICYMI, the U.S. central bank raised its interest rates by another 25 basis points as many had expected. And though it no longer believes that its policies are “accommodative,” Governor Powell and his team are still committed to gradually hiking their rates higher in the foreseeable future.

Higher rates in the U.S. means that dollar-denominated assets (like Treasuries) are now more attractive than they were yesterday. This is probably why Asian equities saw dips across the board:

  • Nikkei is down by 0.51% to 23,910.1

  • A SX 200 is up by 0.29% to 6,184.6

  • Shanghai index is down by 0.39% to 2,795.792

  • Hang Seng is down by 0.45% to 27,693.0

Commodity prices fared a bit better, with gold finding support from a bit of bargain-hunting while crude oil benchmarks extended their intraweek uptrends as traders priced in Iran’s sanctions scheduled on November.

  • Gold is up by 0.31% to $1,197.91 per troy ounce

  • Brent crude oil is up by 0.39% to $82.06 per barrel

  • U.S. WTI is up by 0.47% to $72.35 per barrel

Major Market Mover(s):

CAD

The Loonie continued to take more hits as an unnamed Trump admin official shared that the U.S. will go ahead and publish its agreement with Mexico on Friday.

If you recall, Canada’s ambassador to Washington recently revealed that, on a scale of 1 to 10, chances of an agreement by the September 30 deadline is a 5. Will Canada be really left out of the NAFTA deal?

USD/CAD is up by 20 pips (+0.15%) to 1.3037; CAD/JPY is down by 11 pips (-0.12%) to 86.47; EUR/CAD is up by 39 pips (+0.26%) to 1.5318; GBP/CAD is up by 10 pips (+0.06%) to 1.7148; AUD/CAD is up by 17 pips (+0.18%) to .9462; and CAD/CHF is down by 12 pips (-0.16%) to .7408.

EUR

There were no direct catalysts for the euro, but the common currency might have gotten some support as some bears take profits ahead of the Italian government revealing its budget targets.

Read: Why All The Buzz About Italy’s 2019 Budget?

EUR/USD is up by 14 pips (+0.12%) to 1.1751; EUR/JPY is up by 13 pips (+0.09%) to 132.46; EUR/GBP is up by 17 pips (+0.19%) to .8933; EUR/AUD is up by 17 pips (+0.10%) to 1.6189, and EUR/NZD is up by 25 pips (+0.14%) to 1.7661.

Watch Out For:

  • 6:00 am GMT: Germany’s GfK consumer climate (10.6 expected, 10.5 previous)

  • 8:00 am GMT: ECB’s economic bulletin

  • 8:00 am GMT: Euro Zone’s private loans (y/y) (3.1% expected, 3.0% previous)

This post first appeared here:

27

Asian Session Recap: Comdolls Higher, JPY Lower on Improved Risk Sentiment

Risk appetite was the name of the game, as Asian session traders caught up to their U.S. counterparts and priced in more rate hikes from the U.S.

  • U.K. GfK consumer confidence slips from -7 to -9 in September
  • Tokyo’s core CPI (y/y) up from 0.9% to 1.0% in September
  • Japan’s unemployment rate dips from 2.5% to 2.4% in August
  • Japan’s unemployment rate dips from 2.5% to 2.4% in August
  • Japan’s retail sales (y/y) higher at 2.7% vs. 2.2% expected, 1.5% previous
  • Japan’s housing starts (y/y) up by 1.6% vs. 0.4% expected, -0.7% previous
  • AU private sector credit grows by 0.5% vs. 0.4% expected and previous

Major Events/Reports:

Japan’s data dump

Retail activity in the world’s third-largest economy accelerated by 2.7% from a year earlier in August, which marks the fastest expansion in eight months.

Industrial production also grew, as it rose by another 0.7% after a 0.2% dip last month. Meanwhile, the unemployment rate edged lower from 2.5% to 2.4% while maintaining a jobs-to-applicant ratio of 1.63.

Last but not the least is the BOJ printing its Summary of Opinions, which further highlighted the members’ concerns over keeping its monetary easing more sustainable.

The reports barely made dents on the yen’s price action, however, as traders focused on the overall risk sentiment in the markets.

Overall risk appetite

Japan might have printed a bunch of reports earlier today, but it was themes from the previous session that ruled price action during the session.

Specifically, traders are feeling optimistic that the Fed is still on a tightening track. Not only that, but Governor Powell also recently shared his (lack of) worry that the U.S. will see a recession “in the next year or two.”

The dollar’s strength and M&A moves boosted Nikkei to its 27-year high, while China’s markets also shot higher ahead of a week-long holiday.

  • Nikkei is up by 1.21% to 24,085.3

  • A SX 200 is down by 0.10% to 6,195.5

  • Shanghai index is up by 0.93% to 2,817.727

  • Hang Seng is up by 0.62% to 27,886.8

Commodity prices were also bullish, with gold seeing some bargain-hunting after being dragged lower by dollar strength. Meanwhile, oil prices continued to receive support from Iran’s looming sanctions.

  • Gold is up by 0.12% to $1,184.50

  • Brent crude oil is up by 0.17% to $81.42

  • U.S. WTI is up by 0.08% to $72.23

Major Market Mover(s):

JPY

Yen traders shrugged off a stronger local equities market and M&A news and dumped the safe-haven anyway in favor of its higher-yielding counterparts.

USD/JPY is up by 14 pips (+0.12%) to 113.50; EUR/JPY is up by 20 pips (+0.15%) to 132.17; GBP/JPY is up by 23 pips (+0.15%) to 148.49; CAD/JPY is up by 20 pips (+0.23%) to 97.13; NZD/JPY is up by 8 pips (+0.11%) to 75.01, and CHF/JPY is up by 22 pips (+0.19%) to 116.23.

AUD

The high-yielding Aussie soaked up most of the risk-friendly vibes and was pushed higher across the board.

AUD/USD is up by 8 pips (+0.11%) to .7214; AUD/JPY is up by 17 pips (+0.21%) to 81.87; AUD/NZD is up by 22 pips (+0.20%), and GBP/AUD is down by 8 pips (+0.04%) to 1.8136.

CAD

The Loonie continued to gain support from the Canadian officials’ optimism that a NAFTA deal can still be reached. Of course, it also didn’t hurt that improved risk sentiment pushed oil and comdoll prices higher.

USD/CAD is down by 16 pips (-0.12%) to 1.3026; EUR/CAD is down by 11 pips (-0.07%) to 1.5169, and GBP/CAD is down by 12 pips (-0.07%) to 1.7041.

Watch Out For:

  • 6:45 am GMT: France’s consumer spending (0.3% expected, 0.1% previous)

  • 6:45 am GMT: France’s preliminary CPI (-0.1% expected, 0.5% previous)

  • 7:00 am GMT: Switzerland’s KOF economic barometer (100.1 expected, 100.3 previous)

  • 7:55 am GMT: Germany’s unemployment change (-9K expected, -8K previous)

  • 8:00 am GMT: Spain’s flash CPI (y/y) to remain at 2.2%?

  • 8:30 am GMT: U.K.’s current account (-19.4B GBP expected, -17.7B GBP previous)

  • 8:30 am GMT: No changes expected from U.K.’s GDP reading of 0.4%

  • 8:30 am GMT: U.K.’s revised business investment (q/q) (0.5% expected and previous)

  • 9:00 am GMT: Euro Zone CPI flash estimate (y/y) (1.1% expected, 1.0% previous)

  • 9:00 am GMT: Italy’s preliminary CPI (-0.2% expected, 0.4% previous)

This post first appeared here:

28

Asian Session Recap: CAD Jumps on NAFTA Deal, JPY Lower on Risk Appetite

Weak reports got nothing on global trade optimism! Thanks to a last-minute NAFTA deal, the bulls are starting the trading month on a strong note.

  • China’s markets out on a holiday
  • Most Australian banks out on Labor Day holiday
  • China’s manufacturing PMI slips from 51.3 to 50.8 in September
  • China’s non-manufacturing PMI up from 54.2 to 54.9 in September
  • Caixin manufacturing PMI dips from 50.6 to 50.0 in September
  • Japan’s Tankan manufacturing index lower from 21 to 19 in Q3 2018
  • Japan’s Tankan non-manufacturing index dips from 24 to 22 in Q3
  • Japan’s final manufacturing PMI decreases from 52.9 to 52.5 in September
  • AU AIG manufacturing index jumps from 56.7 to 59.0 in September
  • AU MI inflation gauge up by 0.3% vs. 0.1% gain in September

Major Events/Reports:

NAFTA deal reached?

Reuters cites “sources with direct knowledge of the talks” in confirming that the U.S. and Canada have reached a deal over the weekend.

Word around is that the “framework deal” involves the U.S. getting more access to Canada’s dairy markets while Canada caps its auto exports to the U.S.

In return, Canada gets to keep a provision preserving its cultural industries and that the U.S. would lift its steel and aluminum tariffs.

We have yet to see the details but, for now, traders are happy with the two sides meeting the U.S.’ Sunday deadline and avoiding a trickier confrontation between the trading partners.

Weak manufacturing reports

Manufacturing data from all over Asia highlighted the region’s sensitivity to the U.S.-China trade war.

Official reports printed from China showed the manufacturing sector cooling down in September to its slowest reading since February. A closer look tells us that the exports subindex fell to its lowest since 2016.

The non-manufacturing sector did a bit better, clocking in at 54.9 when analysts had only seen in at 54.0. However, Caixin’s reading came in at 50.0, the lowest since May 2017, as exports declined at a faster rate and business confidence slid to a nine-month low. Yipes!

Meanwhile, a quarterly survey among Japan’s largest manufacturers worsened for a third straight quarter on trade war concerns. Large non-manufacturers were also less optimistic, thanks in part to a string of natural disasters that hit the country in early September.

Overall risk appetite

The Australian and Chinese markets are out on holidays, but that didn’t stop market players from starting a brand new trading month on a strong note.

Nikkei, in particular, rose to its highest levels since 1991 on a weak yen and an improvement in risk sentient. Meanwhile, Hang Seng is also up as U.S. and Canada established a framework deal over the weekend.

  • Nikkei is up by 0.54% to 24,251.2
  • Hang Seng is up by 0.26% to 27.788.5

Commodity prices were also in the bull party, with gold taking advantage of a bit of dollar weakness and crude oil benchmarks still being supported by Iran’s sanctions scheduled next month.

  • Gold is down by 0.14% to $1,188.72 per troy ounce
  • Brent crude oil is up by 0.35% to $83.14 per barrel
  • U.S. WTI is up by 0.04% to $73.52 per barrel

Major Market Mover(s):

CAD

Not surprisingly, talks of a deal between Canada and the U.S. propelled the Loonie higher across the board.

USD/CAD is down by 74 pips (-0.57%) to 1.2834; CAD/JPY is up by 71 pips (+0.81%) to 88.76; GBP/CAD is down by 96 pips (-0.57%) to 1.6723; NZD/CAD is down by 49 pips (-0.57%) to .8490; CAD/CHF is up by 44 pips (+0.58%) to .7648, and EUR/CAD is down by 96 pips (-0.64%) to 1.4881.

JPY

The low-yielding yen took hits against its major counterparts as start-of-month positioning and traders’ optimism over a NAFTA deal drove investors to buy higher-yielding assets.

USD/JPY is up by 24 pips (+0.21%) to 113.92; EUR/JPY is up by 20 pips (+0.15%) to 132.09; GBP/JPY is up by 33 pips (+0.22%) to 148.44; AUD/JPY is up by 13 pips (+0.16%) to 82.23; NZD/JPY is up by 16 pips (+0.21%) to 75.36, and CHF/JPY is up by 29 pips (+0.25%) to 116.05.

Watch Out For:

  • 6:00 am GMT: Germany’s retail sales (0.4% expected, -0.4% previous)
  • 7:15 am GMT: Switzerland’s retail sales (y/y) (0.4% expected, -0.3% previous)
  • 7:15 am GMT: Spain’s manufacturing PMI (52.7 expected, 53.0 previous)
  • 7:30 am GMT: Switzerland’s manufacturing PMI (62.6 expected, 64.8 previous)
  • 7:45 am GMT: Italy’s manufacturing PMI (50.3 expected, 50.1 previous)
  • 7:50 am GMT: France’s final manufacturing PMI to remain at 52.5?
  • 7:55 am GMT: Germany’s final manufacturing PMI expected to maintain 53.7 reading
  • 8:00 am GMT: Euro Zone final manufacturing PMI to retail 53.3 reading?
  • 8:00 am GMT: Italy’s monthly unemployment rate (10.5% expected, 10.4% previous)
  • 8:30 am GMT: U.K.’s manufacturing PMI (52.6 expected, 52.8 previous)
  • 8:30 am GMT: U.K. net individual lending (4.8B GBP expected, 4.0B GBP previous)
  • 8:30 am GMT: U.K. mortgage approvals (65K expected and previous)
  • 9:00 am GMT: Euro Zone’s unemployment rate (8.1% expected, 8.2% previous)

This post first appeared here:

29

Asian Session Recap: AUD and CAD Extend Gains, NZD Slips on Weak Data

We’re starting to see mixed price action! Does this mean that the post-USMCA deal afterglow starting to fade?

  • China’s still markets out on a holiday
  • NZIER business confidence dips from -20 to -30 in Q3 2018
  • RBA keeps rates at 1.50% as expected in October
  • Japan’s consumer confidence improves from 43.3 to 43.4 in September

Major Events/Reports:

RBA keeps maintains rates at 1.50%

As widely expected, the Reserve Bank of Australia (RBA) maintained its interest rates at a record low of 1.50% for another month in October. That’s the 26th month in a row, yo!

As in their previous statement, RBA members still believe that growth rate will be above 3.0% in 2018 and 2019. However, unemployment and inflation levels have yet to hit the central bank’s comfort levels as they’re still expected to improve “gradually.”

Meanwhile, RBA has noted the Aussie’s depreciation against major currencies but maintains that it’s “within the range that it has been” in more than two years. Last but not the least, household consumption remains a source of uncertainty for the members.

Overall, no surprises from the RBA. The lack of game-changing statements might have helped support the Aussie during the trading session.

Mixed risk sentiment

After partying over the newly-minted USMCA deal, some investors are getting back on their desks and pricing in the results of the U.S.’ trade conflicts with its partners.

Analysts cite recent manufacturing reports from China and the euro zone, which are starting to show weaker activity and global demand. Hang Seng, which was out on a holiday yesterday, caught up to the uncertainty today.

  • Nikkei is up by 0.27% to 24,311.7
  • A SX 200 is down by 0.83% to 6,119.5
  • Hang Seng is down by 1.64% to 27,333.7

Commodity prices were a bit more coordinated, with gold taking advantage of a bit of dollar weakness while crude oil continued to find support from pre-Iran sanctions jitters.

  • Gold is up by 0.21% to $1,191.40 per troy ounce
  • Brent crude oil is up by 0.07% to $85.00 per barrel
  • U.S. WTI is up by 0.05% to $75.49 per barrel

Major Market Mover(s):

AUD

The high-yielding Aussie still made pips rain as Hong Kong traders caught up to positive headlines from the weekend. Of course, it also helped that the RBA kept its policies steady for another month despite the Aussie’s recent weakness.

AUD/USD is up by 9 pips (+0.12%) to .7229; AUD/JPY is up by 12 pips (+0.15%) to 82.37; EUR/AUD is down by 19 pips (-0.12%) to 1.6006; GBP/AUD is down by 13 pips (-0.07%) to 1.8034, AUD/NZD is up by 31 pips (+0.28%) to 1.0939, and AUD/CHF is up by 12 pips (+0.17%) to .7115.

CAD

The oil-related Loonie continued to gain support from positioning ahead of the Iran sanctions scheduled to take effect in November.

USD/CAD is down by 9 pips (-0.07%) to 1.2803; CAD/JPY is up by 10 pips (+0.11%) to 88.99; GBP/CAD is down by 18 pips (-0.11%) to 1.6691; EUR/CAD is down by 20 pips (-0.13%) to 1.4814, and CAD/CHF is up by 12 pips (+0.15%) to .7687.

NZD

The Kiwi took some hits after a quarterly business survey from New Zealand printed weaker results and hinted at weaker economic activity in the next quarter.

NZD/USD is down by 9 pips (-0.13%) to .6608; GBP/NZD is up by 27 pips (+0.14%) to 1.9728; NZD/JPY us down by 7 pips (-0.09%) to 75.29, and EUR/NZD is down by 17 pips (-0.10%) to 1.7510.

Watch Out For:

  • 6:00 am GMT: U.K.’s Nationwide house price index (0.2% expected, -0.5% previous)
  • 6:30 am GMT: AU commodity prices (y/y)
  • 7:00 am GMT: Spain’s unemployment change (28.2K expected, 47.0K previous)
  • 8:30 am GMT: U.K.’s construction PMI (52.8 expected, 52.9 previous)
  • 9:00 am GMT: Euro Zone’s PPI (0.2% expected, 0.4% previous)

This post first appeared here:

30

Asian Session Recap: EUR Jumps on Budget News, Comdolls Dip on Risk Aversion

The euro was king of pips during the Asian session on speculations that the Italian government would bend its budget plans.

Meanwhile, the Aussie and Kiwi took hits as traders flocked to lower-yielding bets.

  • China’s markets out on National Day holiday
  • AU AIG services index inches up from 52.2 to 52.5 in September
  • NZ ANZ commodity prices slips by 1.8% vs. 1.1% decline in September
  • U.K. BRC shop price index (y/y) up by 0.2% vs. -1.1% previous
  • AU building approvals plunges by 9.4% vs. 1.0% expected, -4.6% previous

Major Events/Reports:

Italy to bow to EU pressure?

A few hours ago, Corriere della Sera cited a Cabinet meeting and shared that Italy’s populist, anti-establishment government might bow down to the EU’s budget restrictions after all.

The newspaper detailed that the government will stick to its 2.4% budget in 2019 but would reduce its target deficit to 2.2% and then 2.0% in the next two years.

The report was especially welcome for investors who had worried over seemingly unbending statements from key officials like Claudio Borghi, Giuseppe Conte, and Luigi Di Maio in the last couple of trading sessions.

Mixed market performance

U.S. equities may have logged another positive day yesterday, but that didn’t stop Asian session players from taking a chill pill.

Japanese automakers were hit, for example, by a sharp drop in the U.S. new car sales last month. Meanwhile, other traders took the opportunity to take profits from the bullish run in the past couple of days.

  • Nikkei is down by 0.79% to 24,077.8
  • A SX 200 is up by 0.14% to 6,139.5
  • Hang Seng is down by 0.52% to 26,985.8

Commodity prices were a little more bullish, with the safe-haven gold taking advantage of some risk aversion while crude oil prices continued to inch higher ahead of Iran’s sanctions scheduled in November.

  • Gold is up by 0.34% to $1,206.87 per troy ounce
  • Brent crude oil is up by 0.26% to $84.81 per barrel
  • U.S. WTI is up by 0.27% to $75.20 per barrel

Major Market Mover(s):

EUR

The common currency clobbered its major counterparts on speculations that the Italian government would exert more effort in meeting the EU’s budget deficit standards.

EUR/USD is up by 30 pips (+0.26%) to 1.1577; EUR/JPY is up by 37 pips (+0.28%) to 131.61; EUR/GBP is up by 15 pips (+0.17%) to .8911; EUR/CHF is up by 29 pips (+0.25%) to 1.1391, and EUR/CAD is up by 36 pips (+0.24%) to 1.4844.

AUD

A drop in Australia’s building approvals and a bit of risk aversion in the markets weighed on the high-yielding Aussie across the board.

AUD/USD is down by 14 pips (-0.19%) to .7174; AUD/JPY is down by 13 pips (-0.15%) to 81.56; AUD/CHF is down by 14 pips (-0.20%) to .7058; EUR/AUD is up by 75 pips (+0.47%) to 1.6137, and GBP/AUD is up by 58 pips (+0.32%) to 1.8109.

NZD

Much like the Aussie, the high-yielding Kiwi was weighed down by traders rushing to lower-yielding bets. It also doesn’t help that a commodity prices report printed earlier is looking bearish in the months ahead.

NZD/USD is down by 18 pips (-0.27%) to .6575; NZD/JPY is down by 18 pips (-0.24%) to 74.74; NZD/CAD is down by 25 pips (-0.30%) to .8430; GBP/NZD is up by 80 pips (+0.40%) to 1.9761, and NZD/CHF is down by 18 pips (-0.27%) to .6469.

Watch Out For:

  • Germany’s banks out on German Unity Day holiday
  • 7:15 am GMT: Spain’s services PMI (52.9 expected, 52.7 previous)
  • 7:50 am GMT: No changes expected from France’s 54.3 services PMI
  • 7:55 am GMT: Germany’s final services PMI expected to remain at 56.5
  • 8:00 am GMT: Euro Zone’s final services PMI estimated to remain unchanged at 54.7
  • 8:30 am GMT: U.K.’s services PMI (54.0 expected, 54.3 previous)
  • 9:00 am GMT: Euro Zone retail sales (0.2% expected, -0.2% previous)

This post first appeared here:

31

Asian Session Recap: Bond Yield Headlines Further Weigh on AUD and NZD

Comdoll traders shrugged off good trade data from Australia to price in higher Treasury yields from the U.S.

Meanwhile, dollar bulls took a chill pill and gave way for the yen and franc to scoop up benefit of a risk-averse trading environment.

  • China’s markets still out on holiday
  • Australia’s trade surplus widens from 1.55B AUD to 1.60B AUD in August

Major Events/Reports:

Australia’s trade numbers

Data from the Land Down Under clocked in a trade surplus of 1.60B AUD in August, which is stronger than the 1.55B surplus seen in July and the 1.40B reading that markets had expected.

It’s also the EIGTHTH straight month of surplus, yo!

A closer look tells us that exports had risen by another 1% from the previous month to its second-highest levels as sales of other rural and meat and meat preparations propped the figures higher.

Meanwhile, inbound shipments were mostly flat even as demand for consumption goods, non-industrial transport equipment, and food and beverages inched higher.

Unfortunately for Aussie bulls, the numbers weren’t impressive enough to counter the overall theme of traders flocking to assets made more attractive by higher yields.

Mixed market sentiment

Asian session equity players didn’t go the way of their U.S. counterparts as they priced in capital flying into “safe” plays like dollar-denominated assets.

In the previous session recaps, we talked about how hawkish remarks from Fed head honcho Powell and U.S. Treasury yields hitting notable highs have attracted yield-seekers away from high-yielding investments (mostly in Asia) and into dollar-denominated assets that now have slightly better yields than yesterday.

Thing is, the capital flight is forcing emerging markets to offer higher yields on THEIR own bonds, which means that they’ll have to pay more for acquiring debt than they had to yesterday.

  • Nikkei is down by 0.60% to 23,966.0
  • A SX 200 is up by 0.34% to 6,176.5
  • Hang Seng is down by 1.68% to 26,635.0

Commodity prices were a little more mixed, with gold slipping on a bit of dollar demand while crude oil benchmarks continued their uptrends ahead of Iran’s sanctions.

  • Gold is down by 0.04% to $1,196.62 per troy ounce
  • Brent crude oil is up by 0.20% to $86.17 per barrel
  • U.S. WTI I up by 0.12% to $76.28 per barrel

Major Market Mover(s):

AUD and NZD

Comdoll trades shrugged off Australia’s positive trade data in favor of selling the high-yielding Aussie and Kiwi.

AUD/USD is down by 14 pips (-0.19%) to .7087; AUD/JPY is down by 34 pips (-0.42%) to 89.99; EUR/AUD is up by 28 pips (+0.17%) to 1.6184; GBP/AUD is up by 33 pips (+0.18%) to 1.8244, and AUD/CHF is down by 19 pips (-0.27%) to .7028.

NZD/USD is down by 19 pips (-0.30%) to .6494; NZD/JPY is down by 37 pips (-0.50%) to 74.21; EUR/NZD is up by 39 pips (+0.22%) to 1.7662; GBP/NZD is up by 49 pips (+0.25%) to 1.9910, and AUD/NZD is up by 12 pips (+0.11%) to 1.0913.

JPY and CHF

The Greenback didn’t gain as sharply as the yen and the franc, which took advantage of the overall risk aversion in the markets.

USD/JPY is down by 26 pips (-0.22%) to 114.27; EUR/JPY is down by 37 pips (-0.28%) to 131.07; GBP/JPY is down by 40 pips (-0.27%) to 147.76; CAD/JPY is down by 25 pips (-0.28%) to 88.72, and CHF/JPY is down by 17 pips (-0.15%) to 115.23.

USD/CHF is down by 7 pips (-0.07%) to .9916; EUR/CHF is down by 15 pips (-0.13%) to 1.1374; GBP/CHF is down by 15 pips (-0.12%) to 1.2822; CAD/CHF is down by 9 pips (-0.12%) to .7699, and NZD/CHF is down by 22 pips (-0.34%) to .6440.

Watch Out For:

  • 8:30 am GMT: U.K.’s housing equity withdrawal (q/q) (-6.5B GBP expected, -6.7B GBP previous)

This post first appeared here:

32

Asian Session Recap: AUD Higher on PBOC’s Moves, CAD Dragged by Lower Oil

Aussie bulls got to work after the PBoC provided support for liquidity in the Chinese markets. Equities and commodity traders missed the memo, however, and focused on WHY the central bank made aggressive moves.

  • Japan’s markets out on Health-Sports Day holiday
  • PBOC cuts RRR over the weekend
  • AU ANZ job ads slip by another 0.8% vs. 0.7% decline in August
  • China’s Caixin services PMI up from 51.5 to 53.1 in September vs. 51.4 expected

Major Events/Reports:

PBOC starts the month with a bang

In case you missed it, the People’s Bank of China (PBOC) cut its reserve requirement ratio (RRR) by 100 basis points effective October 15.

This is the fourth time this year that the central bank has cut the level of cash that banks must hold as reserves and marks a step up in the government’s efforts to support liquidity amidst capital outflows due to trade war fears.

The move is expected to inject around 750B CNY ($109.2B) in cash into the banking system and release around 1.2T CNY in liquidity.

But wait, there’s more! Earlier today the central bank also set its mid-point yuan setting to 6,8957 per dollar, the lowest since May 2017 and is a hair’s breadth away from the 6.9000 psychological handle that a lot of market geeks are watching.

Overall risk aversion

Chinese traders returned to their desks today and, despite the PBOC’s RRR and yuan peg moves, they started the week in the red.

Turns out, investors are seeing the PBOC’s moves as confirmation that the government is concerned over the impact of its trade war with the U.S. on the economy.

  • A SX 200 is down by 0.70% to 6,15.8
  • Shanghai index is down by 2.95% to 2,738.044
  • Hang Seng is down by 0.85% to 26,345.9

Commodities weren’t any luckier, with gold weighed down by more dollar strength.

Meanwhile, a U.S. official hinting that the administration could consider exemptions for nations that have shown efforts to reduce Iranian oil imports have weighed on crude oil benchmarks alongside overall risk aversion.

  • Gold is down by 0.59% to $1,196.23 per troy ounce
  • Brent crude oil is down by 0.83% to $82.39 per barrel
  • U.S. WTI is down by 0.63% to $73.77 per barrel

Major Market Mover(s):

CAD

The Loonie, which has been riding on the coattails of crude oil price increases for the past few days, got dragged along with oil benchmarks taking hits today.

USD/CAD is up by 33 pips (+0.26%) to 1.2972; CAD/JPY is down by 7 pips (-0.08%) to 87.78; NZD/CAD is up by 25 pips (+0.31%) to .8354; EUR/CAD is up by 28 pips (+0.18%) to 1.4933; GBP/CAD is up by 36 pips (+0.21%) to 1.7005, and CAD/CHF is down by 20 pips (-0.26%) to .7643.

AUD

Aussie bulls cheered the PBOC’s decision to boost liquidity and support the economy by cutting its RRR and lowering its yuan reference point to its lowest since mid-2017.

AUD/USD is up by 8 pips (+0.11%) to .7057; AUD/JPY is up by 21 pips (+0.26%) to 80.36; AUD/CAD is up by 32 pips (+0.35%) to .9154; EUR/AUD is up by 24 pips (+0.15%) to 1.6313; GBP/AUD is up by 24 pips (+0.13%) to 1.8577, and AUD/NZD is up by 9 pips (+0.08%) to 1.0957.

CHF

There were no direct catalysts to drag the low-yielding franc higher, but the safe haven ended up taking hits against some of its counterparts.

EUR/CHF is down by 12 pips (-0.11%) to 1.1414; GBP/CHF is down by 10 pips (-0.08%) to 1.2997, and CHF/JPY is up by 24 pips (+0.21%) to 114.85.

JPY

What risk aversion? The low-yielding yen lost pips to its higher-yielding counterparts even as equities and commodities traders were busy painting the town (or maybe just the charts) red.

USD/JPY is up by 17 pips (+0.15%) to 113.87; NZD/JPY is up by 15 pips (+0.20%) to 73.33; GBP/JPY is up by 16 pips (+0.11%) to 149.28; EUR/JPY is up by 13 pips (+0.10%) to 131.09, and NZD/JPY is up by 15 pips (+0.20%) to 73.33.

Watch Out For:

  • 5:45 am GMT: Switzerland’s unemployment rate (2.5% expected, 2.6% previous)
  • 6:00 am GMT: Germany’s industrial production (0.4% expected, -1.3% previous)
  • 8:30 am GMT: Euro Zone Sentix investor confidence (11.4 expected, 12.0 previous)

This post first appeared here:

33

Asian Session Recap: JPY Higher, NZD Lower as Traders Price in Global Growth Concerns

No top-tier data? No problem! Traders went back to pricing in their global growth concerns while the PBOC stepped up its efforts to weaken the yuan.

  • AU NAB business confidence improves from 5 to 6 in September
  • Japan’s current account surplus narrows down from 1.48T JPY to 1.43T JPY in August
  • Japan’s Economy Watchers Sentiment at 48.6 vs. 47.3 expected, 48.7 previous
  • IMF cuts global growth forecasts for 2018 and 2019

Major Events/Reports:

IMF downgrades global growth prospects

The biggest story of the hour is the International Monetary Fund (IMF) downgrading its global growth forecasts by 0.2% to 3.7% in 2018 and 2019 in its latest World Economic Outlook. That’s the first downgrade since 2016, yo!

The downgrade was also broad-based. While the IMF maintained Uncle Sam’s GDP forecast at 2.9% this year, it also cut its 2019 estimate by 0.2% to 2.5% over “recently announced measures” and predicted that “US growth will decline as fiscal stimulus begins to unwind in 2020.”

China also saw a 0.2% downgrade to 6.2% next year thanks to the recent tariffs, while “surprises that suppressed activity in early 2018” earned the euro area and the U.K. the same 0.2% downgrade in 2019.

Overall, IMF believes that

“The balance of risks to the global growth forecast is tilted to the downside, both in the short term and beyond.”

Duhn duhn duhn.

Mixed market reaction

Thanks to a lack of fresh catalyst and the IMF’s recent report, Asian session traders went back to pricing in their global growth concerns.

Specifically, market players are worried over the high U.S. bond yields draining capital for the emerging markets; the U.S.-China trade war affecting export-dependent economies, and political skirmishes over Brexit and Italy’s budget weighing on risk sentiment.

China’s markets were spared the bloodbath, however, thanks to the People’s Bank of China (PBOC) setting its yuan mid-point rate above the psychological 6.9 mark at 6.9019 per dollar. Seems like the central bank isn’t done providing support this week!

  • Nikkei is down by 1.15% to 23,510.6
  • A SX 200 is down by 0.75% to 6,028.5
  • Shanghai index is up by 0.49% to 2,729.805
  • Hang Seng is up by 0.42% to 26,312.0

Commodity prices were a bit more optimistic, with crude oil extending its last-minute rally from the previous session while gold took advantage of a bit of dollar weakness and risk aversion in the markets.

  • Gold is up by 0.25% to $1,191.05
  • Brent crude oil is up by 0.70% to $84.34
  • U.S. WTI is up by 0.62% to $74.65

Major Market Mover(s):

AUD

The high-yielding Aussie was spared from the overall risk aversion thanks to Dalian iron ore futures hitting three-week highs after a week-long holiday in China.

For newbies out there, you should know that Australia exports A LOT of iron ore to China, so higher iron ore prices means more Aussie needed to complete transactions.

AUD/USD is up by 9 pips (+0.13%) to .7087; AUD/NZD is up by 33 pips (+0.30%) to 1.0988; AUD/CHF is up by 13 pips (+0.19%) to .7036; EUR/AUD is down by 20 pips (-0.12%) to 1.6214, and GBP/AUD is down by 19 pips (-0.10%) to 1.8473.

JPY

With the dollar taking a chill pill after days of gains, the low-yielding yen soaked up most of the risk aversion flow in the markets.

USD/JPY is down by 13 pips (-0.12%) to 113.10; GBP/JPY is down by 15 pips (-0.10%) to 148.07; EUR/JPY is down by 16 pips (-0.12%) to 129.96, and CHF/JPY is down by 17 pips (-0.15%) to 113.91.

NZD

The high-yielding Kiwi didn’t find as much support from higher iron ore prices, so the bears got busy pricing in their concerns for global (especially China’s!) growth.

NZD/USD is down by 14 pips (-0.19%) to .6449; NZD/JPY is down by 14 pips (-0.19%) to 72.93; EUR/NZD is up by 22 pips (+0.12%) to 1.7816, and GBP/NZD is up by 14 pips (+0.07%) to 2.0298.

Watch Out For:

  • 6:00 am GMT: Germany’s trade balance (15.9B EUR expected, 15.8 EUR previous)
  • 8:30 am GMT: BOE’s FPC statement

This post first appeared here:

34

Asian Session Recap: AUD and NZD Gain, USD and JPY Slip on a Bit of Risk-Taking

There were no new catalysts to rock the markets, but that didn’t stop Asian session traders from taking on some risks despite their global growth concerns.

  • AU Westpac consumer sentiment up by 1.0% vs. 3.0% decline in September
  • Japan’s core machinery orders jump by 6.8% vs. -3.9% expected, 11.0% previous
  • Japan’s preliminary machine tool orders up by another 2.8% vs. 5.1% increase in August
  • Trump: China “not ready to make a deal“

Major Events/Reports:

FOMC’s Williams: neutral levels within “the next year or so”

In a speech in Indonesia, New York Fed President John Williams repeated that the Fed is still working on achieving a neutral interest rate. He shared that

“My view is our path today is getting us back to normal interest rates or neutral interest rates relatively quickly, over the next year or so…”

He also justified the goal and pace by saying that:

“From my perspective, the most important thing we can do now is get ourselves well positioned for whatever may come…

Once we’re there, we’re better positioned for whatever may happen. If we need to raise rates more than expected we can do that in a reasonable way. If the economy slows we can adjust to that.”

The permanent voting member also warned that the Fed might not be as clear with its future policies as it has been in the past.

He said that strong forward guidance is becoming “less compelling,” and that “the future direction of policy will no longer be as clear as it was during the past few years.”

Specifically, Williams believes that, soon_, “it will no longer be clear whether interest rates need to go up or down, and explicit forward guidance about the future path of policy will no longer be appropriate.”_

Mixed market reaction

With no fresh catalyst on the docket, traders continued to price in their concerns over global growth and the escalating U.S.-China trade war.

Fortunately for equities traders, a pullback (or a mini reversal) of U.S. bond yields from the previous session, as well as demand for defensive stocks propped the Asian bourses.

  • Nikkei is up by 0.10% to 23,492.0
  • A SX 200 is up by 0.33% to 6,042.5
  • Shanghai index is down by 0.18% to 2,716.123
  • Hang Seng is up by 0.43% to 26,286.3

Commodity prices also went in several directions. Gold, for example, inched higher as a dip in U.S. bond yields dragged the dollar lower and pulled the safe-haven higher.

Meanwhile, crude oil prices started the session on a weak note on the back of global growth worries, but soon steadied as Hurricane Michael in Florida caused the shutdown of about 40% of U.S. Gulf of Mexico crude output.

  • Gold is up by 0.03% to $1,189.68
  • Brent crude oil is down by 0.08% to $84.78
  • U.S. WTI is down by 0.03% to $74.62

Major Market Mover(s):

AUD and NZD

High-yielding currencies like the Aussie and Kiwi, like some Asian equities, found support from falling U.S. bond yields, optimism over a Brexit deal, and a bit of profit-taking from the previous days’ losses.

AUD/USD is up by 17 pips (+0.23%) to .7119; AUD/JPY is up by 25 pips (+0.31%) to 80.48; AUD/CAD is up by 15 pips (+0.16%) to .9210; GBP/AUD is down by 19 pips (-0.10%) to 1.8485, and AUD/CHF is up by 8 pips (+0.11%) to .7052.

NZD/USD is up by 15 pips (+0.24%) to .6486; NZD/JPY is up by 25 pips (+0.32%) to 73.32; EUR/NZD is down by 5 pips (-0.03%) to 1.7748, and NZD/CAD is up by 14 pips (+0.17%) to .8391.

JPY and USD

Asian session traders shrugged off Japan’s strong machine orders reports in favor of pricing in a slightly more risk-friendly trading environment.

Meanwhile, the dollar continued to dip against its major counterparts on the back of falling U.S. bond yields.

USD/JPY is up by 10 pips (+0.09%) to 113.06; CHF/JPY is up by 25 pips (+0.22%) to 114.10; GBP/JPY is up by 32 pips (+0.21%) to 148.78, and EUR/JPY is up by 36 pips (+0.27%) to 130.15.

USD/CHF is down by 9 pips (-0.09%) to .9908; USD/CAD is down by 6 pips (-0.05%) to 1.2938; EUR/USD is up by 22 pips (+0.19%) to 1.1512, and GBP/USD is up by 17 pips (+0.13%) to 1.3159.

Watch Out For:

  • 6:45 am GMT: France’s industrial production (0.1% expected, 0.7% previous)
  • 8:00 am GMT: Italy’s industrial production (0.7% expected, -1.8% previous)
  • 8:30 am GMT: U.K.’s GDP release. Read our mini trading guide if you’re planning on trading the report!
  • 8:30 am GMT: U.K.’s manufacturing production (0.1% expected, -0.2% previous)
  • 8:30 am GMT: U.K.’s construction output (-0.4% expected, 0.5% previous)
  • 8:30 am GMT: U.K.’s goods trade balance (-10.9B GBP expected, -10.0B GBP previous)
  • 8:30 am GMT: U.K.’ industrial production to remain at 0.1%?
  • 9:00 am GMT: MPC member Andy Haldane to give a speech in London

This post first appeared here:

35

Asian Session Recap: Yen Crosses Recover But Risk Aversion Continues to Drag USD and CAD

Risk aversion is still the name of the game during the Asian session, as traders catch up to the previous session’s bearish moves.

  • U.K.’s RICS house price balance slips to -2% vs. 2% expected, 1% previous
  • Japan’s bank lending (y/y) up by 2.3% vs. 2.1% expected, 2.2% previous
  • Japan’s PPI (y/y) gains 3.0% vs. 2.9% expected, 3.0% previous
  • AU MI inflation expectations stay at 4.0% in September

Major Events/Reports:

China moves to discourage more capital outflow

A Reuters report cited “three executives at fund management companies” and said that China is suspending approvals for some niche overseas investment products. Not only that, it’s also urging license holders to be “low profile” in marketing said products.

For newbies out there, know that the Qualified Domestic Limited Partnership (QDLP) and Qualified Domestic Institutional Investor (QDII) schemes permit China-based local and foreign funds to raise money from domestic investors for offshore investments.

Word around is that China’s foreign exchange regulator hasn’t issued fresh quotas under the QDII, while the Shanghai Municipal Financial Service Office (FSO), which oversees QDLP, asked license holders to be “tight-lipped” about its business to the media and the public.

Not surprisingly, the news inspired concerns that the government is more worried about the yuan’s depreciation and capital outflow than we’re led to believe.

Overall risk aversion

With no fresh catalyst to price in, Asian session market players focused on catching up to the previous sessions’ bearish themes.

If you recall, the U.S. equities took heavy hits as tightening expectations for the Fed and the continued rise of U.S. bond yields sapped demand for riskier assets such as equities.

It also didn’t help that International Monetary Fund (IMF) managing director Christine Lagarde supported a gloomy report published earlier this week by warning against an escalation in global trade tensions. She advised:

“De-escalate. Fix the system. Don’t break it.”

  • Nikkei is down by 4.16% to 22,529.0
  • A SX 200 is down by 0.52% to 5,889.5
  • Shanghai index is down by 4.34% to 2,607.444
  • Hang Seng is down by 3.76% to 25,207.0

Commodity benchmarks also didn’t catch a break. Gold slipped a bit as positive U.S. reports supported more Fed rate hikes (and a stronger dollar).

Meanwhile, crude oil prices extended their declines after the American Petroleum Institute reported higher-than-expected U.S. crude stockpiles last week.

  • Gold is down by 0.10% to $1,193.07 per troy ounce
  • Brent crude oil is down by 1.48% to $81.40 per barrel
  • U.S. WTI is down by 1.06% to $71.84 per barrel

Major Market Mover(s):

USD

The Greenback continued to lose pips across the board following heavy losses in the U.S. equities. Of course, it also doesn’t help that the POTUS is upping the pressure on the Fed by calling it “crazy” for its interest rate hikes.

USD/JPY is down by 9 pips (-0.08%) to 112.19; USD/CHF is down by 40 pips (-0.40%) to .9862; EUR/USD is up by 49 pips (+0.42%) to 1.1566, and GBP/USD is up by 38 pips (+0.29%) to 1.3226.

JPY

Whether it’s due to profit-taking, a short squeeze, or flight away from Japanese equities, the low-yielding yen took a break from its weekly gains and took hits against most of its major counterparts.

AUD/JPY is up by 25 pips (+0.31%) to 79.38; CHF/JPY is up by 38 pips (+0.33%) to 113.75; GBP/JPY is up by 34 pips (+0.23%) to 148.38; NZD/JPY is up by 32 pips (+0.44%) to 72.67, and CAD/JPY is up by 9 pips (+0.10%) to 86.00.

EUR

The common currency re-activated its safe-haven status in the euro region as traders got spooked from falling equities prices.

EUR/JPY is up by 44 pips (+0.34%) to 129.76; EUR/GBP is up by 14 pips (+0.15%) to .8745; EUR/AUD is up by 24 pips (+0.15%) to 1.6345, and EUR/CAD is up by 38 pips (+0.26%) to 1.5088.

CAD

The oil-related Loonie took more hits as a bearish U.S. crude stockpiles report and word that Saudi Arabia will boost its oil shipments to India to cover for Iran’s shortfall dragged oil prices lower.

EUR/CAD is up by 38 pips (+0.26%) to 1.5088; AUD/CAD is up by 17 pips (+0.18%) to .9231; GBP/CAD is up by 19 pips (+0.11%) to 1.7253; CAD/CHF is down by 17 pips (-0.23%) to .7560, and NZD/CAD is up by 29 pips (+0.35%) to .8450.

Watch Out For:

  • 6:45 am GMT: France’s final CPI expected to maintain -0.2% reading
  • 8:30 am GMT: BOE’s credit conditions survey
  • 9:00 am GMT: BOE Gov Mark Carney to give a speech in Bali
  • 10:45 am GMT: BOE MPC member Gertjan Vlieghe to give a speech in Brussels
  • 11:30 am GMT: ECB monetary policy meeting accounts

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36

Asian Session Recap: China Prints Largest Trade Surplus with the U.S.

China’s exports were on fire in September! Will this result to an escalation of the U.S.-China trade war?

  • Business NZ manufacturing index slips from 52.0 to 51.7 in September
  • AU home loans slips by 2.1% vs. 0.9% dip expected, 0.0% previous
  • China’s trade surplus jumps to 213B CNY vs. 85B CNY expected, 180B CNY previous
  • China’s trade surplus (in dollars) widens from $27.9B to $31.7B in September
  • Japan’s tertiary industry activity up by 0.5% vs. 0.3% expected, -0.1% previous

Major Events/Reports:

China’s trade data

The biggest story of the hour is the world’s second largest economy printing its trade data for the month of September.

China’s trade surplus widened from $27.9B to $31.7B in September, which is not only better than the $19.4B that markets had expected, but also marks the largest surplus since June.

Turns out, exports jumped by a whopping 14.5% from a year earlier, the fastest growth since February, after already clocking in a 9.8% growth in August.

Meanwhile, inbound shipments rose by 14.3% against a 20% increase in August.

The most interesting bit about the report is China recording its RECORD HIGH surplus with the U.S. at $34.13B for the month. In fact, the nine-month surplus is now at $225.79B, about 15% higher than the same period last year.

The Donald hasn’t made comments about the release yet, but market geeks are on their toes (or at least on their Twitter feeds) to see if today’s report leads to an escalation of the U.S. China trade war.

However, Chinese trade figures on Friday showed China’s trade surplus with the United States hit a record high in September, providing a likely source of contention with U.S. President Donald Trump over trade policies and the currency.

Mixed market action

Market bears took a chill pill during the Asian session after making equities bleed for most of the week.

There were no fresh catalysts (aside from China’s release) to change market sentiment, so a bit of profit-taking ahead of the weekend might have factored in the cautious optimism.

  • Nikkei is down by 0.28% to 22,527.2
  • A SX 200 is up by 1.79% to 5,888.5
  • Shanghai index is down by 0.12% to 2,580.237
  • Hang Seng is up by 1.18% to 25,563.5

Commodity prices were also mixed, with gold taking some hits on some risk-taking while crude oil benchmarks recover from their steep losses from earlier this week.

  • Gold is down by 0.30% to $1,120.59 per troy ounce
  • Brent crude oil is up by 0.55% to $80.74 per barrel
  • U.S. WTI is up by 0.54% to $71.35 per barrel

Major Market Mover(s):

JPY

The low-yielding yen continued to take hits across the board, as a bit of risk-taking inspired demand for higher-yielding currencies.

USD/JPY is up by 21 pips (+0.18%) to 112.37; AUD/JPY is up by 18 pips (+23%) to 80.08; NZD/JPY is up by 15 pips (+0.20%) to 73.27; GBP/JPY is up by 32 pips (+0.22%) to 148.72, and CHF/JPY is up by 16 pips (+0.14%) to 113.51.

EUR

There were no direct catalysts to push the euro higher, but the common currency ended up extending its gains from the previous sessions.

EUR/USD is up by 11 pips (+0.10%) to 1.1604; EUR/GBP is up by 11 pips (+0.13%) to .8768; EUR/JPY is up by 37 pips (+0.28%) to 130.40; EUR/CHF is up by 18 pips (+0.15%) to 1.1487, and EUR/NZD is up by 45 pips (+0.25%) to 1.7796.

Watch Out For:

  • 6:00 am GMT: Germany’s final CPI expected to maintain 0.4% reading
  • 9:00 am GMT: Euro Zone industrial production (0.4% expected, -0.8% previous)

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37

Asian Session Recap: Pound Drops as EU, Britain “Pause” Brexit Talks

It’s only the first trading session of the week and already traders are busy pricing in a couple of market themes.

Here’s what happened so far:

  • U.K.’s Rightmove house price index up by 1.0% vs. 0.7% uptick in September
  • Japan’s industrial production revised lower from 0.7% to 0.2% in August

Major Events/Reports:

EU and Britain pause Brexit talks

A flurry of activity over the weekend raised expectations of a Brexit deal being officially endorsed in time for the EU meeting this week.

Instead, we learned that Britain and EU paused the negotiations until the summit in Brussels as “a number of unresolved issues” remained between Brexit Secretary Dominic Raab and his EU counterpart Michel Barnier.

Raab tweeted:
tweet

The delay is bad news for Britain since EU leaders are not scheduled for another official meet until December and that said leaders won’t be inclined to schedule any more meetings unless they see significant progress.

It also doesn’t help that Theresa May’s ground is getting shakier. Over the weekend the Brexit spokesman of the Democratic Unionist Party (DUP), May’s parliamentary ally, threatened that DUP’s 10 parliament members would vote against the U.K. budget and possibly even a vote of no-confidence if May breaks her pinky promises during Brexit talks.

For newbies out there, you should know that DUP is against any checks between the Northern Ireland and mainland Britain after Brexit. At the same time, it also doesn’t want additional customs red tape with Ireland, an EU member. Talk about tricky situations!

U.S. to include currencies in trade deals?
Over the weekend, U.S. Treasury Secretary Steven Mnuchin shared that Washington views the currency chapter in the U.S.-Mexico-Canada Agreement (USMCA) as a model for future trade deals to deter its partners from currency manipulation.

Mnuchin said that

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tweet2761×107 4.65 KB

If the U.S. does include currency-related policies in its trade deals, then countries like Japan and China could have more trouble closing deals with the U.S. than markets originally predicted.

Overall risk aversion

A strong trade report from China might have deterred some market bears last Friday, but they’re coming back today as traders continue to price in the impact of the U.S.-China trade war; rising U.S. bond yields, and a bit of uncertainty ahead of the earnings season.

  • Nikkei is down by 1.47% to 22,360.4
  • A SX 200 is down by 0.20% to 5,818.4
  • Shanghai index is down by 0.79% to 2,568.258
  • Hang Seng is down by 1.01% to 25,541.7

Commodity prices had more luck, with gold taking advantage of the risk aversion and oil prices rising on the back of Saudi Arabia possibly using its oil production to help boost oil prices.

  • Gold is up by 0.44% to $1,221.90 per troy ounce
  • Brent crude oil is up by 1.12% to $81.41 per barrel
  • U.S. WTI is up by 0.85% to $72.10 per barrel

Major Market Mover(s):

GBP

The pause in negotiations, amidst expectations of a proposal being officially endorsed ahead of the EU meeting, didn’t do the pound any favors.

GBP/USD is down by 40 pips (-0.31%) to 1.3106; GBP/JPY is down by 59 pips (-0.40%) to 146.89; GBP/AUD is down by 42 pips (-0.22%) to 1.8444; GBP/CAD is down by 53 pips (-0.31%) to 1.7071; GBP/CHF is down by 57 pips (-0.44%) to 1.2986, and EUR/GBP is up by 24 pips (+0.28%) to .8810.

JPY and CHF

Risk aversion in the markets pushed low-yielding currencies like the yen and franc higher across the board. The yen even received an extra boost from Washington possibly officially labeling Japan as a currency manipulator.

USD/JPY is down by 13 pips (-0.11%) to 112.08; EUR/JPY is down by 28 pips (-0.21%) to 129.41; AUD/JPY is down by 16 pips (-0.20%) to 79.64, and NZD/JPY is down by 15 pips (-0.20%) to 72.87.

USD/CHF is down by 8 pips (-0.08%) to .9908; EUR/CHF is down by 20 pips (-0.21%) to 129.41; NZD/CHF is down by 11 pips (-0.16%) to .6442, and AUD/CHF is down by 11 pips (-0.16%) to .7040.

Watch Out For:

  • 7:15 am GMT: Switzerland’s PPI (0.1% expected, 0.0% previous)

This post first appeared here:

38

Asian Session Recap: NZ CPI Boosts NZD, Risk-Taking Drags JPY and CHF Lower

A surprisingly strong CPI report boosted the Kiwi across the board. Meanwhile, potential easing tensions between the U.S. and Saudi Arabia and a bit of risk-taking dragged safe havens lower.

  • NZ CPI jumps by 0.9% vs. 0.7% expected, 0.4% growth in Q2 2018
  • China’s CPI (y/y) higher at 2.5% as expected vs. 2.3% uptick in August
  • China’s PPI (y/y) lower from 4.1% to 3.6% in September
  • Meeting minutes: RBA concerned over impact of prolonged low income growth and declining house prices

Major Events/Reports:

New Zealand’s strong inflation report

Consumer prices in New Zealand rose by 0.9% in Q3 2018, which is stronger than Q2’s 0.4% increase and the expected 0.7% uptick. This translates to an annualized increase of 1.9% following the previous quarter’s 1.5% price growth.

Turns out, rising oil prices mostly pushed prices higher. Petrol prices jumped by a whopping 19%, which helped nudge transport prices 5.6% higher in Q3 (against +2.0% in Q2).

Housing and household utilities prices also saw increases, while alcoholic beverages and tobacco extended their surge from the previous quarter.

Higher prices could help move the RBNZ from its neutral stance to a more hawkish one, so the upside surprise in today’s numbers helped push the Kiwi higher.

China’s data releases

A report from the world’s second-largest economy saw consumer prices rising by another 2.5% from a year ago in September, which is higher than August’s 2.3% increase and is right around analysts’ expectations.

For reference, the government is targeting the 3.0% mark for 2018.

What caught more attention, however, is China’s factory gate prices cooling down for a third month in a row.

China’s PPI rose by 3.6% from a year earlier in September, which is weaker than August’s 4.1% increase and the 3.7% growth that analysts had expected.

This month’s figure marked the lowest reading since April, as factors like extraction, raw materials, and processing grew at slower rates. Investors feared that these point to cooling domestic demand, which isn’t cool amidst the U.S.-China trade war.

Cautious trading = mixed price action

Whether it’s profit-taking from the previous days’ losses, or optimism that that tensions between the U.S. and Saudi Arabia would ease, Asian bourses were a bit more optimistic than their U.S. counterparts.

It’s still not all rainbows and unicorns, however, as a weak Chinese factory gate prices report underscored the negative impact of the ongoing U.S.-China trade war.

  • Nikkei is up by 0.32% to 22,341.6
  • A SX 200 is up by 0.58% to 5,855.4
  • Shanghai index is down by 0.15% to 2,564.245
  • Hang Seng is down by 0.19% to 25,396.2

Commodity prices were also mixed, with gold taking a backseat to a bit of dollar strength and risk-taking, while crude oil benchmarks continued to price in Iran’s looming sanctions and tensions between the U.S. and Saudi Arabia.

  • Gold is down by 0.05% to $1,226.17 per troy ounce
  • Brent crude oil is up by 0.32% to $81.00 per barrel
  • U.S. WTI is up by 0.20% to $71.84 per barrel

Major Market Mover(s):

NZD

A surprisingly strong inflation report pointed to a higher chance that the RBNZ would soon adopt a hawkish bias, so the Kiwi bulls cheered the release.

NZD/USD is up by 17 pips (+0.26%) to .6568; NZD/JPY is up by 34 pips (+0.47%) to 73.56; AUD/NZD is down by 32 pips (-0.29%) to 1.0852; GBP/NZD is down by 56 pips (-0.28%) to 2.011; NZD/CHF is up by 30 pips (+0.47%) to .6493, and EUR/NZD is down by 54 pips (-0.31%) to 1.7620.

JPY and CHF

Whether it was profit-taking or cautious optimism ahead of this week’s top-tier events, the low-yielding yen and franc both took hits against their major counterparts.

USD/JPY is up by 23 pips (+0.20%) to 111.99; GBP/JPY is up by 22 pips (+0.15%) to 147.21; EUR/JPY is up by 22 pips (+0.17%) to 129.62; AUD/JPY is up by 13 pips (+0.16%) to 79.83, and CAD/JPY is up by 15 pips (+0.17%) to 86.19.

USD/CHF is up by 22 pips (+0.23%) to .9886; EUR/CHF is up by 15 pips (+0.13%) to 1.1442; GBP/CHF is up by 13 pips (+0.10%) to 1.2995; CAD/CHF is up by 13 pips (+0.17%) to .7608, and AUD/CHF is up by 10 pips (+0.13%) to .7047.

Watch Out For:

  • 8:30 am GMT: U.K.’s labor market numbers. Read our mini trading guide to see what analysts are expecting!
  • 9:00 am GMT: Euro Zone’s trade balance (15.0B EUR expected, 12.8B EUR previous)
  • 9:00 am GMT: Euro Zone ZEW economic sentiment (-12.3 expected, -10.6 previous)
  • 10:00 am GMT: Italy’s trade balance (4.34B EUR expected, 5.68B EUR previous)

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39

Asian Session Recap: NZD and USD Gain on More Risk-Taking, CAD and Oil Slip

With no fresh catalyst to price in, Asian session market players were happy to take their cues from all the risk-taking in the previous trading session.

  • Australia’s MI leading index slips by 0.1% vs. 0.0% reading in September

Major Events/Reports:

Risk-taking in the markets

Asian session market players took cues from their U.S. counterparts and priced in positive U.S. data, strong earnings reports, and a bit of risk-taking after days of seeing losses.

Chinese bourses were relatively more subdued, however, thanks to lingering trade war fears.

  • Nikkei is up by 1.33% to 22,849.1
  • A SX 200 is up by 0.56% to 5,924.4
  • Shanghai index is up by 0.10% to 2,548.883
  • Hang Seng is up by 0.07% to 25,463.3

Commodity prices missed the risk appetite train, with the safe-haven gold taking hits from a risk-friendly trading environment and a bit of dollar strength.

Meanwhile, crude oil benchmarks took breathers from their gains after a U.S. crude inventory report reflected a bigger-than-expected drawback in supplies.

  • Gold is down by 0.22% to $1,221.80 per troy ounce
  • Brent crude oil is down by 0.17% to $81.41 per barrel
  • U.S. WTI is down by 0.24% to $71.98 per barrel

Major Market Mover(s):

NZD

New Zealand didn’t print any major report, so the Kiwi’s gains likely had more to do with the overall risk-taking in the markets than any specific economic release.

NZD/JPY is up by 12 pips (+0.17%) to 73.97; NZD/CAD is up by 17 pips (+0.20%) to .8530; NZD/CHF is up by 10 pips (+0.15%) to .6528; GBP/NZD is down by 9 pips (-0.07%) to 2.0009; EUR/NZD is down by 16 pips (-0.09%) to 1.7558, and AUD/NZD is down by 6 pips (-0.05%) to 1.0836.

CAD

The oil-related Loonie went down with the crude oil benchmarks and failed to gain against its major counterparts.

USD/CAD is up by 23 pips (+0.18%) to 1.2956; CAD/JPY is down by 7 pips (-0.08%) to .7652; EUR/CAD is up by 11 pips (+0.07%) to 1.4978, and GBP/CAD is up by 22 pips (+0.13%) to 1.7069.

USD

More demand for U.S. equities means more demand for the dollar, which is why the Greenback continued to inch higher across the board.

USD/JPY is up by 10 pips (+0.09%) to 112.35; EUR/USD is down by 12 pips (-0.11%) to 1.1561; GBP/USD is down by 10 pips (-0.07%) to 1.3174, and USD/CHF is up by 8 pips (+0.08%) to .9914.

Watch Out For:

  • EU Summit starts today. What can you expect from the event?
  • 8:30 am GMT: U.K.’s CPI report. Read our mini event preview if you’re planning on trading the release!
  • 8:30 am GMT: U.K.’s PPI input (0.9% expected, 0.5% previous)
  • 8:30 am GMT: U.K.’s PPI output to remain at 0.2%?
  • 8:30 am GMT: BOE’s FPC meeting minutes
  • 8:30 am GMT: U.K.’s house price index (y/y) (2.9% expected, 3.1% previous)
  • 9:00 am GMT: Euro Zone final headline and core CPI (y/y)

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40

Asian Session Recap: Jobs Data Boosts AUD, GBP Lower Ahead of Retail Report

A pretty busy session for the forex bulls and bears, as they priced in several data releases and a not-so-fruitful EU Summit.

  • Japan’s trade deficit widens from 0.19T JPY to 0.24T JPY in September
  • Australia adds net 5,600 jobs in September vs. 15,200 expected, 44,600 in August
  • Australia’s unemployment rate down from 5.3% to 5.0% in September
  • Australia NAB quarterly business confidence dips from 7 to 3 in Q3 2018

Major Events/Reports:

Australia’s jobs report

Data from the Land Down Under showed the economy adding a net of 5,600 jobs in September. For reference, analysts had expected a net addition of 15,200 after seeing a 44,600 surge in August.

A closer look tells us that full-time employment increased by 20,400 while part-time jobs saw a net decrease of 14,700 for the month.

For newbies out there, know that market players and the RBA prefer full-time jobs over part-time ones as they point to improved consumer confidence and spending.

Meanwhile, the jobless rate plunged from 5.3% to 5.0% That’s the lowest since April 2012, yo!

The labor force participation rate dipping from 65.7 to 65.4 was the only dark cloud in the sky, as it hinted that part of the improvement in the unemployment rate came from job-seekers giving up their search rather than all of them finding employment.

Low-key risk aversion

The Asian bourses went the way of their U.S. counterparts, as a hawkish Fed meeting minutes, global trade war concerns, lack of (significant) progress in the EU Summit, and in Nikkei’s case a weak trade report weighed on high-yielding bets.

  • Nikkei is down by 0.57% to 22,711.8
  • A SX 200 is up by 0.20% to 5,919.4
  • Shanghai index is down by 1.99% to 2,510.618
  • Hang Seng is down by 0.15% to 25,424.3

Commodity prices also reflected the overall risk-aversion theme. The safe-haven gold gained some ground, while crude oil benchmarks extended their declines from the previous session.

  • Gold is up by 0.12% to $1,223.61 per troy ounce
  • Brent crude oil is down by 0.22% to $80.10 per barrel
  • U.S. WTI is down by 0.34% to $69.78 per barrel

Major Market Mover(s):

AUD

Australia’s jobs data falling to its six-year lows attracted a lot of bulls to the Aussie’s yard.

AUD/USD is up by 23 pips (+0.32%) to .7132; AUD/JPY is up by 18 pips (+0.22%) to 80.26; AUD/NZD is up by 34 pips (+0.31%) to 1.0886; AUD/CHF is up by 19 pips (+0.27%) to .7094; EUR/AUD is down by 54 pips (-0.34%) to 1.6122, and GBP/AUD is down by 79 pips (-0.43%) to 1.8367.

CAD

There were no direct catalysts for the Loonie’s decline, but its positive correlation with oil prices might have dragged the comdoll lower today.

USD/CAD is up by 19 pips (+0.15%) to 1.3038; CAD/JPY is down by 18 pips (-0.21%) to 86.32; AUD/CAD is up by 42 pips (+0.45%) to .9298; EUR/CAD is up by 17 pips (+0.11%) to 1.4990, and CAD/CHF is down by 12 pips (-0.16%) to .7630.

GBP

An extension of Britain’s exit schedule means more uncertainty, so the pound bears found it easy to dominate the charts.

GBP/USD is down by 14 pips (-0.11%) to 1.3099; EUR/GBP is up by 10 pips (+0.11%) to .8778; GBP/CHF is down by 21 pips (-0.16%) to 1.3031; GBP/NZD is down by 24 pips (-0.12%) to 1.9995, and GBP/JPY is down by 32 pips (-0.21%) to 147.41.

JPY

The low-yielding yen gained across the board despite a weak exports report from Japan.

USD/JPY is down by 11 pips (-0.10%) to 112.53; EUR/JPY is down by 16 pips (-0.12%) to 128.39; NZD/JPY is down by 5 pips (-0.06%) to 73.72, and CHF/JPY is down by 6 pips (-0.05%) to 113.12.

Watch Out For:

* Day 2 of EU Summit starts today. Read what you can expect from the event!

  • 6:00 am GMT: Switzerland’s trade balance (2.45B CHF expected, 2.13B CHF previous)
  • 6:00 am GMT: Germany’s wholesale price index (0.4% expected, 0.3% previous)
  • 8:30 am GMT: U.K.’s retail sales report. Read our mini trading guide to see what market geeks are expecting!

This post first appeared here:

41

Asian Session Recap: Comdolls Jump Despite China’s GDP Miss

Commodity-related currencies shrugged off China’s weaker-than-expected GDP report while equities picked up the risk-averse vibe from the U.S. session.

  • NZ visitor arrivals dips by 1.9% in September vs. 2.8% growth in August
  • NZ credit card spending (y/y) retains 7.8% growth in September
  • Japan’s national core CPI (y/y) up by 1.0% as expected vs. 0.9% in August
  • China’s GDP down to 6.5% in Q3 vs. 6.6% expected, 6.7% in Q2
  • China’s GDP down to 6.5% in Q3 vs. 6.6% expected, 6.7% in Q2
  • China’s fixed asset investment (ytd/y) improves from 5.3% to 5.4% in September
  • China’s retail sales (y/y) jumps by 9.2% vs. 9.0% expected and previous
  • China’s unemployment rate edges lower from 5.0% to 4.9% in September
  • U.S. asks WTO for a panel over China’s tariff-related request

Major Events/Reports:

China’s data dump

Earlier today the world’s second-largest economy printed a bunch of top-tier reports that mostly clocked in mixed results.

The GDP report got the most attention, as it showed the economy growing by 6.5% from a year earlier in Q3 2018 when analysts had expected a 6.6% uptick after Q2’s 6.7% increase. In fact, 6.5% marks the weakest growth in NINE YEARS!

The economy had grown by 1.6% on a quarterly basis, which is weaker than Q2’s 1.7% but is right around markets’ expectations.

The data miss was not good for investors who were seeing weaknesses in areas like factory activity and infrastructure investment as the government’s crackdown on business debt pushed up the companies’ borrowing costs.

Meanwhile, a slowdown in manufacturing output dragged on industrial production. The report only reflected a 5.8% gain after rising by 6.1% in August.

China’s fixed asset investment showed better results, printing a 5.4% increase from January to September after last month’s 5.3% reading. Public investment grew a bit faster during the period, while public investment maintained its growth.

Last but not the least is the retail sales report, which popped up by 9.2% from a year earlier in September. That’s the fastest growth since April, yo!

Turns out, sales of garments, personal care, home appliances, furniture, and building materials grew at a faster pace, while cosmetics, jewelry, office supplies, and oil and oil products increased at slower paces.

Chinese government steps in to prop up sentiment

China’s GDP miss might have had a more bearish impact if several government officials hadn’t made efforts to share their optimism and future plans on the economy.

For starters, China Banking and Insurance Regulatory Commission (CBIRC) announced that it would now allow publicly-raised funds from bank wealth management products to be invested in China’s stock market.

The move pointed to higher demand for China’s stocks, which is probably why the Chinese markets didn’t fall as sharply as they did earlier this week.

Meanwhile, People’s Bank of China (PBoC) Yi Gang said in an interview that China’s current stock market valuation is at relatively low levels relative to the economy’s fundamentals.

He also shared that the central bank will roll out targeted measures to encourage commercial bank lending and help corporate financing problems.

Last but not the least is the PBoC plotting its USD/CNY reference rate at 6.9530, which is 0.16% weaker than yesterday and marks the lowest level since January 4, 2017.

Mixed market reaction

China missing its GDP expectations (by a bit!) weren’t received well in the Asian bourses, which were already picking up on the risk-averse theme from the U.S. session.

There were no new bombshells to cause the risk aversion but worries over the Fed’s rate hikes and the impact of the ongoing U.S.-China trade war were enough to keep the bear party alive.

  • Nikkei is down by 1.00% to 22,432.2
  • A SX 200 is up by 0.78% to 5,915.9
  • Shanghai index is down by 0.02% to $2,485.985
  • Hang Seng is down by 0.34% to 25,366.8

Commodities fared a bit better, with gold taking advantage of a bit of dollar weakness while crude oil prices gained some points back from a bearish U.S. session trading.

  • Gold is up by 0.20% to $1,227.70 per troy ounce
  • Brent crude oil is up by 0.14% to $79.42 per barrel
  • U.S. WTI is up by 0.20% to $68.78 per barrel

Major Market Mover(s):

Comdolls

Commodity-related currencies shrugged off China’s (slight) GDP miss in favor of pricing in the government’s efforts at limiting the bearish impact of today’s releases.

AUD/USD is up by 12 pips (+0.17%) to .7111; AUD/JPY is u by 28 pips (+0.35%) to 79.92; AUD/CHF is up by 16 pips (+0.22%) to .7084; EUR/AUD is down by 14 pips (-0.09%) to 1.6117, and GBP/AUD is down by 22 pips (-0.12%) to 1.8312.

CAD/JPY is up by 29 pips (+0.34%) to 86.03; CAD/CHF is up by 16 pips (+0.21%) to .7625; USD/CAD is down by 21 pips (-0.16%) to 1.3064; GBP/CAD is down by 19 pips (-0.11%) to 1.7012, and EUR/CAD is down by 12 pips (-0.08%) to 1.4972.

NZD/USD is up by 21 pips (+0.33%) to .6564; NZD/JPY is up by 39 pips (+0.53%) to 73.77; NZD/CHF is up by 25 pips (+0.39%) to .6583; GBP/NZD is down by 54 pips (-0.27%) to 1.9840; EUR/NZD is down by 43 pips (-0.25%) to 1.7461, and AUD/NZD is down by 16 pips (-0.15%) to 1.0833.

JPY

The low-yielding yen took the most hits on a recovery of its higher-yielding counterparts.

USD/JPY is up by 21 pips (+0.19%) to 112.39; EUR/JPY is up by 33 pips (+0.26%) to 128.81; GBP/JPY is up by 35 pips (+0.24%) to 146.36, and CHF/JPY is up by 16 pips (+0.15%) to 112.82.

Watch Out For:

  • 6:30 am GMT: BOJ’s Kuroda to give a speech in Tokyo
  • 8:00 am GMT: Euro Zone’s current account (21.4B EUR expected, 21.3B EUR previous)
  • 8:00 am GMT: Euro Zone’s current account (21.4B EUR expected, 21.3B EUR previous)

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42

Asian Session Recap: Equities Jump on China’s Tax Cut Plans, FX Spillover Limited

Thin trading conditions and a lack of fresh catalysts inspired traders to price in China’s tax cut plans announced over the weekend.

  • New Zealand markets out on Labor Day holiday
  • Japan’s all industries activity improves by 0.5% vs. 0.4% expected, -0.2% previous
  • RBA’s Debelle: “We have an open mind on what constitutes full employment”

Major Events/Reports:

China’s government updates

Over the weekend China released a detailed draft plan that gives more tax cuts on personal income.

The move came after last Friday’s report reflecting that the world’s second-largest economy had grown by its weakest pace in almost ten years.

China had already raised the personal income tax-free threshold from 3,500 CNY to 5,000 CNY earlier this year. This time around, taxes on factors like educations costs, rent reduction, medical care, and mortgage interests will be tweaked.

The draft plan will have a two-week public comment period and is scheduled to take effect at the start of 2019.

Mixed market reaction

Equity players ate up China’s tax cut plan, as it points to the government possibly doing more intervention while China deals with a trade war with the U.S., falling stock markets, and weakening business confidence.

  • Nikkei is up by 0.40% to 22,622.6
  • A SX 200 is down by 0.39% to 5,887.4
  • Hang Seng is up by 2.40% to 26,174.0
  • Shanghai index is up by 4.17% to 2,656.867

Commodity prices were a little more mixed, with gold taking advantage of a bit of dollar weakness.

Crude oil prices initially got a boost ahead of Iran’s sanctions in November but eventually took a chill pill as others priced in global trade war concerns and rising drilling activity in the U.S.

  • Gold is up by 0.20% to $1,228.00 per troy ounce
  • Brent crude oil is down by 0.03% to $79.96 per barrel
  • U.S. WTI is down by 0.01% to $69.50 per barrel

Major Market Mover(s):

CAD

Oil bulls might have taken a chill pill some time during the session, but the Loonie remained positive until mid-day trading.

CAD/JPY is up by 17 pips (+0.20%) to 86.00; CAD/CHF is up by 8 pips (+0.10%) to .7608; GBP/CAD is down by 6 pips (-0.04%) to 1.7116, and AUD/CAD is down by 12 pips (-0.13%) to .9316.

JPY

Risk-taking and some dollar weakness pushed the yen crosses higher across the board. Volatility was relatively muted, though, thanks to a holiday in New Zealand and a lack of fresh catalysts rocking the markets.

USD/JPY is up by 8 pips (+0.07%) to 112.59; GBP/JPY is up by 20 pips (+0.13%) to 147.19; EUR/JPY is up by 14 pip (+0.11%) to 129.67; NZD/JPY is up by 11 pips (+0.14%) to 74.27, and CHF/JPY is up by 13 pips (+0.11%) to 113.03.

Watch Out For:

  • 10:00 am GMT: Germany’s Bundesbank monthly report

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