Article Highlights

  • Chinese Sept CPI down from 2.0% to 1.6% vs. 1.8% forecast
  • Producer prices fell by 5.9% y/y in China as expected
  • RBNZ Gov Wheeler: Some further easing possible
  • Japanese producer prices down 3.9% y/y as expected
  • Japanese gov’t downgraded their economic outlook
  • Australia’s Westpac consumer sentiment index up by 4.2% this month
  • Westpac’s home lending rate hike: Room for RBA rate cut?
  • U.K. employment data due today
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Not a good day to be an Aussie bull, huh? After yesterday’s bleak imports data, China followed up with a downbeat CPI release today, as the reading fell from 2.0% to 1.6% in September, lower than the projected 1.8% figure. To make things worse, producer prices indicated a 5.9% year-over-year decline, hinting at stronger downside pressure on consumer price levels later on.

Australia’s Westpac consumer sentiment figure for this month, which indicated a 4.2% rebound, should’ve been enough to keep the Aussie afloat against its forex peers but traders decided to zoom in on the bank’s decision to hike their home lending rate. As it turns out, this could keep the country’s ongoing housing boom in check, giving the RBA room to cut interest rates if needed.

Speaking of rate cuts, RBNZ Governor Wheeler mentioned in his testimony earlier that “some further easing in the OCR seems likely” but reiterated that this still depends on how economic data turns out. The Kiwi sold off sharply upon hearing these remarks but quickly rebounded from its losses.

AUD/USD is down 18 pips to .7225 (-0.24%), AUD/JPY is down 27 pips to 86.48 (-0.31%), NZD/USD is up 40 pips to .6677 (+0.60%), NZD/JPY is up 41 pips to 79.90 (+0.54%) and AUD/NZD is down 84 pips to 1.0820 (-0.77%).

Japan had its fair share of bad news, as the PPI report indicated a 3.9% tumble in producer price levels, suggesting that the economy could still struggle to ward off deflation. The Japanese government decided to downgrade their economic outlook, pushing the Nikkei to close 1.89% lower for the day.

Yen forex pairs barely reacted to all this, as Japan already had it coming. USD/JPY is still moving sideways around 119.60 (-0.06%), EUR/JPY is up 15 pips to 136.37 (+0.10%), and GBP/JPY is up 10 pips to 182.75 (+0.08%).

The British pound could be in for more action in the next few hours, as the U.K. is gearing up to print its jobs data for September. Analysts are expecting to see a 2.3K drop in claimants, enough to keep the jobless rate steady at 5.5%, but forex traders might be more interested to see a potential pickup in the average earnings index from 2.9% to 3.1%. If so, strong wage inflation could reduce speculations of BOE dovishness stemming from yesterday’s disappointing CPI results.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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