Article Highlights

  • Japan’s average cash earnings up by 0.1% vs. 0.2% uptick expected, 0.0% previous
  • U.K. BRC retail sales monitor improves by 0.6% vs. 1.7% previous
  • AU current account deficit narrows down from 15.9B AUD to 11.4B AUD in Q3 2016
  • RBA keeps rates at 1.50% as expected
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Asian session market players kept calm and carried on today after getting jittery over Renzi’s resignation yesterday.

Major Events:

RBA keeps its rates at 1.50% – Earlier today, the Reserve Bank of Australia (RBA) has decided to keep its rates at 1.50%, a move that market players had expected. In its official release, the central bank noted that higher commodity prices are boosting national income and that, globally, “the outlook for inflation is more balanced than it has been for some time.

On a domestic scale, the economy is expected to see some slowdown near the end of the year before picking up again. Labor market conditions remain “somewhat mixed” with “considerable variation in employment outcomes across the country.

The housing market has also shown different outcomes, with some areas seeing rapid price increases and others declining prices. Last but not the least, inflation is also expected to remain low thanks to lack of upward pressure from wages.

Overall, the RBA believes that keeping its rates steady is “consistent with sustainable growth in the economy and achieving the inflation target over time.” RBA Governor Lowe and his team will conduct their next meeting on February 2017.

Australia’s current account – Before the RBA made its waves, Australia had a chance to sneak a peek of tomorrow’s GDP report. See, the current account deficit clocked in at 11.3B AUD in Q3 2016, much lower than Q2’s 15.9B figure and marks the lowest level in two years.

A closer look, however, tells us that it was higher prices for Australia’s commodity that mostly boosted the numbers. Iron ore export volumes actually fell by 2.0% and while liquefied natural gas (LND) also dipped by 1.0%. In seasonally adjusted chain volume terms, the surplus on goods and services dropped by 61% in Q3, which is expected to shave off as much as 0.2% from the GDP report. Yikes!

Risk appetite returns – Thanks to Uncle Sam printing better-than-expected data yesterday and Italy’s Renzi delaying his official resignation, Asian session market players had a chance to keep calm and carry on.

Nikkei is up by 0.47%, Hang Seng is up by 0.76%, the Shanghai Index is hanging in there with 0.03%, and Australia’s A SX 200 is up by 0.52%. Oil prices missed the bus, however, as Brent crude oil slips by 0.53% to $54.65 and U.S. crude oil prices dips by 0.70% to $51.43.

Major Market Movers:

AUD – The Australian dollar failed to find support from the RBA’s decision to hold its fire. Instead, Aussie traders focused on the impact of today’s releases on tomorrow’s GDP report.

AUD/USD is down by 15 pips (-0.20%) to .7462, AUD/JPY is down by 19 pips (-0.22%) to 84.88, EUR/AUD shot up by 13 pips (+0.09%) to 1.4415, and AUD/NZD ended the session 31 pips lower (-0.30%) to 1.0452.

Watch Out For:

  • 8:00 am GMT: German factory orders (0.6% expected, -0.6% previous)
  • 9:15 am GMT: Switzerlan’s CPI (-0.1% expected, 0.1% previous)
  • 10:10 am GMT: Euro Zone retail PMI
  • 10:30 am GMT: FPC meeting minutes
  • 11:00 am GMT: No revision expected to the Euro Zone’s GDP

See also:

U.S. Session Recap
London Session Recap

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