Article Highlights

  • Australia’s house price index (q/q) rises by 4.1% vs. 2.4% uptick expected, 1.5% growth in Q3 2016
  • NZ credit card spending (y/y) up by 5.3% vs. 7.1% previous
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Forex price action was a mixed bag of nuts, as a lack of economic catalysts pushed major currencies in different directions during the Asian session.

Major Events:

RBA’s meeting minutes – The Aussie took a few hits after the Reserve Bank of Australia’s (RBA) latest meeting minutes hinted at “build-up of risks” in the housing market.

In its minutes released two weeks after its official decision, the RBA repeated its optimism of slowly transitioning from a mining boom. Specifically, it noted higher commodity prices, better business sentiment indicators, and stronger trade data.

However, the central bank also repeated its warnings that a stronger currency would “complicate” its adjustment from the mining boom. In addition, it also pointed to the labor market, which continued to show subdued wage growth and is expected to sustain spare capacity that’s only estimated to “decline slowly.”

But perhaps the most notable bit in the announcement is the RBA noting that “there had been a build-up of risks” in the housing market. See, borrowing for housing by investors had picked up while household debt grew faster than household income. Considering the subdued wage growth, the pick-up in household debt is posing risks to Australia’s consumer spending patterns.

This is probably why Aussie traders didn’t cheer the Australian Bureau of Statistics report, which reflected another 4.1% rise in Australia’s house prices in Q4 2016. This not only represents the strongest quarterly gain since Q3 2015, but is also equivalent to an annualized gain of 7.7%. That’s faster than the 3.5% uptick in Q3 and 6.3% expected gain, yo!

Mixed risk sentiment – Japanese traders are back from a holiday and boy, did they catch up! Nikkei got knocked back by a few points thanks to not-so-hawkish speeches by Fed officials during the U.S. session and concerns that it would take a longer while before Trump rolls out his “phenomenal” tax and infrastructure plans.

Nikkei slipped by 0.30% while the Shanghai index edged up by 0.22% and Hang Seng inched 0.23% higher. Australia’s A SX 200, which suffered a bit from the RBA’s meeting minutes, stepped back by 0.10%.

Market Movers:

EUR – Post-debate polls reflecting Macron a winner boosted the common currency against its major counterparts.

EUR/USD hiked by 11 pips (+0.10%) to 1.0755, EUR/GBP popped up to .8699 after dropping to a session low of .8675, and EUR/JPY jumped by 36 pips (+0.30%) to 121.26.

AUD – The Australian dollar got knocked back by its major counterparts after the RBA’s meeting minutes reflected worries over the housing market.

AUD/USD is down by 27 pips (-0.35%) to .7710, AUD/JPY is down by 12 pips (-0.14%) to 86.93, and AUD/NZD is down by 27 pips (-0.25%) to 1.0941 after hitting bottom at 1.0930.

Watch Out For:

  • 6:45 am GMT: Switzerland’s SECO economic forecasts
  • 7:00 am GMT: Switzerland’s trade balance (3.85B CHF expected, 4.73B CHF previous)
  • 9:30 am GMT: U.K. CPI (2.1% expected, 1.8% previous)
  • 9:30 am GMT: U.K. core CPI (y/y) (1.7% expected, 1.6% previous)
  • 9:30 am GMT: U.K. PPI input (0.2% expected, 1.7% previous)
  • 9:30 am GMT: U.K. net public borrowing (2.9B GBP expected, -9.8B GBP previous)
  • 10:35 am GMT: BOE’s Mark Carney to give a speech in London

See also:

U.S. Session Recap
London Session Recap

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

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