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The Greenback gave way to its lower-yielding counterparts, as a bit of profit-taking and overall risk appetite gripped the Asian markets.

  • Fed’s Evans: “Allow more time to wait” before next rate hike
  • Fed’s Evans: Fed had a “serious policy outcome miss” in inflation goals
  • RBA’s minutes: Still worried about wage growth and property prices
  • AU house price index (q/q) up by 2.2% as expected vs. 4.1% growth in Q4 2016

Major Events/Reports:

RBA’s meeting minutes

With not a lot of data on the docket, Asian session traders paid attention to the Reserve Bank of Australia (RBA)’s meeting minutes.

One takeaway from the release is that the central bank continues to think that “developments in the labour and housing markets warranted careful monitoring.”

To be more specific, the RBA noted that though housing property price pressures are beginning to ease, they’re still rising “briskly” and that it would “likely take some time” for the full effects of the latest supervision measures to kick in.

Meanwhile, growth in working hours had declined and wage growth will likely “remain subdued for some time yet” even as the jobless rate fell to a four-year low of 5.5% in May.

Overall, the RBA is still concerned that housing debt had outpaced growth in household incomes, which could spell trouble for household consumption.

Despite these, Lowe and his team still expect the economy to grow by an annualized rate of “a little above 3%,” which is probably why the Aussie still got a boost during the Asian session. Of course, it also doesn’t hurt that quarterly house prices grew by 2.2% as markets had expected in Q1 2017.

Overall risk appetite

Asian session traders picked up on the recovery of U.S. equities and extended their weekly gains.

Nikkei is up by 1.13%, the Shanghai index is up by 0.06%, Hang Seng dipped by 0.01%, and Australia’s A SX 200 is down by 0.39%.

It might have helped the dollar bears that FOMC member and Chicago Fed Head Charles Evans showed his dovish feathers by hinting that he needs more info before giving his thumbs up for another rate hike.

In a speech late Monday, Evans admitted that while employment numbers are nearly within the Fed’s goals, the Fed has had a “serious policy outcome miss” when it comes to its inflation targets.

Evans also shared that “I don’t see why we would not be served to allow more time to wait,” adding that “It remains to be seen whether there will be two rate hikes this year, or three, or four or exactly when we start paring back reinvestments of maturing assets.” At the end of the day, though, he believes that “Our exact actions will appropriately be driven by how events transpire to influence the outlook for achieving our policy goals.

Major Market Mover(s):

AUD

After a weak start to the day, the Aussie found momentum and eventually ended the session higher against its major counterparts.

AUD/USD is up from its .7585 session low to trade at .7595, AUD/JPY is up by 7 pips (+0.08%) to 84.82, and EUR/AUD is down from its 1.4709 session high to trade at 1.4688.

JPY

Optimism in the equities markets and Dudley’s hawkish remarks during the U.S. session pushed the low-yielding yen lower against most of its counterparts.

USD/JPY is up by 8 pips (+0.07%) to 111.69, EUR/JPY is up by 21 pips (+0.17%) to 124.60, and GBP/JPY is up by 19 pips (+0.13%) to 142.26.

Watch Out For:

  • 5:45 am GMT: Switzerland’s SECO economic forecasts
  • 6:00 am GMT: German PPI (-0.1% expected, 0.4% previous)
  • 7:30 am GMT: BOE Governor Carney to give a speech in London
  • 8:00 am GMT: Euro Zone current account
  • 8:45 am GMT: SNB’s Thomas Jordan to speak in Bern