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As if this week’s central bank roster isn’t enough, fresh tariff threats added to the volatility seen during the Asian trading session.

  • U.K.’s BRC shop price index (y/y) slips by 0.3% vs. 0.5% decline in July
  • U.K.’s Nationwide house price index improves by another 0.6% vs. 0.1% expected, 0.5% previous
  • Japanese final manufacturing PMI revised higher from 51.6 to 52.3 in July
  • Chinese Caixin manufacturing PMI down from 51.0 to 50.8 in July

Major Events/Reports:

New Zealand’s labor market data

Kiwi traders finally had a chance to react to New Zealand’s jobs numbers and, unfortunately, they weren’t all that.

Unemployment rate slipped from 4.5% to 4.4% in Q1 2018, marking the fifth consecutive quarter that the report printed lower reading.

However, the labor force participation rate also edged 0.1% lower to 70.8%, hinting that the decline in jobless rates was due to workers giving up their job hunts.

Underutilization rate also rose from 11.9% to 12.0%, which means that the percentage of workers who can work more and/or longer hours (read: spare capacity) shot higher.

Last but not the least are wages, which only grew by 0.3% in Q1 and were unchanged (1.9% for private sector, 1.5% for public sector) in annualized forms.

U.S. to impose additional tariffs on China’s goods?

The biggest story of the hour is one that slipped just before the U.S. markets closed for the day.

As mentioned in the U.S. session recap, sources from the Trump administration hinted that they could impose a 25% tariff on an additional $200 billion worth of Chinese imports.

The report – released at such an impactful time during the early Asian session – could have caused deeper moves, but market players are learning to price in actual policies implemented.

It’s also possible that investors are still hopeful that U.S. Treasury Secretary Mnuchin and Chinese Vice Premier Liu He could still work things out over the next couple of days.

In any case, the fresh threats, combined with the People’s Bank of China (PBoC) further weakening the yuan in its daily mid-point fix, was enough to spook a lot of Asian market players.

  • Nikkei is up by 0.86% to 22,746.8
  • A SX 200 is down by 0.14% to 6,278.6
  • Shanghai index is down by 0.32% to 2,867.334
  • Hang Seng is down by 0.03% to 28,575.5

Commodities also failed to get bullish momentum, with gold prices dominated by dollar demand ahead of the FOMC statement and crude oil weighed by an increase in U.S. crude oil stockpiles.

  • Gold is down by 0.19% to $1,221.44
  • Brent crude oil is down by 0.38% to $73.89
  • U.S. WTI is down by 0.07% to $68.34

Major Market Mover(s):

NZD

The combination of mixed New Zealand job data, China’s less-than-stellar PMI reports, and jitters over the U.S.-China trade war made the Kiwi the weakest link during the Asian session.

NZD/USD is down by 22 pips (-0.32%) to .6796; NZD/JPY is down by 19 pips (-0.25%) to 76.07; AUD/NZD is up by 25 pips (+0.23%) to 1.0909; EUR/NZD is up by 43 pips (+0.25%) to 1.7185, and GBP/NZD is up by 45 pips (+0.24%) to 1.9288.

CHF

There were no catalysts to drag the franc lower. So whether it was SNB intervention or SNB intervention, the Swiss franc lost pips across the board just before Swiss banks take a short holiday break.

USD/CHF is up by 23 pips (+0.23%) to .9925; CHF/JPY is down by 16 pips (-0.14%) to 112.78; EUR/CHF is down by 13 pips (-0.12%) to 1.1592, and GBP/CHF is up by 15 pips (+0.11%) to 1.3010.

Watch Out For:

  • Swiss banks out on Swiss National Day holiday
  • 6:30 am GMT: AU commodity prices (y/y)
  • 7:15 am GMT: Spain’s manufacturing PMI (53.1 expected, 53.4 previous)
  • 7:45 am GMT: Italy’s manufacturing PMI (53.0 expected, 53.3 previous)
  • 7:50 am GMT: France’s final manufacturing PMI to remain at 53.1?
  • 7:55 am GMT: Germany’s final manufacturing PMI expected to maintain 57.3 reading
  • 8:00 am GMT: Euro Zone final manufacturing PMI (55.1 expected and previous)
  • 8:30 am GMT: U.K.’s manufacturing PMI (54.2 expected, 54.4 previous)