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Asian session market players took cues from the previous session and priced in strong earnings reports. However, gains were limited by geopolitical concerns.

  • Japan’s household spending (y/y) down by 1.2% as expected vs. 3.9% decline in May
  • Japan’s leading indicators slip from 106.9% to 105.2% in June
  • RBA keeps rates at 1.50% as expected

Major Events/Reports:

RBA keeps rates at 1.50% as expected

Earlier today we saw the Reserve Bank of Australia (RBA) keep its interest rates at 1.50% for a TWENTY-SECOND month in a row in August. How’s that for consistency?

As in its previous statement, the central bank still see growth to average at a bit above 3.0% in 2018 and 2019 though it remains worried over household consumption and the “direction of international trade policy in the United States.

It also retained its positive outlook on the labour market, saying that the unemployment rate is expected to gradually decline to around 5.0% “over the next couple of years.” In addition to that, RBA still believes that “[t]he Australian dollar remains within the range that it has been in over the past two years.

The central bank also thinks that latest CPI reports are in line with expectations. It’s currently expecting “once-off declines” in September to weigh on headline prices down to 1.75%, but still expect the rate to print higher than its current rates in 2019 and 2020.

The report didn’t really reveal anything new, which is probably why the Aussie barely reacted to the release.

Spillover risk-taking from the previous session

Asian session market players are still worried over the U.S.-China trade war and possible escalation in conflicts between the U.S. and Iran.

However, most of the losses were cushioned by strong earnings reports from the U.S. session and a few upside surprise earnings releases in the Asian markets.

  • Nikkei is up by 0.62% to 22,646.2
  • A SX 200 is down by 0.34% to 6,241.5
  • Shanghai index is up by 1.43% to 2,743.708
  • Hang Seng is up by 0.96% to 28,087.0

Commodities joined the risk-taking bandwagon, with gold taking advantage of a retreat in dollar demand while crude oil continued to draw support from the U.S. renewing its sanctions on Iran.

  • Gold is up by 0.22% to $1,209.98
  • Brent crude oil is up by 0.54% to $73.99
  • U.S. WTI is up by 0.31% to $69.06

Major Market Mover(s):

NZD

There were no currency-specific catalysts to drag the Kiwi lower, though analysts points to overall risk aversion from the U.S.-China and U.S.-Iran conflicts as one of the biggest anchors to the Kiwi’s flight.

NZD/USD is down by 5 pips (-0.07%) to .6728; AUD/NZD is up by 15 pips (+0.14%) to 1.0986; NZD/CAD is down by 12 pips (-0.14%) to .8742; NZD/CHF is down by 8 pips (-0.12%) to .6704, and NZD/JPY is down by 9 pips (-0.12%) to 74.90.

GBP

The pound continued to slip across the board as Asian session traders caught up to pricing in a no-deal Brexit that would take Britain away from the EU without securing a trade agreement.

GBP/JPY is down by 13 pips (-0.09%) to 144.06; EUR/GBP is up by 5 pips (+0.06%) to .8930; GBP/AUD is down by 15 pips (-0.09%) to 1.7507, and GBP/CAD is down by 15 pips (-0.09%) to 1.6814.

USD

The Greenback took steps back against some of its counterparts after a strong performance in the previous sessions.

USD/JPY is down by 7 pips (-0.07%) to 111.33; AUD/USD is up by 5 pips (+0.07%) to .7392, and USD/CAD is down by 8 pips (-0.06%) to 1.2994.

Watch Out For:

  • 6:00 am GMT: Germany’s trade balance (21.4B EUR expected, 20.3B EUR previous)
  • 6:00 am GMT: Germany’s industrial production (-0.5% expected, 2.6% previous)
  • 6:00 am GMT: Germany’s industrial production (-0.5% expected, 2.6% previous)
  • 7:00 am GMT: Switzerland’s currency reserves
  • 7:30 am GMT: U.K.’s Halifax house price index (0.2% expected, 0.3% previous)