The RBA’s meeting minutes did little to change the economic picture today, so traders focused on extending the previous sessions’ themes.
- NZ visitor arrivals improves by 0.6% vs. 3.6% decline in June
- NZ credit card spending (y/y) sees 3.2% increase vs. 5.8% uptick in June
- RBA’s meeting minutes: No strong case for near-term adjustment
- Australian PM Turnbull narrowly survives leadership vote
RBA’s meeting minutes
A lack of changes to the Reserve Bank of Australia’s (RBA) monetary policy decision earlier this month resulted in muted reaction from the Aussie.
Well, the meeting minutes isn’t any more exciting. In today’s release we confirmed that the central bank’s outlook “had not changed materially” from three months ago.
That is, growth is still expected to be a bit above 3% in 2018 and 2019; unemployment rate is still estimated at around 5% by 2020, and that the Aussie’s current levels are still within its “trading range” from the previous years.
At the end of the day, RBA members continue to believe that its current policies are helping in boosting inflation and reducing unemployment. They maintain that “the next move in the cash rate would more likely be an increase than a decrease,” though there’s “no strong case for a near-term adjustment” for now.
Turnbull narrowly beats leadership challenge
The biggest story of the hour is Australian Prime Minister Malcolm Turnbull narrowly surviving a leadership challenge that (fortunately or unfortunately?) doesn’t involve Wakanda-style, one-on-one combat.
Earlier today Turnbull called a snap vote among his party members to dispel rumors of his weakening leadership. He ended up narrowly beating Home Affairs Minister and leading figure in the Liberal Party’s conservative wing Peter Dutton 48-35 to remain top party boss.
Analysts expect the plot to thicken over the next couple of weeks as Dutton – who left his post after the vote – gets more support from other MPs repeats his challenges until Turnbull gets kicked out.
Unfortunately, today’s vote also signaled instability among Liberal Party members, which then exposes them to possibly losing to the opposing Labor party in the next elections.
Mixed risk sentiment
With no fresh catalyst to rock the markets, Asian session market players extended economic themes from the previous session.
Dollar weakness remained the biggest mover after U.S. President Trump spoke against the Fed’s tightening plans.
He also accused China and the European Union of currency manipulation, which might have helped boost the euro and the yuan earlier today.
Yen strength from USD/JPY’s dip weighed on Nikkei initially, but the bulls soon stepped in as risk sentiment improved.
Meanwhile, China’s markets saw support from bargain-hunting and optimism ahead of this week’s U.S.-China trade negotiations. Australia took the biggest hits thanks to political drama in the parliament.
- Nikkei is up by 0.33% to 22,273.2
- A SX 200 is down by 1.01% to 6,291.5
- Shanghai index is up by 1.43% to 2,737.127
- Hang Seng is up by 0.48% to 27.729.6
The major commodity benchmarks also saw mixed price action, with gold taking advantage of dollar weakness, Brent crude oil rising further on expectations of lower Iran oil supply shortfall, and WTI slipping after the previous session’s bullish run.
- Gold is up by 0.33% to $1,194.08 per troy ounce
- Brent crude oil is up by 0.21% to $72.22 per barrel
- U.S. WTI is down by 1.67% to $65.50 per barrel
Major Market Mover(s):
AUD and NZD
Dollar weakness, aided by optimism over the U.S.-China negotiations this week brought the bulls to the comdolls’ yard during the relatively data-light trading session.
AUD/USD is up by 16 pips (+0.22%) to .7355 and AUD/JPY is up by 22 pips (+0.27%) to 80.98 while NZD/USD is up by 22 pips (+0.32%) to .6659 and NZD/JPY is up by 25 pips (+0.34%) to 72.32.
EUR, GBP, and CHF
There were no catalysts to directly explain the strong moves, but dollar weakness, profit-taking from the previous week’s selloffs, and positive Brexit headlines from the previous session pushed European currencies higher across the board today.
EUR/USD is up by 43 pips (+0.37%) to 1.1524; EUR/JPY is up by 52 pips (+0.41%) to 126.89; EUR/CHF is up by 11 pips (+0.10%) to 1.1394; EUR/GBP is up by 10 pips (+0.12%) to .8983, and EUR/AUD is up by 26 pips (+0.16%) to 1.5669.
USD/CHF is down by 28 pips (-0.28%) to .9887; CHF/JPY is up by 37 pips (+0.33%) to 111.37, and CAD/CHF is down by 10 pips (-0.13%) to .7589.
GBP/USD is up by 34 pips (+0.27%) to 1.2829; GBP/JPY is up by 44 pips (+0.31%) to 141.26; GBP/AUD is up by 11 pips (+0.06%) to 1.7443, and GBP/CAD is up by 19 pips (+0.11%) to 1.6712.
Watch Out For:
- 6:00 am GMT: Switzerland’s trade balance (2.85B CHF expected, 2.59B CHF previous)
- 8:30 am GMT: U.K.’s public sector borrowing (-2.1B GBP expected, 4.5B GBP previous)
- 10:00 am GMT: U.K.’s CBI industrial order expectations (10 expected, 11 previous)