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As in the previous trading session, Asian session market players priced in their worries over the “emerging” markets and boosted the safe havens higher across the board.

  • Australia’s current account deficit widens from 11.7B AUD to 13.5B AUD in Q2 2018
  • RBA keeps rates at 1.50% as expected in August
  • India allows state refiners to import Iranian oil

Major Events/Reports:

RBA’s policy statement

As expected, the Reserve Bank of Australia (RBA) kept its interest rates at 1.50% for another month in August.

In its statement, the central bank continued to believe that non-mining business investment, public structure investment, and exports will continue to prop up the economy.

It also maintained its outlook that growth will grow to “a bit above” 3.0% in 2018 and 2019; inflation will be higher than 2.0% in 2019 and 2020, and that wages will gradually lift over time.

The lack of significant changes in the RBA’s statement was a welcome development for traders who had worried that the out-of-cycle interest rate increases of four major Australian banks will push the RBA into cutting (instead of raising) its rates down the road.

Emerging market worries underpin risk-taking

With no Wall Street prices to take cues from, Asian session market players priced in their concerns over the emerging (submerging?) markets.

As mentioned in the U.S. session recap, Argentina just implemented new export taxes and spending cuts; Turkey’s central bank just raised its rates to keep inflation in check, and political uncertainty is clouding Brazil’s economic prospects.

Of course, it also didn’t help that traders are still at the edge of their seats waiting for the U.S. to possibly announce a fresh set of tariffs ($200 billion worth this time!) on China’s goods.

  • Nikkei is down by 0.25% to 22,651.4
  • A SX 200 is down by 0.56% to 6,285.7
  • Shanghai index is down by 0.06% to 2,719.189
  • Hang Seng is up by 0.03% to 27,721.2

Gold prices benefited from emerging market worries.

Crude oil was a little more mixed. Brent crude lost ground after India allowed state refiners to import Iranian oil, while U.S. oil prices inched higher after two platforms in the Gulf of Mexico were evacuated in preparation for hurricane Gordon.

The two oil benchmarks encountered a bit of profit-taking by the end of the session, however.

  • Gold is down by 0.12% to $1,199.62 per troy ounce
  • Brent crude oil is up by 0.08% to $78.04 per barrel
  • U.S. WTI is down by 0.07% to $70.02 per barrel

Major Market Mover(s):

AUD

Global trade concerns weighed heavily on the Aussie early in the session, but the comdoll recovered a bit after the RBA kept its policies unchanged in August.

AUD/USD is down by 21 pips (-0.29%) to .7192; AUD/JPY is down by 20 pips (-0.25%) to 79.88; EUR/AUD is up by 23 pips (+0.14%) to 1.6129; GBP/AUD is up by 40 pips (+0.23%) to 1.7882; AUD/CHF is down by 15 pips (-0.22%) to .6976, and AUD/NZD is down by 21 pips (-0.19%) to 1.0905.

USD

The Greenback caught a couple more pips across the board on uncertainty in the emerging markets and the U.S.-China trade war.

USD/CHF is up by 8 pips (+0.08%) to .9700; USD/CAD is up by 21 pips (+0.16%) to 1.3113; NZD/USD is down by 7 pips (-0.10%) to .6593, and USD/JPY is up by 4 pips (+0.04%) to 111.07.

EUR

The common currency slipped against its major counterparts after seeing support in the previous trading sessions.

EUR/USD is down by 18 pips (-0.15%) to 1.1600; EUR/JPY is down by 17 pips (-0.13%) to 128.85; EUR/GBP is down by 7 pips (-0.08%) to .9020, and EUR/NZD is down by 12 pips (-0.07%) to 1.7591.

Watch Out For:

  • 7:00 am GMT: Spain’s unemployment change (35.2K expected, -27.1K previous)
  • 7:15 am GMT: Switzerland’s CPI (0.0% expected, -0.2% previous)
  • 8:30 am GMT: U.K.’s construction PMI (54.9 expected, 55.8 previous)
  • 9:00 am GMT: Euro Zone’s PPI (0.3% expected, 0.4% previous)
  • 9:30 am GMT: RBA Governor Philip Lowe to give a speech in Perth