There were no fresh catalysts on the docket, so Asian session traders mostly took cues from the previous trading sessions and priced in their bets ahead of today’s events.
- RBNZ keeps rates at 1.75%, policies steady as expected
- China’s industrial profits slip to five-month low in August
- NZ farmer confidence falls for the first time since early 2016
NZ farmer confidence at negative levels
A report printed earlier saw New Zealand’s net farmer confidence falling to -3% in Q3 2018, down from +2% in Q2.
Turns out, dairy farmers led the pessimism amidst the slide in dairy prices since the last quarterly survey.
Rabobank New Zealand General Manager for Country Banking Hayley Gourley revealed that most of the concerns stem from uncertainty over the dairy market outlook as well as the government’s recent policy changes.
It’s not all gloom and doom, however, as the report also showed sheep and beef farmers remaining in “positive territory” for the period.
China’s industrial profits slip to five-month low
Profits of China’s major industrial companies rose by 9.2% from a year earlier in August, which is slower than the 16.2% uptick we saw in July.
In fact, today’s release marked the fourth monthly deceleration AND the slowest growth seen in five months!
The National Bureau of Statistics (NBS) cited weaker demand for raw materials and industrial products as business expansions slowed amidst the government’s deleveraging efforts.
It also didn’t help that the weaker revenue was met with higher factory prices.
Overall, today’s numbers don’t fare well for China’s prospects in case it escalates its trade war with the U.S.
Mixed risk sentiment
The Asian bourses followed the lead of their U.S. counterparts, pricing in even tighter policies from the Fed.
ICYMI, the U.S. central bank raised its interest rates by another 25 basis points as many had expected. And though it no longer believes that its policies are “accommodative,” Governor Powell and his team are still committed to gradually hiking their rates higher in the foreseeable future.
Higher rates in the U.S. means that dollar-denominated assets (like Treasuries) are now more attractive than they were yesterday. This is probably why Asian equities saw dips across the board:
- Nikkei is down by 0.51% to 23,910.1
- A SX 200 is up by 0.29% to 6,184.6
- Shanghai index is down by 0.39% to 2,795.792
- Hang Seng is down by 0.45% to 27,693.0
Commodity prices fared a bit better, with gold finding support from a bit of bargain-hunting while crude oil benchmarks extended their intraweek uptrends as traders priced in Iran’s sanctions scheduled on November.
- Gold is up by 0.31% to $1,197.91 per troy ounce
- Brent crude oil is up by 0.39% to $82.06 per barrel
- U.S. WTI is up by 0.47% to $72.35 per barrel
Major Market Mover(s):
The Loonie continued to take more hits as an unnamed Trump admin official shared that the U.S. will go ahead and publish its agreement with Mexico on Friday.
If you recall, Canada’s ambassador to Washington recently revealed that, on a scale of 1 to 10, chances of an agreement by the September 30 deadline is a 5. Will Canada be really left out of the NAFTA deal?
USD/CAD is up by 20 pips (+0.15%) to 1.3037; CAD/JPY is down by 11 pips (-0.12%) to 86.47; EUR/CAD is up by 39 pips (+0.26%) to 1.5318; GBP/CAD is up by 10 pips (+0.06%) to 1.7148; AUD/CAD is up by 17 pips (+0.18%) to .9462; and CAD/CHF is down by 12 pips (-0.16%) to .7408.
The euro took a plunge during the session, likely because of Italy-related worries since the euro dropped after word got around the cabinet meeting on the budget will be delayed.
EUR/USD was down by 43 pips (-0.37%) to 1.1703, EUR/JPY was down by 58 pips (-0.44%) to 131.83, EUR/CHF was down by 20 pips (-0.17%) to 1.1318
Watch Out For:
- 6:00 am GMT: Germany’s GfK consumer climate (10.6 expected, 10.5 previous)
- 8:00 am GMT: ECB’s economic bulletin
- 8:00 am GMT: Euro Zone’s private loans (y/y) (3.1% expected, 3.0% previous)