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A surprisingly strong CPI report boosted the Kiwi across the board. Meanwhile, potential easing tensions between the U.S. and Saudi Arabia and a bit of risk-taking dragged safe havens lower.

  • NZ CPI jumps by 0.9% vs. 0.7% expected, 0.4% growth in Q2 2018
  • China’s CPI (y/y) higher at 2.5% as expected vs. 2.3% uptick in August
  • China’s PPI (y/y) lower from 4.1% to 3.6% in September
  • Meeting minutes: RBA concerned over impact of prolonged low income growth and declining house prices

Major Events/Reports:

New Zealand’s strong inflation report

Consumer prices in New Zealand rose by 0.9% in Q3 2018, which is stronger than Q2’s 0.4% increase and the expected 0.7% uptick. This translates to an annualized increase of 1.9% following the previous quarter’s 1.5% price growth.

Turns out, rising oil prices mostly pushed prices higher. Petrol prices jumped by a whopping 19%, which helped nudge transport prices 5.6% higher in Q3 (against +2.0% in Q2).

Housing and household utilities prices also saw increases, while alcoholic beverages and tobacco extended their surge from the previous quarter.

Higher prices could help move the RBNZ from its neutral stance to a more hawkish one, so the upside surprise in today’s numbers helped push the Kiwi higher.

China’s data releases

A report from the world’s second-largest economy saw consumer prices rising by another 2.5% from a year ago in September, which is higher than August’s 2.3% increase and is right around analysts’ expectations.

For reference, the government is targeting the 3.0% mark for 2018.

What caught more attention, however, is China’s factory gate prices cooling down for a third month in a row.

China’s PPI rose by 3.6% from a year earlier in September, which is weaker than August’s 4.1% increase and the 3.7% growth that analysts had expected.

This month’s figure marked the lowest reading since April, as factors like extraction, raw materials, and processing grew at slower rates. Investors feared that these point to cooling domestic demand, which isn’t cool amidst the U.S.-China trade war.

Cautious trading = mixed price action

Whether it’s profit-taking from the previous days’ losses, or optimism that that tensions between the U.S. and Saudi Arabia would ease, Asian bourses were a bit more optimistic than their U.S. counterparts.

It’s still not all rainbows and unicorns, however, as a weak Chinese factory gate prices report underscored the negative impact of the ongoing U.S.-China trade war.

  • Nikkei is up by 0.32% to 22,341.6
  • A SX 200 is up by 0.58% to 5,855.4
  • Shanghai index is down by 0.15% to 2,564.245
  • Hang Seng is down by 0.19% to 25,396.2

Commodity prices were also mixed, with gold taking a backseat to a bit of dollar strength and risk-taking, while crude oil benchmarks continued to price in Iran’s looming sanctions and tensions between the U.S. and Saudi Arabia.

  • Gold is down by 0.05% to $1,226.17 per troy ounce
  • Brent crude oil is up by 0.32% to $81.00 per barrel
  • U.S. WTI is up by 0.20% to $71.84 per barrel

Major Market Mover(s):

NZD

A surprisingly strong inflation report pointed to a higher chance that the RBNZ would soon adopt a hawkish bias, so the Kiwi bulls cheered the release.

NZD/USD is up by 17 pips (+0.26%) to .6568; NZD/JPY is up by 34 pips (+0.47%) to 73.56; AUD/NZD is down by 32 pips (-0.29%) to 1.0852; GBP/NZD is down by 56 pips (-0.28%) to 2.011; NZD/CHF is up by 30 pips (+0.47%) to .6493, and EUR/NZD is down by 54 pips (-0.31%) to 1.7620.

JPY and CHF

Whether it was profit-taking or cautious optimism ahead of this week’s top-tier events, the low-yielding yen and franc both took hits against their major counterparts.

USD/JPY is up by 23 pips (+0.20%) to 111.99; GBP/JPY is up by 22 pips (+0.15%) to 147.21; EUR/JPY is up by 22 pips (+0.17%) to 129.62; AUD/JPY is up by 13 pips (+0.16%) to 79.83, and CAD/JPY is up by 15 pips (+0.17%) to 86.19.

USD/CHF is up by 22 pips (+0.23%) to .9886; EUR/CHF is up by 15 pips (+0.13%) to 1.1442; GBP/CHF is up by 13 pips (+0.10%) to 1.2995; CAD/CHF is up by 13 pips (+0.17%) to .7608, and AUD/CHF is up by 10 pips (+0.13%) to .7047.

Watch Out For:

  • 8:30 am GMT: U.K.’s labor market numbers. Read our mini trading guide to see what analysts are expecting!
  • 9:00 am GMT: Euro Zone’s trade balance (15.0B EUR expected, 12.8B EUR previous)
  • 9:00 am GMT: Euro Zone ZEW economic sentiment (-12.3 expected, -10.6 previous)
  • 10:00 am GMT: Italy’s trade balance (4.34B EUR expected, 5.68B EUR previous)