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Thin trading conditions and a lack of fresh catalysts inspired traders to price in China’s tax cut plans announced over the weekend.

  • New Zealand markets out on Labor Day holiday
  • Japan’s all industries activity improves by 0.5% vs. 0.4% expected, -0.2% previous
  • RBA’s Debelle: “We have an open mind on what constitutes full employment”

Major Events/Reports:

China’s government updates

Over the weekend China released a detailed draft plan that gives more tax cuts on personal income.

The move came after last Friday’s report reflecting that the world’s second-largest economy had grown by its weakest pace in almost ten years.

China had already raised the personal income tax-free threshold from 3,500 CNY to 5,000 CNY earlier this year. This time around, taxes on factors like educations costs, rent reduction, medical care, and mortgage interests will be tweaked.

The draft plan will have a two-week public comment period and is scheduled to take effect at the start of 2019.

Mixed market reaction

Equity players ate up China’s tax cut plan, as it points to the government possibly doing more intervention while China deals with a trade war with the U.S., falling stock markets, and weakening business confidence.

  • Nikkei is up by 0.40% to 22,622.6
  • A SX 200 is down by 0.39% to 5,887.4
  • Hang Seng is up by 2.40% to 26,174.0
  • Shanghai index is up by 4.17% to 2,656.867

Commodity prices were a little more mixed, with gold taking advantage of a bit of dollar weakness.

Crude oil prices initially got a boost ahead of Iran’s sanctions in November but eventually took a chill pill as others priced in global trade war concerns and rising drilling activity in the U.S.

  • Gold is up by 0.20% to $1,228.00 per troy ounce
  • Brent crude oil is down by 0.03% to $79.96 per barrel
  • U.S. WTI is down by 0.01% to $69.50 per barrel

Major Market Mover(s):

CAD

Oil bulls might have taken a chill pill some time during the session, but the Loonie remained positive until mid-day trading.

CAD/JPY is up by 17 pips (+0.20%) to 86.00; CAD/CHF is up by 8 pips (+0.10%) to .7608; GBP/CAD is down by 6 pips (-0.04%) to 1.7116, and AUD/CAD is down by 12 pips (-0.13%) to .9316.

JPY

Risk-taking and some dollar weakness pushed the yen crosses higher across the board. Volatility was relatively muted, though, thanks to a holiday in New Zealand and a lack of fresh catalysts rocking the markets.

USD/JPY is up by 8 pips (+0.07%) to 112.59; GBP/JPY is up by 20 pips (+0.13%) to 147.19; EUR/JPY is up by 14 pip (+0.11%) to 129.67; NZD/JPY is up by 11 pips (+0.14%) to 74.27, and CHF/JPY is up by 13 pips (+0.11%) to 113.03.

Watch Out For:

  • 10:00 am GMT: Germany’s Bundesbank monthly report