Geronimooooo! Asian session traders ignored the risk-friendly vibes from the previous session as they priced in equities-related jitters and economic concerns in China.
- Tokyo’s core CPI (y/y) maintains 1.0% growth in October
Asian market bloodbath
Unlike in the U.S. session, Asian session traders just weren’t in a risk-taking mood. Instead, they continued to price in global growth concerns and jitters over a generally underwhelming earnings season.
The heebie-jeebies started showing after U.S. tech giant Amazon printed a weak holidays forecast while Alphabet showed mixed earnings numbers after the U.S. markets closed.
The selloff REALLY started getting legs when the People’s Bank of China (PBoC) set USD/CNY’s mid-point reference rate at 6.9510, which is not only higher than yesterday’s 6.9492 print but also above the psychological 6.95 mark. Oh, and it’s also the yuan’s lowest setting since 2016!
The move came amidst the government’s efforts to stimulate China’s markets with additional budget allotments, quota changes, and hints of tax cuts for consumers. Unfortunately, traders are focusing on the government’s apparent concern for the economy rather than the positive impact of the government’s changes.
- Nikkei is down by 0.71% to 21,117.1
- A SX 200 is down by 1.39% to 5,623.4
- Shanghai index is down by 0.58% to 2,588.658
- Hang Seng is down by 1.41% to 24,642.9
Commodities reflected the overall risk-averse trading environment, with the safe-haven gold gaining a bit despite a strong session for the U.S. dollar.
Meanwhile, oil benchmarks took another hit after Saudi Arabia’s OPEC governor Adeeb Al-Aama shared that rising inventories over the past few weeks could push oil markets towards an “oversupply situation” in Q4 2018. Yikes!
- Gold is up by 0.01% to $1,232.24 per troy ounce
- Brent crude oil is down by 0.38% to $76.43 per barrel
- U.S. WTI is down by 0.36% to $66.71 per barrel
Major Market Mover(s):
Concerns over China’s economy, weaker commodity prices, and aversion to higher-yielding bets dragged the commodity-related currencies lower across the board.
AUD/USD is down by 49 pips (-0.69%) to .7031; AUD/JPY is down by 72 pips (-0.90%) to 78.85; AUD/CHF is down by 44 pips (-0.63%) to .7031; AUD/CAD is down by 33 pips (-0.36%) to .9220; EUR/AUD is up by 102 pips (+0.63%) to 1.6165, and GBP/AUD is up by 125 pips (+0.69%) to 1.8228.
NZD/USD is down by 38 pips (-0.58%) to .6480; NZD/JPY is down by 57 pips (-0.77%) to 72.68; NZD/CHF is down by 33 pips (-0.58%) to .6480; GBP/NZD is up by 130 pips (+0.66%) to 1.9776, and EUR/NZD is up by 96 pips (+0.55%) to 1.7538.
USD/CAD is up by 44 pips (+0.34%) to 1.3114; CAD/JPY is down by 46 pips (-0.54%) to 85.52; GBP/CAD is up by 54 pips (+0.32%) to 1.6806; EUR/CAD is up by 39 pips (+0.26%) to 1.4905, and CAD/CHF is down by 20 pips (-0.26%) to .7625.
Not surprisingly, forex playas flocked to the low-yielding yen during a risk-averse trading environment.
USD/JPY is down by 24 pips (-0.21%) to 112.15; CHF/JPY is down by 27 pips (-0.24%) to 112.15; EUR/JPY is down by 35 pips (-0.28%) to 127.47, and GBP/JPY is down by 33 pips (-0.23%) to 143.74.
Watch Out For:
- 6:00 am GMT: Germany’s GfK consumer climate (10.5 expected vs. 10.6 previous)