Asian session players got busy today with a bunch of top-tier reports to price in. However, equity traders had a much different reaction than the forex peeps.
Here’s what’s up!
- NZ ANZ business confidence slightly improves from -38.3 to -37.1 in October
- U.K. BRC shop price index (y/y) slips by 0.2% after 0.2% growth in September
- U.K.’s GfK consumer confidence slips to -10 as expected vs. -9 previous
- Australia’s quarterly CPI maintains 0.4% growth vs. 0.5% expected in Q2 2018
- Australia’s trimmed mean CPI (q/q) gains 0.4%, previous reading downgraded from 0.5% to 0.4%
- Australia’s private sector credit up by 0.4% as expected vs. 0.5% previous
- China’s manufacturing PMI drops from 50.8 to 50.2 in October vs. 50.6 expected
- China’s non-manufacturing PMI lower from 54.9 to 53.9 vs. 54.7 expected
- BOJ keeps policies unchanged as expected
- Japan’s housing starts (y/y) falls by 1.5% vs. -0.7% expected, 1.6% previous
- Japan’s consumer confidence inches down from 43.4 to 43.0 vs. 43.5 expected
Australia’s inflation miss
Consumer prices in Australia grew by another 0.4% in Q3 2018, which is a tad lower than the 0.5% uptick that analysts had expected. The annualized reading also came in at 1.9% against Q2’s 2.1% growth.
Turns out, a slower housing price growth did much of the damage, while alcohol and tobacco and health, insurance, and financial services also saw slower growth rates.
Details reveal that the closely-watched RBA trimmed mean CPI clocked in at 1.8% after rising by 1.9% in the second quarter. Ditto for the RBA weighed mean CPI, which also missed forecasts with only a 1.7% increase after Q2’s 1.9% expansion.
For newbies out there, you should know that slower consumer price growth generally means less pressure on the central bank to raise rates, so currency bulls usually look for faster inflation with reports like these.
China’s PMI releases
Another week, another chance to worry about the U.S.-China trade war!
Data from the world’s second-largest economy showed the manufacturing PMI at 50.2 in October, much weaker than September’s 50.8 reading and the expected 50.6 figure. In fact, we’re lookin’ at the slowest pace in over two years!
China’s statistics bureau cited the impact of a week-long holiday as a reason for the slump, though analysts are quick to point out that the U.S.-China trade war is now showing its bite. After all, October is the first full month after the U.S.’ latest tariffs kicked in on September 24.
Details don’t get much better as they reflect weakening domestic AND external demand. New export orders, for example, contracted for a fifth straight month and at the fastest pace in at least a year. The sub-index fell to 46.9 from 48.0 in September.
Meanwhile, China’s non-manufacturing index also slowed down, this time from 54.9 to 53.9 in the same month.
Apparently, new orders dropped by 0.9 points while sales prices also edged lower by 0.3 points for the month.
Today’s numbers not only tell us that China’s economy may already be smarting from the current tariffs, but that it’s also vulnerable to further tariff increases as the U.S.-China trade war plot thickens.
BOJ trims inflation estimates
As expected, the Bank of Japan (BOJ) kept its monetary policies steady for another month in October.
That is, short-term interest rates are still targeted at -0.1% while BOJ members eye the 10-year government bond yields at “around zero percent.”
What caught the investors’ attention is Governor Kuroda and his gang downgrading their growth estimates for 2018 and inflation forecasts from 2018 through 2020:
The downgrades highlight the BOJ’s persistent challenge to stimulate prices and hinted that the central bank isn’t likely to “normalize” its stimulative policies anytime soon.
Mixed risk sentiment
Whether it’s end-of-month profit-taking, bargain hunting, easing up of global growth-related concerns, or a continuation of the risk-taking vibe from the previous sessions, the Asian bourses ended mid-day trading higher than their open prices.
- Nikkei is up by 1.79% to 21,842.4
- A SX 200 is up by 0.40% to 5,787.3
- Hang Seng is up by 0.60% to 24,733.0
- Shanghai index is up by 1.13% to 2,597.052
Commodity prices reflected the risk-friendly vibe. Gold took hits from risk appetite and dollar demand from the previous trading sessions. Meanwhile, crude oil benchmarks inched higher even as traders continued to worry over the impact of the U.S.-China trade war.
- Gold is down by 0.38% to $1,218.03 per troy ounce
- Brent crude oil is up by 0.28% to $76.35 per barrel
- U.S. WTI is up by 0.09% to $66.38 per barrel
Major Market Mover(s):
Weak data releases, worries over China’s growth, and limited upside movement for commodities dragged commodity-related currencies lower against most of their counterparts.
AUD/USD is down by 20 pips (-0.28%) to .7085; AUD/JPY is down by 16 pips (-0.19%) to 80.21; AUD/CHF is down by 20 pips (-0.28%) to .7121; EUR/AUD is up by 41 pips (+0.26%) to 1.6005, and GBP/AUD is up by 54 pips (+0.30%) to 1.7933.
NZD/USD is down by 7 pips (-0.10%) to .6547; EUR/NZD is up by 12 pips (-0.07%) to 1.7321; NZD/CHF is down by 7 pips (-0.10%) to 74.12, and AUD/NZD is down by 18 pips (-0.16%) to 1.0822.
USD/CAD is up by 15 pips (+0.11%) to 1.3125; GBP/CAD is up by 21 pips (+0.12%) to 1.6677; EUR/CAD is up by 12 pips (+0.08%) to 1.4884, and CAD/CHF is down by 9 pips (-0.11%) to .7658.
There were no direct catalysts for the pound’s weakness but Brexit-related concerns from the previous sessions and profit-taking ahead of the BOE’s announcement might have factored in today’s price action.
GBP/USD is up by 5 pips (+0.04%) to 1.2707; GBP/JPY is up by 16 pips (+0.11%) to 143.86, and GBP/NZD is up by 24 pips (+0.12%) to 1.9409.
Watch Out For:
- BOJ’s press conference on tap
- 7:00 am GMT: Germany’s retail sales (0.5% expected, -0.1% previous)
- 7:45 am GMT: France’s preliminary CPI (0.1% expected, -0.2% previous)
- 8:00 am GMT: Spain’s flash GDP (q/q) to remain at 0.6%?
- 9:00 am GMT: Italy’s monthly unemployment rate (9.9% expected, 9.7% previous)
- 10:00 am GMT: Euro Zone’s CPI flash estimate (y/y) (2.2% expected, 2.1% previous)
- 10:00 am GMT: Euro Zone’s core CPI estimate (1.1% expected, 0.9% previous)
- 10:00 am GMT: Italy’s preliminary CPI (0.2% expected, -0.5% previous)
- 10:00 am GMT: Euro Zone’s unemployment rate expected to steady at 8.1%