The dollar dipped lower after Democrats gained majority in Congress and hinted at tougher times for the Trump admin’s policies.
Commodity-related currencies were a mixed bag of beans, though, with the Kiwi gaining support from a strong labor market report while the Loonie slipped despite the higher crude oil prices.
- Australia’s AIG construction index slips from 49.3 to 46.4 in October
- New Zealand unemployment rate improves from 4.4% to 3.9% in Q3 2018
- New Zealand jobs up by 1.1% vs. 0.5% expected, 0.6% in Q2 2018
- New Zealand’s labor cost index (q/q) gains 0.5% as expected vs. 0.6% previous
- New Zealand’s inflation expectations remains at 2.0% in Q4 2018
- Japan’s average cash earnings (y/y) inches up by 1.1% vs. 1.2% expected, 0.8% previous
- Japan’s leading indicators lower from 104.5% to 103.9% in September
New Zealand’s jobs report
Data printed earlier showed New Zealand’s unemployment rate dropping from 4.4% to 3.9% in Q3 2018. That’s the lowest since Q2 2008!
The labor force participation rate also edged up from 70.9% to 71.1%, which means that the improvement in jobless rate happened despite the increase of workers looking for job opportunities.
Employment numbers further support the rosy picture, as employment picked up by a strong 1.1% when analysts had only expected a 0.5% uptick after Q2’s 0.6% growth.
Last but not the least, average hourly earnings rose 1.4% during the quarter, which is also 3.6% higher than last year’s figure. Not bad at all, eh?
Equities shaken by Democrat House takeover
Asian bourses took cues from their U.S. counterparts and started the session strong across the board.
The momentum lost ground, however, when U.S. mid-term election results trickled in and supported speculations that the Democrats would snatch control of the House from the Republicans.
For newbies out there, know that this is BFD since opposition from Congress could make it hard for Trump to pursue policies like increasing infrastructure spending, amending Dodd-Frank regulations, and implementing more tax cuts.
With 401 out of 435 seats declared, the Democrats currently lead with 210 seats against the Republicans’ 191.
Still, Asian session players retained some of their optimism. Some believe that a split government could find common ground in policies related to fiscal stimulus. For now, Asian equity markets remain in the green.
- Nikkei is up by 0.69% to 22,300.4
- A SX 200 is up by 0.33% to 5,865.3
- Shanghai index is up by 0.26% to 2,666.283
- Hang Seng is up by 1.17% to 26,427.3
Commodity prices also saw strength, with gold prices taking advantage of dollar weakness while crude oil benchmarks saw some reprieve from the previous sessions’ losses.
- Gold is up by 0.23% to $1,229.50 per troy ounce
- Brent crude oil is up by 0.50% to $72.00 per barrel
- U.S. WTI is up by 0.29% to $61.91 per barrel
Major Market Mover(s):
Kiwi bulls had an early start as they charged as soon as New Zealand printed its strong labor market numbers.
NZD/USD is up by 31 pips (+0.46%) to .6769; NZD/JPY is up by 23 pips (+0.29%) to 76.64; GBP/NZD is down by 17 pips (-0.08%) to 1.9413; EUR/NZD is down by 13 pips (-0.07%) to 1.6941, and AUD/NZD is down by 21 pips (-0.20%) to 1.0726.
The dollar lost pips across the board as soon as early election results hinted at a split government in the U.S.
USD/JPY is down by 18 pips (-0.16%) to 113.23; USD/CHF is down by 31 pips (-0.31%) to .9993; EUR/USD is up by 42 pips (+0.37%) to 1.1468; USD/CAD is down by 14 pips (-0.11%) to 1.3109; GBP/USD is up by 43 pips (+0.33%) to 1.3141, and AUD/USD is up by 17 pips (+0.23%) to .7261.
The Loonie failed to take advantage of the recovery in crude oil prices and continued to slide lower against its counterparts.
CAD/JPY is down by 4 pips (-0.04%) to 86.38; CAD/JPY is down by 14 pips (-0.18%) to .7624; AUD/CAD is up by 12 pips (+0.13%) to .9518; GBP/CAD is up by 42 pips (+0.24%) to 1.7226, and EUR/CAD is up by 40 pips (+0.27%) to 1.5033.
CHF and JPY
A bit of risk-taking in the markets translated to a lost pip or two (or fifteen) for the safe-haven currencies.
EUR/JPY is up by 27 pips (+0.21%) to 128.85; AUD/JPY is up by 5 pips (+0.07%) to 82.22; CHF/JPY is up by 16 pips (+0.14%) to 113.29, and GBP/JPY is up by 30 pips (+0.20%) to 148.80.
AUD/CHF is up by 5 pips (+0.07%) to .7256; EUR/CHF is up by 8 pips (+0.07%) to 1.1462, and GBP/CHF is up by 3 pips (+0.02%) to 1.3133.
Watch Out For:
- 7:00 am GMT: Germany’s industrial production (0.0% expected, -0.3% previous)
- 8:00 am GMT: Switzerland’s foreign currency reserves
- 8:30 am GMT: U.K. Halifax house price index (0.5% expected, -1.4% previous)
- 9:00 am GMT: Italy’s retail sales (0.1% expected, -0.2% previous)