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Asian markets had a gloomy start to the day, but news about high-level meetings between U.S. and Chinese reps renewed optimism for global trade prospects.

  • AU NAB business confidence dips from 6 to 4 in October
  • U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He talked trade last Friday

Major Events/Reports:

Australia’s businesses lose confidence in October

A report from NAB Group Economics showed business confidence and conditions slipping in October.

That’s right! Business conditions dipped from +14 to a reading of +12, while confidence fell from +6 to a 2018 low of +4.

A closer look tells us that the employment component was the biggest drag for the month. However, NAB chief economist Alan Oster assured that the decline “comes after a run of strong gains” and that survey results still point to the economy adding about 20,000 jobs per month.

U.S. and China hold high-level talks ahead of Trump-Xi meeting

The biggest story of the hour is the Wall Street Journal reporting that U.S. Treasury Secretary Steven Mnuchin resuming talks with his Chinese counterpart Vice Premier Liu He ahead of a meeting between Presidents Trump and Xi Jinping at the end of the month.

WSJ cited “people briefed on the conversation” and said that the U.S. is demanding a concrete offer from China before negotiations take place while Chinese officials prefer talking first before placing their cards on the table.

While Friday’s convo didn’t really lead to solid breakthroughs, the confirmation of the call was enough sign that both parties are trying to reach middle ground.

Overall risk appetite

The Asian bourses were on track to follow the bearish footsteps of their U.S. counterparts before news of U.S. and Chinese reps talking boosted overall risk sentiment.

Japanese and Australian markets missed the memo, however, as they failed to recover from their losses in early Asian session trading.

  • Nikkei is down by 2.28% to 21,762.2
  • A SX 200 is down by 0.45% to 5,852.9
  • Shanghai index is up by 0.11% to 2,633.456
  • Hang Seng is down by 0.10% to 25,606.5

Commodities also joined the bulls’ party. Gold inched higher on a bit of dollar weakness, while crude oil benchmarks extended their post-Trump tweet rallies from the previous sessions.

  • Gold is up by 0.37% to $1,204.54 per troy ounce
  • Brent crude oil is up by 0.65% to $69.49 per barrel
  • U.S. WTI is up by 0.60% to $59.17 per barrel

Major Market Mover(s):

AUD and NZD

Optimism over renewed talks between China and the U.S. boosted commodity-related currencies that would benefit from more export demand from China.

AUD/USD is up by 40 pips (+0.56%) to .7213; AUD/JPY is up by 56 pips (+0.69%) to 82.22; AUD/CAD is up by 32 pips (+0.34%) to .9534; EUR/AUD is down by 36 pips (-0.23%) to 1.5598, and GBP/AUD is down by 40 pips (-0.23%) to 1.7867.

NZD/USD is up by 37 pips (+0.55%) to .6746; NZD/JPY is up by 53 pips (+0.69%) to 76.90; EUR/NZD is down by 40 pips (-0.24%) to 1.6677; GBP/NZD is down by 45 pips (-0.23%) to 1.9103, and NZD/CAD is up by 30 pips (+0.34%) to .8917.

CHF and JPY

Not surprisingly, a jump in risk sentiment weighed on safe haven currencies like the franc and yen.

USD/JPY is up by 15 pips (+0.14%) to 113.99; GBP/JPY is up by 64 pips (+0.43%) to 146.90; EUR/JPY is up by 56 pips (+0.44%) to 128.25; CHF/JPY is up by 29 pips (+0.25%) to 112.89, and CAD/JPY is up by 30 pips (+0.35%) to 86.23.

EUR/CHF is up by 22 pips (+0.19%) to 1.1361; GBP/CHF is up by 27 pips (+0.20%) to 1.3013; AUD/CHF is up by 32 pips (+0.44%) to .7284, and NZD/CHF is up by 31 pips (+0.46%) to .6812.

USD

The dollar gave back some pips from its post-FOMC high to trade lower against its lower counterparts.

EUR/USD is up by 33 pips (+0.30%) to 1.1251; USD/CHF is down by 11 pips (-0.10%) to 1.0098; USD/CAD is down by 27 pips (-0.20%) to 1.3219, and GBP/USD is up by 40 pips (+0.31%) to 1.2888.

Watch Out For:

  • 7:00 am GMT: Germany’s final CPI expected to maintain 0.2% growth
  • 7:45 am GMT: France’s preliminary private payrolls (q/q) (0.3% expected, 0.1% previous)
  • 8:15 am GMT: Switzerland’s PPI (0.1% expected, -0.2% previous)
  • 9:30 am GMT: U.K.’s labor market numbers. Read our mini trading guide to see what markets are expecting from the releases!
  • 10:00 am GMT: Germany’s ZEW economic sentiment (-24.2 expected, -24.7 previous)
  • 10:00 am GMT: Euro Zone ZEW economic sentiment (-17.3 expected, -19.4 previous)
  • 11:00 am GMT: NFIB small business index (108.0 expected, 107.9 previous)