Global growth concerns weighed on the Asian bourses. Luckily for AUD and NZD, the bulls paid more attention to domestic data.
- NZ ANZ business confidence improves from -37.1 to -24.1 in December
- AU CB leading index slips by 0.5% vs. 0.1% decline in September
- AU HIA new home sales inches up by 3.6% vs. 0.8% dip in October
Positive reports from Australia and New Zealand
There were no top-tier reports printed earlier in the session, so it was easier for market players to pay attention to Australia and New Zealand’s data releases.
The Reserve Bank of Australia (RBA)’s meeting minutes, for example, still reflected the central bank’s stance that “the next move in the cash rate was more likely to be an increase than a decrease, but that there was no strong case for a near-term adjustment in monetary policy.”
A separate release also showed that new home sales had risen modestly in November after seeing a dip in October.
Meanwhile, business sentiment in New Zealand clocked in its best readings since April as lower oil prices and loose credit conditions helped overall sentiment.
Though they didn’t move the markets, you might want to note what several key policymakers had to say during the trading session.
Chinese President Xi Jinping had a lot to say, but one of the more notable ones was when he said that
“No one is in a position to dictate to the Chinese people what should or should not be done.”
The low-key combative stance, coupled with a lack of fiscal stimulus announcements, led to some selling in the Chinese bourses.
Bank of Canada (BOC) Governor Stephen Poloz also made headlines when he shared that the central bank’s rate hike schedule “can be interrupted” depending on economic data.
The BOC head honcho also admitted that “[t]here is a risk there that we have rising inflation at the same time as slowing economies,” but reassured that he doesn’t see a recession in 2019. Good to know!
Japan lowers growth forecasts
Japan’s government lowered its growth and inflation forecasts for the current and next fiscal years earlier today, after natural disasters and weaker export demand took a chunk out of economic activity.
The Cabinet Office now sees the economy growing by 0.9% (from 1.5%) in FY 2018 and 1.3% (from 1.5%) in FY 2019. Meanwhile, consumer prices are expected to rise by 1.0% (from 1.1%) in 2018 and then increase by 1.1% (from 1.5%) in FY 2019.
The government will use these numbers to prepare the state budget for the next fiscal year starting in April, which is especially tricky now that policymakers are preparing to raise the nationwide sales tax.
Overall risk aversion
The Asian bourses tracked their U.S. counterparts and dipped some points on the back of global growth and trade concerns.
If you recall, rumors of a verbal tussle between U.S. and Chinese reps, along with a bit of pre-FOMC profit-taking have dragged on high-yielding bets.
Of course, it also didn’t help that Xi Jinping’s speech earlier today failed to mention any progress on the U.S.-China trade negotiations.
- Nikkei is down by 1.54% to 21,176.0
- A SX 200 is up by 0.34% to 5,606.649
- Shanghai index is down by 1.09% to 2,569.649
- Hang Seng is down by 0.90% to 25,853.0
Commodity prices were a little more mixed. Gold took advantage of a bit of dollar weakness, while crude oil continued to slide after a U.S. report showed more-than-expected crude oil inventories.
- Gold is up by 0.23% to $1,248.40 per troy ounce
- Brent crude oil is steady at $60.27 per barrel
- U.S. WTI is up by 0.23% to $49.23 per barrel
Major Market Mover(s):
AUD and NZD
Aussie and Kiwi bulls looked to positive economic data from Australia and New Zealand for direction and managed to save the comdolls from the risk-averse vibe during the trading session.
AUD/USD is up by 13 pips (+0.18%) to .7190; AUD/CHF is up by 10 pips (+0.13%) to .7135; AUD/CAD is up by 14 pips (+0.14%) to .9633; EUR/AUD is down by 17 pips (-0.11%) to 1.5789, and GBP/AUD is down by 5 pips (-0.03%) to 1.7566.
NZD/USD is up by 47 pips (+0.69%) to .6850; NZD/JPY is up by 35 pips (+0.46%) to 77.09; NZD/CHF is up by 43 pips (+0.64%) to .6797; EUR/NZD is down by 101 pips (-0.61%) to 1.6574; AUD/NZD is down by 47 pips (-0.45%) to 1.0497, and GBP/NZD is down by 96 pips (-0.52%) to 1.8440.
The Aussie and Kiwi might have escaped the bears’ clutches, but the other yen crosses weren’t as lucky. They got hit by the risk aversion train, yo!
GBP/JPY is down by 16 pips (-0.11%) to 142.16; EUR/JPY is down by 26 pips (-0.20%) to 127.77; CAD/JPY is down by 15 pips (-0.18%) to 84.00, and CHF/JPY is down by 19 pips (-0.17%) to 113.42.
Uncertainty (and profit-taking) ahead of the Fed’s much-awaited monetary policy decision weighed on the Greenback in the last couple of hours.
USD/JPY is down by 28 pips (-0.25%) to 112.55; USD/CAD is down by 9 pips (-0.07%) to 1.3397; USD/CHF is down by 8 pips (-0.08%) to .9922; GBP/USD is up by 11 pips (+0.09%) to 1.2631, and EUR/USD is up by 6 pips (+0.05%) to 1.1353.
Watch Out For:
- 6:45 am GMT: Switzerland’s SECO economic forecasts
- 9:00 am GMT: Germany’s Ifo business climate (101.8 expected, 102.0 previous)