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Higher-yielding bets started the session on a strong note before profit-taking and a bit of risk aversion pushed them back lower by the end of the Asian session.

  • Japan’s core machinery orders dips by 1.9% vs. 3.6% uptick expected, 3.6% decline previous
  • Japan’s PPI (y/y) up by 2.6% vs. 2.4% expected, 2.2% previous
  • AU MI inflation expectations up by 4.2% vs. 4.4% in July
  • NZ electronic card retail spending down by 0.5% vs. 0.1% decline in June
  • Japan’s tertiary industry activity clocks in at 0.0% vs. 0.2% expected, -0.1% previous
  • RBNZ’s Wheeler: “We would like to see a lower exchange rate”

Major Events/Reports:

RBNZ Governor Wheeler’s presser

As mentioned in the U.S. session recap, the RBNZ kept its rates steady at 1.75% as market players had expected. It also lowered its inflation forecasts; maintained its stance that rates won’t rise until Q3 2019, and shared that a weaker currency is “needed.”

RBNZ Governor Graeme Wheeler furthered the central bank’s cause in his presser by repeating that he would like to see a weaker NZD.

In his presser, he admitted that a weak U.S. dollar is one of the reasons why Kiwi is stronger but that “A lower New Zealand dollar is needed to increase tradables inflation and help deliver more balanced growth.

Wheeler also talked currency intervention, saying that the option “is always open” to them and that they have intervened in the past. Duhn duhn duhn.

Risk aversion lite

With not a lot of major data on the docket, forex traders turned their eyes on nuclear threats between the U.S. and North Korea. But since there was no “fire and fury” heard from either side today, market bears have mostly calmed down.

The threats haven’t completely disappeared; however, as some Asian session traders took the opportunity to dump their higher-yielding assets in favor of lower-yielding ones.

Whether it’s due to profit-taking from previous tren ds or positioning ahead of potentially risky events, equities and higher-yielding comdolls ended up getting the shorter sticks during the session.

  • Nikkei is down by 0.11% to 19.716.50
  • Australia’s A SX 200 is down by 0.17% to 5,755.60
  • Hang Seng is down by 1.52% to 27,336.50, and
  • Shanghai index is down by 1.03% to 11,571.07.

Major Market Mover(s):

Comdolls

Higher-yielding currencies like the comdolls rallied at the start of the session when it doesn’t look like we’ll see more “fire and fury” from either Trump or Kim Jong-Un.

The tides changed, however, when Asian session traders jumped in and either took profits from their higher-yielding bets or priced in a bit more of risk aversion.

In Kiwi’s case, a not-so-dovish RBNZ statement pushed the currency higher before a bit of jawboning from Wheeler and risk aversion dragged it back to new daily lows.

AUD/USD popped up to 87.09 before settling down at 86.61,
AUD/JPY jumped to .7911 before settling to .7876,
USD/CAD fell to 1.2692 before jumping back to 1.2717,
CAD/JPY hit 86.78 before settling to 86.50,
NZD/USD popped up to 81.12 before sliding back to 80.35, and
NZD/JPY rose to .7371 before reaching .7306.

Watch Out For:

  • 7:45 am GMT: France’s industrial production (-0.6% expected, 1.9% previous)
  • 9:00 am GMT: Italy’s trade balance (3.87B EUR expected, 4.34B EUR previous)
  • 9:30 am GMT: U.K.’s manufacturing production (0.0% expected, -0.2% previous)
  • 9:30 am GMT: U.K.’s goods trade balance (-11.0B GBP expected, -11.9B GBP previous)
  • 9:30 am GMT: U.K.’s construction output (1.4% expected, -1.2% previous)
  • 9:30 am GMT: U.K.’s industrial production (0.1% expected, -0.1% previous)