The dollar and higher-yielding currencies popped higher on news that North Korea is holding off from bombing Guam today.
- AU new motor vehicle sales down by 2.0% in July vs. 1.1% uptick in June
- Japan’s industrial production revised higher from 1.6% to 2.2% in June
- No additional jawboning from the RBA’s meeting minutes
RBA meeting minutes
Earlier today the Reserve Bank of Australia (RBA) printed its meeting minutes from its August monetary policy decision.
The RBA spent some time discussing employment, saying that “expectations of ongoing low wage growth could weigh on consumption growth” and that the muted assumption for wage inflation could mean that “low inflation in Australia might also persist longer than forecast.”
Lowe and his team also repeated its aversion to a strong Aussie by saying that “further appreciation of the exchange rate would be expected to result in a slower pick-up in inflation and economic activity than currently forecast.”
The central bank didn’t follow up with similar statements, however, which led analysts to speculate that the RBA doesn’t want to jawbone the Aussie too much until it can follow through with any threat it makes.
Safe havens back off on overall risk appetite
It was a good time to sell “safe havens” such as the yen and franc today as threats of nuclear war between the U.S. and North Korea eased.
A few hours ago Wall Street Journal published that Kim Jong-Un has held off from firing missiles in Guam despite its threats to attack by “mid-August.”
However, the North Korean state media has also warned that the Korean leader could change his mind “if the Yankees persist in their extremely dangerous reckless actions.”
The lack of action from North Korea, together with a bit of profit-taking ahead of this week’s major reports, caused high-yielding bets to jump across the board.
Nikkei is up by 1.23%; Australia’s A SX 200 is up by 0.68%; Hang Seng is up by 0.40%, and Shanghai index is up by 0.64%.
Major Market Mover(s):
JPY and CHF
Low-yielders yen and franc took hits across the board as traders flocked to higher-yielding assets.
USD/JPY is up by 54 pips (+0.49%) to 110.21,
EUR/JPY is up by 61 pips (+0.47%) to 129.84,
GBP/JPY is up by 69 pips (+0.49%) to 142.88, and
AUD/JPY is up by 62 pips (+0.72%) to 86.73.
Meanwhile, USD/CHF is up by 6 pips (+0.06%) to .9732,
AUD/CHF is up by 22 pips (+0.29%) to .7659,
GBP/CHF is up by 11 pips (+0.09%) to 1.2618, and
NZD/CHF is up by 21 pips (+0.30%) to .7108.
Watch Out For:
- French and Italian markets out on Assumption Day holiday
- 7:00 am GMT: Germany’s preliminary GDP (q/q) (0.7% expected, 0.6% previous)
- 8:15 am GMT: Switzerland’s PPI (0.0% expected, -0.1% previous)
- 9:30 am GMT: U.K. CPI reports (Read Forex Gump’s trading guide if you’re trading the event!)
- 9:30 am GMT: U.K. PPI output expected to remain at 0.0%
- 9:30 am GMT: U.K. PPI input (0.4% expected, -0.4% previous)
- 9:30 am GMT: U.K. HPI (y/y) (4.3% expected, 4.7% previous)