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Comdolls got some love during the Asian session, as a lack of risk-averse news drove traders into higher-yielding currencies.

  • U.K. BRC shop price index (y/y) slips by 0.3% vs. 0.4% decrease in July
  • Japan’s retail sales (y/y) up by 1.9% vs. 1.0% expected, 2.2% previous
  • AU building approvals down by 1.7% vs. 5.4% decline expected, 11.7% growth previous
  • AU construction work done (q/q) up by 9.3% vs. 0.9% expected, 0.9% previous
  • RBNZ’s Wheeler: lower NZD is “needed” to help deliver more balanced growth

Major Events/Reports:

Australia’s data releases

Earlier today the Land Down Under printed a couple of economic data. Building approvals, for example, fell by 1.7% in July after rising by 11.7% in June.

A closer look tells us that the 6.7% decline in private dwellings excluding houses (read: mostly apartments) led the decline. Fortunately, traders had expected a 5.0% fall so the 1.7% dip was no biggie.

Meanwhile, the value of building – both residential and non-residential – and engineering work popped up by 9.3% in Q2 2017. This is better than the 0.9% lift expected and translates to a 6.8% increase from a year earlier in the quarter.

Details reveal that the increase was mostly driven by LNG platform-related work off the north-west coast of Western Australia. Building construction was actually flat for the quarter, while residential construction posted another 0.4% decline.

Luckily for Aussie bulls, traders mostly focused on the headline surprise, which helped propel the comdoll higher across the board.

Graeme Wheeler’s speech

In a speech earlier today, Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler took his opportunity to jawbone the Kiwi once again.

Wheeler shared that “The appreciation in the exchange rate has been a headwind for the tradables sector and, by reducing already weak tradables inflation, made it more difficult to reach the Bank’s inflation goals,” adding that “A lower New Zealand dollar is needed to increase tradables inflation and help deliver more balanced growth.

Wheeler also talked about the RBNZ’s loan-to-value lending restrictions (LVRs) which helped curb housing market prices. If you recall, Prime Minister Bill English said this month that the RBNZ’s rules were temporary and that Wheeler and his team should start thinking about removing them.

Instead, Wheeler emphasized the risks of the housing prices shooting higher again, saying that “Their removal would require a degree of confidence that financial stability risks won’t deteriorate again.

Kiwi spiked lower when Wheeler made his speech, but it soon steadied when there was no follow up jawboning from the RBNZ head honcho.

Improved risk sentiment

A lack of retaliation from the U.S., Japan, or South Korea for North Korea’s missile stunt yesterday was good news for risk-taking during the Asian session.

Nikkei, which fell to a four-month low yesterday, is up by 0.54% to 19,467.50 while Hang Seng is up by 0.69% to 27,957.00. Australia’s A SX 200 dipped by 0.19% to 5,658.30, however, while Shanghai index is also down by 0.17% to 12,195.01.

Major Market Mover(s):

AUD

A risk-friendly trading environment and a couple of relatively strong reports from Australia boosted the Aussie against its major counterparts.

AUD/USD is up by 52 pips (+0.60%) to 87.73;
AUD/JPY is up by 47 pips (+0.59%) to .7994;
EUR/AUD is down by 72 pips (-0.48%) to 1.4990;
GBP/AUD is down by 80 pips (-0.49%) to 1.6180, and
AUD/NZD is up by 28 pips (+0.26%) to 1.0991.

NZD

Kiwi had a bearish moment when Wheeler jawboned the currency for another day today, but it quickly recovered its losses and ended the session almost unchanged against its counterparts.

NZD/USD is up by 24 pips (+0.33%) to .7273 and NZD/JPY is up by 25 pips (+0.31%) to 79.82.

Watch Out For:

  • 7:00 am GMT: Switzerland’s UBS consumption indicator
  • Germany’s preliminary CPI (0.1% expected, 0.4% previous)
  • 8:00 am GMT: KOF economic barometer (107.0 expected, 106.8 previous)
  • 8:00 am GMT: KOF economic barometer (107.0 expected, 106.8 previous)
  • 9:00 am GMT: Switzerland Credit Suisse economic expectations
  • 9:30 am GMT: U.K. individual lending (5.3B GBP expected, 5.6B GBP previous)
  • 9:30 am GMT: U.K. mortgage approvals (66K expected, 65K previous)