The yen lost a couple more pips against its major counterparts while the Greenback saw mixed price action ahead of the September FOMC statement.
- NZ Westpac consumer sentiment slips from 113.4 to 112.4 in Q2 2017
- Australia’s house price index (q/q) jumps by 1.9% vs. 1.2% expected, 2.2% previous
- RBA: Wages, inflation expected to remain low “for some time”
- RBA positive about the economy but concerned over strong AUD and high household debt
- RBA sees solid job growth ahead but expects wages to remain muted
RBA’s meeting minutes
With not a lot of other top-tier scheduled for release, focus turned to the Reserve Bank of Australia (RBA)’s minutes from its meeting earlier this month. If you recall, central bank kept its rates steady at 1.50% for a 13th consecutive month in September.
In its release the RBA once again noted the below-growth trend in 2016/17 but mentioned the uptrend in non-mining investment. RBA also mentioned the easing of housing market conditions in Sydney even as conditions remain varied across regions.
Like in its official statement, Lowe and his gang spent some time talking about employment. They said that solid growth is expected to continue, which would also support household incomes and spending.
They’re also concerned over high housing debt, however, saying that it has outpaced the “slow growth in household incomes over the preceding few years.” Members also noted that “wages and inflation had remained low but stable.” Still, the central bank is confident that low interest rates and continued reduction in spare capacity would eventually result in a “gradual increase in growth in wages and inflation.”
And then there’s the jawboning special, where the RBA emphasized that the Aussie’s appreciation was “weighing on domestic growth and contributing to subdued inflationary pressure,” adding that “further appreciation of the Australian dollar would be expected to result in a slower pick-up in growth and inflation.” Yipes!
Overall, the concern for a strong dollar and belief that low interest rates could help boost below-trend growth supported speculations that the RBA isn’t in any hurry to raise its rates anytime soon.
Mixed risk sentiment
Japanese traders – who were out on a holiday yesterday – caught up to their U.S. and European counterparts by buying high-yielding assets.
Chinese traders weren’t as upbeat even though word through the grapevine is that the People’s Bank of China (PBoC) is drafting plans that would increase foreign investors’ access to China’s financial industry.
- Nikkei is up by 1.45% to 20,198.50
- Australia’s A SX 200 is up by 0.08% to 5,725.10
- Hang Seng is down by 0.08% to 28,137.50
- Shanghai index is down by 0.45% to 3,347.58
Major Market Mover(s):
The low-yielding yen lost pips across the board as Japanese traders caught up to the previous sessions’ risk-friendly trading.
USD/JPY is up by another 5 pips (+0.05%) to 111.47;
EUR/JPY climbed by 26 pips (+0.20%) to 133.46;
GBP/JPY is up by 36 pips (+0.24%) to 150.72, and
CHF/JPY is up by 17 pips (+0.15%) to 116.04.
The Aussie got a boost from better-than-expected housing prices report, but soon gave up some of its gains when the RBA’s meeting minutes pointed to a longer period of low interest rates.
AUD/USD hit a high of .7994 before settling down to .7971 while AUD/JPY slipped from 89.05 to 88.80 before yen weakness pushed it back up to 88.86. AUD/NZD straight up fell to 1.0951 after hitting session highs near 1.0988.
A risk-friendly environment got mixed in with positive expectations over today’s dairy auction and New Zealand’s upcoming elections to boost Kiwi higher against its counterparts.
NZD/USD is up by 21 pips (+0.29%) to .7278;
NZD/JPY is up by 96 pips (+1.19%) to 81.84; and
NZD/CAD is up by 30 pips (+0.34%) to .8953.
The Greenback’s price action was a mixed bag of nuts, as it gained against the yen but lost to the European and commodity currencies.
EUR/USD popped up by 18 pips (+0.15%) to 1.1970;
GBP/USD is up by 27 pips (+0.20%) to 1.3519, and
USD/CHF is down by 10 pips (-0.10%) to .9609.
Watch Out For:
- 8:00 am GMT: Euro Zone current account (22.3B EUR expected, 21.2B EUR previous)
- 9:00 am GMT: German ZEW economic sentiment (12.3 expected, 10.0 previous)
- 9:00 am GMT: German ZEW economic conditions to improve from 86.7?
- 9:00 am GMT: Euro Zone ZEW economic sentiment (32.4 expected, 29.3 previous)
- 9:00 am GMT: Euro Zone ZEW economic conditions to print higher than August’s 38.4?