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It was a mixed day for the major currencies, as Kiwi took more hits on the back of a weak trade balance data while the Aussie saw some green shoots thanks to higher commodity prices. All of these while Asian session traders price in North Korea’s latest “act of war” threats.

  • NZ shows 1.235B NZD trade deficit in August vs. 98M NZD surplus in July
  • BOJ’s meeting minutes: Inflation measures have stopped falling but policies should stay accommodative
  • NZ ANZ business confidence flat in September vs. 18.3 reading in August

Major Events/Reports:

New Zealand’s goods trade numbers miss expectations

Earlier today New Zealand’s goods trade data reflected a 1.235B NZD deficit for the month of August. This is weaker than the expected shortfall of 825M NZD for the month and a 98-M surplus in July.

Lower dairy exports led to the miss, apparently. Milk powder, butter & cheese exports fell by 2.6% from a year earlier in August after popping up by a whopping 50.7% in July. Exports of wool (-23.6%), textiles (-23.2%), and iron and steel (-12.4%) also took hits. These all led to exports only rising by 9.0% after showing a 16.7% improvement in July.

Meanwhile, imports rose by another 6.5% year-on-year after already rising by 4.9% in July. The 53.4% jump in crude oil prices after already rising by 9.9% in July might have something to do with the pop in import prices.

As sharp as the changes are, though, traders soon made allowances for month-on-month volatility, which managed to keep a lid on Kiwi’s intraday losses.

Markets react to North Korea’s “act of war” speech

As mentioned in the U.S. session recap, North Korea thickened the geopolitical plot by accusing the U.S. of declaring war on the hermit kingdom and stated that it would shoot down U.S. bomber planes even if they aren’t in the North Korean airspace.

U.S. equities turned lower at the news and the Asian bourses followed suit:

  • Nikkei is down by 0.38% to 20,319.50;
  • Australia’s A SX 200 is down by 0.22% to 5,671;
  • Shanghai index is down by 3,339.28, and
  • Hang Seng is down by 0.13% to 27,465.00.

Commodity prices were a little more mixed.

  • Gold rose by 0.03% to $1,311.90, but
  • Brent crude oil dipped by 0.02% to $58.41 and
  • U.S. crude oil slipped by 0.17% to $52.13

Major Market Mover(s):

NZD

Kiwi dropped at the release of New Zealand’s wider-than-expected trade deficit, but failed to find momentum amidst tight trading conditions in the Asian session.

NZD/USD is down to .7247 (-0.19%) after hitting a low of .7235;
NZD/JPY is down by 27 pips (-0.33%) to 80.81, and
AUD/NZD is up by 36 pips (+0.33%) to 1.0963.

JPY

With not a lot of major data on the docket, overall risk aversion dominated price action and boosted the low-yielding yen higher against its counterparts.

USD/JPY dipped by another 14 pips (-0.13%) to 111.53 and EUR/JPY fell back to its 132.29 open price after hitting a session high of 132.53.

Watch Out For:

  • 6:00 am GMT: Germany’s import prices (0.1% expected, -0.4% previous)
  • 8:30 am GMT: U.K.’s mortgage lending (41.7K expected, 41.6K previous)