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A light trading day enabled the Greenback to extend its gains while a dip in commodity prices dragged commodity-related currencies lower across the board.

  • RBNZ keeps rates unchanged at 1.75% as expected
  • Germany’s GfK consumer climate dips from 10.9 to 10.8 in September
  • Australia’s job vacancies jumped to its record levels in the three months to August

Major Events/Reports:

Dollar extends gains

With not a lot of major catalysts on the docket, Asian session traders focused on catching up to their U.S. session counterparts.

If you recall, forex traders boosted the Greenback after POTUS Trump unveiled a few more details about his administration’s proposed tax cuts. Of course, it also didn’t hurt that traders continued to price in at least one more rate hike from the Fed despite slightly less hawkish statements from the Fed members.

Mixed equities trading

Nikkei, which celebrated a weaker yen and optimistic prospects in Wall Street, gained 0.53% to 20,375.00 while Australia’s A SX 200 followed suit with a 0.13% gain to 5,671.50.

China’s indices were a little less lucky with Hang Seng dipping by 0.39% as shares of financial stocks were threatened by rate hike prospects in the U.S. Meanwhile, light trading pushed the Shanghai index 0.1% lower to 3,342.10 by mid-day trading.

Weaker commodity prices

Both U.S. and Brent crude oil prices stepped back during the Asian session traders after the Black Crack failed to gain momentum despite a bigger-than-expected inventory draw from the EIA.

It also doesn’t help that Brent crude prices recently hit its highest premium over WTI prices in two years. This makes U.S. oil even more competitive and could encourage even more U.S. oil exports.

  • Brent oil is down by 0.42% to $57.44 while
  • U.S. crude oil is down by 0.36% to $51.95.

Meanwhile gold prices took hits in tandem with higher and U.S. Treasury yields and Greenback prices. The yellow metal is down by 0.30% to $1,283.95 as of mid-day trading.

Last but not the least is iron ore, which plummeted further on news that China will cancel about one-third of its iron ore mining licenses to improve Beijing’s air quality.

The measure is expected to affect about 1,000 small mines on top of the estimated thousand that had already closed in the last years. Oh, and let’s not forget that the government is also planning to crack down on steel outputs in the next couple of months!

Not surprisingly, the January 2018 iron ore contract in Dalian dell to its lowest levels since mid-July.

Major Market Mover(s):

USD

Prospects of higher interest rates and lower taxes pushed the scrilla even higher against its major counterparts.

USD/JPY Is up by another 25 pips (+0.22%) to 113.04;
EUR/USD is down by 18 pips (-0.15%) to 1.1731;
GBP/USD is down by 17 pips (-0.13%) to 1.3376, and
USD/CHF Is up by 21 pips (+0.22%) to .9742.

NZD

The New Zealand dollar had a topsy-turvy trading session after risk aversion overtook a bit of relief over a not-so-dovish RBNZ statement.

NZD/USD hit a session high of .7233 before falling back down to .7193;
NZD/JPY popped up to 81.65 before settling down to 81.30, and
NZD/CAD jumped to .9025 before settling down to .8992.

AUD and CAD

The commodity-related currencies were one-two punched by overall dollar strength and weakness in gold, iron ore, and crude oil prices.

AUD/JPY is down by 16 pips (-0.18%) to 88.42;
AUD/USD is down by 32 pips (-0.41%) to .7823;
USD/CAD is up by 22 pips (+0.18%) to 1.2503, and
EUR/CAD is up by 6 pips (+0.04%) to 1.4668.

Watch Out For:

  • Germany’s preliminary CPI to sustain 0.1% growth in September?
  • 6:35 am GMT: BOJ’s Kuroda to give a speech in Tokyo
  • 7:00 am GMT: Spain’s flash CPI (y/y) (1.8% expected, 1.6% previous)
  • 8:15 am GMT: BOE’s Carney to give a speech in London
  • 9:00 am GMT: RBA Assistant Governor Guy Debelle to give a speech in London