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The dollar continued its bullish run during the Asian session while reports from Australia and New Zealand weighed on the Aussie and Kiwi.

  • NZIER business confidence drops from 18 to 5 in Q3 2017
  • AU HIA new home sales jumps by 9.1% in August after 3.7% dip in July
  • AU building approvals up by 0.4% vs. 1.1% expected, -1.2% previous
  • AU ANZ commodity prices (y/y) up by 18.3% vs. 20.8% previous
  • RBA keeps rates at 1.50% as expected
  • BOJ’s core CPI (y/y) up by 0.6% vs. 0.4% previous
  • Japan’s consumer confidence index up rises from 43.3 to 43.9 vs. 43.5 expected

Major Events/Reports:

RBA keeps rates steady as expected

As expected, the Reserve Bank of Australia (RBA) kept its interest rates at 1.50% for another month in October.

Governor Philip Lowe and his team said that indicators are consistent with the economy gradually picking up “over the coming year.”

They cheered the continued pickup in non-mining investment and was a bit less gloomy about the declining terms of trade, saying that it remains “at relatively high levels” even though it will likely decline “in the period ahead.”

The RBA continued to worry about the growth in household debt, however. It shared that it has been outpacing the slow growth in real wages and will likely “constrain growth in household spending.”

Like in the previous statement, RBA still expects wage growth to remain so “for a while yet,” though the strong labour conditions could lift wages over time. Ditto for inflation, which remains low but will “pick up gradually as the economy strengthens.”

Unfortunately for Aussie bulls, the central bank didn’t let up from its jawboning. It maintained its mantra that a strong currency is “weighing on the outlook for output and employment” and that further appreciation would “result in a slower pick-up in economic activity and inflation than currently forecast.”

Asian session traders catch up to previous session’s themes

Asian session traders caught up to their U.S. counterparts as they priced in better-than-expected manufacturing data and strong equities performance from Uncle Sam.

  • Nikkei shot up by another 0.92% to 20,588.50;
  • Australia’s A SX 200 is down by 0.40% to 5,706.30, and
  • Hang Seng is up by 1.51% to 27,970.50.

Commodities didn’t share the optimism, however. Gold was weighed down by higher dollar prices while crude oil suffered from concerns that recent gains in oil prices would entice U.S. shale producers into flooding the market (heh) with more supply.

  • Gold is down by 0.26% to 1,272.48;
  • Silver is down by 0.40% to 15.588;
  • Brent crude oil is down by 0.43% to $55.88, and
  • U.S. crude oil is down by 0.34% to $50.41.

Major Market Mover(s):

USD

The Greenback continued its bullish run against its major counterparts as Asian session traders priced in strong U.S. manufacturing numbers.

EUR/USD is down by 31 pips (-0.26%) to 1.1705;
USD/JPY is up by 41 pips (+0.36%) to 113.15;
GBP/USD is down by 24 pips (-0.18%) to 1.3252, and
USD/CHF is up by 27 pips (+0.28%) to .9777.

AUD

The Aussie took a step back thanks to the RBA’s not-so-hawkish statement in October.

AUD/USD is down by 30 pips (-0.38%) to .7798;
AUD/JPY is down to 88.21 after hitting a high of 88.43;
GBP/AUD is up by 27 pips (+0.16%) to 1.6989, and
AUD/CAD is down by 21 pips (-0.21%) to .9773.

Watch Out For:

  • Germany’s markets out on Unity Day holiday
  • 7:00 am GMT: Spain’s unemployment change (21.3K expected, 46.4K previous)
  • 8:30 am GMT: U.K. construction PMI to remain at 51.1?
  • 8:30 am GMT: BOE’s Financial Policy Committee meeting minutes
  • 9:00 am GMT: Euro Zone PPI (0.1% expected, 0.0% previous)