Asian session traders favored the Greenback ahead of the NFP report, while domestic catalysts dragged the Aussie and the pound lower.
- China still on a week-long bank holiday
- AU AIG construction index slips from 55.3 to 54.7 in September
- Japan’s average cash earnings (y/y) up from -0.6% to 0.9% in August
- Japan’s leading indicators up from 105.2% to 106.8% in August
Dollar extends gains
The dollar index hit fresh seven-week highs today thanks to optimism over Uncle Sam’s tax reform, strong equities markets, and speculations that today’s NFP release won’t be as grim as market players are expecting.
If you recall, positive U.S. reports further buoyed risk sentiment during U.S. session trading. Of course, it also didn’t hurt that FOMC officials such as Williams, George, and Harker shared that they’re open to at least one more rate hike this year.
More rate cuts from the RBA?
The Aussie didn’t get the usual pre-NFP lull treatment as market players digested a Wall Street Journal interview where Ian Harper shared that the central bank had NOT completely ruled out the idea of another rate cut.The RBA board member said that Australia’s economic recovery is “painfully slow” and that the “slow growth in wages, which is feeding into slow growth in household income” is “causing an issue” for him and his team.
At one point, Harper admitted that “You wouldn’t want to be jumping the gun and tightening too quickly.”
Harper’s dovish remarks, which came at the heels of a somewhat dovish RBA statement and a disappointing retail sales report, further dragged the Aussie lower.
Major Market Mover(s):
The Greenback was still king of pips as Asian session traders caught up to their U.S. counterparts.
EUR/USD is down by 7 pips (-0.06%) to 1.1698;
USD/JPY is up by 3 pips (+0.03%) to 112.88;
USD/CHF is up by 6 pips (+0.06%) to .9793.
The Australian dollar continued to take hits thanks to RBA’s Ian Harper hinting that the RBA isn’t done cutting rates just yet.
AUD/USD is down by 38 pips (-0.49%) to .7752;
AUD/JPY is down by 41 pips (-0.47%) to 87.50;
EUR/AUD popped up to 1.5114 before levelling off to 1.5089, and
AUD/NZD fell by 26 pips (-0.24%) to 1.0923.
The pound took a few hits itself on the back of Theresa May’s unfortunate speech yesterday that served to further erode her authority.
GBP/USD is down by 25 pips (-0.19%) to 1.3091;
GBP/JPY is down by 25 pips (-0.17%) to 147.76;
EUR/GBP is up by 11 pips (+0.12%) to .8935, and
GBP/CHF is down by 19 pips (-0.15%) to 1.2819.
Watch Out For:
- 6:00 am GMT: Germany’s factory orders (0.7% expected, -0.7% previous)
- 6:45 am GMT: France’s government budget balance
- 6:45 am GMT: France’s trade balance (-5.4B EUR expected, -6.0B EUR previous)
- 7:00 am GMT: Switzerland’s foreign currency reserves
- 7:30 am GMT: U.K. Halifax house price index (0.0% expected, 1.1% previous)
- 8:00 am GMT: Italy’s retail sales (0.2% expected, -0.2% previous)