No major reports? No problem! Today Asian session forex traders turned their attention to New Zealand’s new government and the next Fed Chairman.
- AU CB leading index up by 0.1% vs. 0.2% growth in July
- Japan’s flash manufacturing PMI slips from 52.9 to 52.5 in October
- Labour and NZ First sign coalition deal
- Labour to change RBNZ’s mandate?
New Zealand’s Labour and NZ First sign coalition agreement
Earlier today New Zealand’s Labour party officially signed a coalition agreement with NZ First’s Winston Peters (who is now Deputy Prime Minister), boy, they sure didn’t waste time sharing their plans!
Among other things Labour leader and future Prime Minister Jacinda Ardern hinted plans of increasing wages, prioritizing job creation and regional economic development, taxing some exports, and banning foreign buyers from the housing market.
The signing of coalition as well as remarks over the government prioritizing fiscal responsibility and wages pushed the New Zealand dollar early in the day.
The move soon lost steam, however, when traders also saw that the new government is planning on taxing exports, limiting foreign buying in the housing market and, most importantly, changing the Reserve Bank of New Zealand’s (RBNZ) mandate to include employment.
Ardern shared that “We have been looking at changing the objectives set out in the Reserve Bank Act,” adding that “The objectives of the Act to possibly include employment is certainly part of our plans.”
The new objective, though not completely a surprise, still points to the RBNZ possibly keeping its dovish feathers for longer.
Dollar continues to weaken
Much like in the previous session, the dollar continued to lose steam as traders brace themselves for possibly a new Fed Chairman announced this week.
If you recall, the Donald hinted that he will announce his pick “very, very soon” in an interview yesterday.
Overall risk appetite
The dollar’s weakness and a lack of fresh catalysts helped propel equities and commodities higher during the Asian session.
- Nikkei is up by another 0.08% to 21,714.50;
- Australia’s A SX 200 is down by 0.01% to 5,893.40;
- Hang Seng is up by 0.03% to 28,314.00, and
- China’s A50 is up by 0.73% to 12,463.37.
Commodity prices also took advantage of risk appetite and overall dollar weakness.
- Gold is up by 0.24% to $1,284.02;
- Silver is up by 0.44% to $17.150;
- Brent crude oil is up by 0.19% to $57.48, and
- U.S. WTI is up by 0.17% to $51.99.
Major Market Mover(s):
Kiwi spiked higher on Ardern’s remarks on fiscal responsibility and higher wages, but it soon fell on her protectionist remarks regarding the housing and export markets and the RBNZ’s new mandate.
NZD/USD shot up to .7005 before falling to .6916;
NZD/JPY popped up to 79.35 before slipping to 78,70;
EUR/NZD is up by 79 pips (+0.47%) to 1.6940, and
AUD/NZD is up by 60 pips (+0.54%) to 1.1263.
The Greenback continued to lose ground against its major counterparts thanks to overall risk appetite and uncertainty ahead of Trump’s Fed Chairman announcement.
EUR/USD is up by 18 pips (+0.15%) to 1.1766;
GBP/USD is up by 24 pips (+0.18%) to 1.3221;
USD/JPY is down by a pip to 133.32 after dropping to 113.25, and
USD/CHF is down by another 6 pips (-0.06%) to .9846.
Watch Out For:
- 7:00 am GMT: France’s flash manufacturing PMI (56.2 expected, 56.1 previous)
- 7:00 am GMT: France’s flash services PMI to remain at 57.0?
- 7:30 am GMT: Germany’s flash manufacturing PMI (60.0 expected, 60.6 previous)
- 7:30 am GMT: Germany’s flash services PMI (55.6 expected and previous)
- 8:00 am GMT: Euro Zone’s flash manufacturing PMI (57.7 expected, 58.1 previous)
- 8:00 am GMT: Euro Zone’s flash services PMI (55.8 expected, 55.8 previous)