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It was a pretty busy day for Asian session forex traders, as they priced in fresh catalysts AND caught up to yesterday’s moves.

  • Japan’s core CPI (y/y) remains at 0.7% as expected in September
  • Tokyo’s core CPI up by 0.6% in October vs. 0.5% expected and previous
  • Australia’s PPI (q/q) clocks in 0.2% growth vs. 0.4% expected, 0.5% previous
  • China’s industrial profits rose to fresh 6-year highs in September
  • Australian government loses Lower House majority after Deputy Prime Minister declared “ineligible.”

Major Events/Reports:

Japan’s inflation numbers

Data printed early in the session saw Japan’s inflation at “meh” levels in September.

Consumer prices in the world’s third largest economy grew by 0.7% from a year earlier in September, which matches analysts’ expectations and August’s growth. That’s the ninth straight month of consumer price growth, yo!

Core consumer prices, which excludes volatile items such as food also rose by 0.7%, which is in line with August’s uptick but missed estimates of a 0.8% growth.

Prices fell by 0.2% on a monthly basis, though, which is weaker than the expected 0.1% increase. A closer look tells us that prices rose the fastest for fuel, light and water charges (+6.0%) and medical care (+1.8%) while clothes and footwear (-0.3%) and furniture and household utensils (-0.2%) took the most hits.

Meanwhile, prices in Tokyo, which is widely recognized as a leading indicator for the nation’s prices, actually fell by 0.2% when analysts were expecting a 0.1% increase. Core consumer prices inched 0.6% higher, though, which is better than the 0.5% expected uptick.

Overall, the tepid consumer price increases put no pressure on the BOJ to tighten its stimulus measures. For reference, BOJ Governor Kuroda and his team are targeting a 2.0% inflation rate. Talk about the long and winding road!

Australia’s government loses Lower House majority

Earlier today Australia’s High Court decided to uphold a strict reading of the constitution that prevents dual citizens from sitting in Federal parliament.

In case you’ve only heard of the case, it involves seven policymakers – who some have dubbed #Citizenship7 – being taken to court over their dual citizenship.

The High Court has unanimously ruled the following as INELIGIBLE for Federal parliamentary:

Barnaby Joyce – Deputy Prime Minister and Nationals leader
Fiona Nash – Senator, Cabinet member, and Nationals Deputy Leader
Larissa Waters – Senator (resigned)
Scott Ludlam – Senator (resigned)
Malcolm Roberts – Senator

Meanwhile, Matt Canavan (Senator and Cabinet member) and Nick Xenophon (Senator) were found ELIGIBLE for their seats. Xenophon has announced his intent to resign, however.

Since the Senators’ spots will go to the next party ticket, there won’t be much volatility on their end. The biggest headache (for the government, at least) is the illegibility of Deputy Prime Minster Joyce.

Joyce will be forced to a by-election in his NSW seat of New England on December 2, where he’s expected to battle it out with known opponent Tony Windsor.

Problem is, the government would lose its tight coalition majority in the meantime. Speaker Tony Smith and Independent MP Cathy McGowan have committed to supply votes for the government, but the uncertainty still made a couple of Aussie bulls jittery.

Continuation of yesterday’s moves

With not a lot of fresh data on the docket, Asian session traders focused on extending yesterday’s market themes.

More specifically, they continued to sell the euro on the back of the ECB’s dovish taper and buy the Greenback after the Republicans made progress on their tax plans.

Most of the Asian bourses tracked the U.S. equities’ further gains, while Australia’s markets took some hits on Barnaby Joyce’s ineligibility.

  • Nikkei hit a new 21-year high and rose by another 1.13% to 21,986.00;
  • Australia’s A SX 200 is down by 0.31% to 5,898.10;
  • Hang Seng is up by 0.83% to 12,746.73,
  • China’s A50 is up by 1.26% to 28,435.50.

Major Market Mover(s):

JPY

The low-yielding yen took a few hits early in the session after Japan’s latest inflation numbers pointed to more work ahead for the BOJ.

EUR/JPY shot up to 132.95 before levelling off to 132.80;
GBP/JPY popped up to 150.10 before settling down to 149.88, and
CAD/JPY hit 88.84 before dipping to 88.72.

USD

The Greenback gained a couple more pips against its major counterparts as Asian session traders extended yesterday’s themes.

EUR/USD is down by 9 pips (-0.08%) to 1.1639;
USD/JPY is up by 14 pips (+0.12%) to 114.10, and
GBP/USD is down by 16 pips (-0.12%) to 1.3136

AUD

The Aussie took some hits on the back of political uncertainty in Australia.

AUD/USD is down by 23 pips (0.30%) to 1.7634;
AUD/JPY is down by 16 pips (-0.18%) to 87.09, and
AUD/NZD is down by 39 pips (-0.35%) to 1.1161.

Watch Out For:

  • 6:00 am GMT: Germany’s import prices (0.5% expected, 0.0% previous)