The RBA may have printed its November policy decision today, but traders got busy pricing in an overall risk-friendly trading environment.
- AU AIG construction index down from 54.7 to 53.2 in September
- Japan’s average cash earnings (y/y) up by 0.9% vs. 0.6% expected, 0.7% previous
- U.K. BRC retail sales monitor (y/y) slips by 1.0% in October vs. 1.9% gain in September
- RBA maintains cash rate at 1.50% as expected
RBA keeps rates at 1.50%
As expected, the Reserve Bank of Australia (RBA) kept its interest rates unchanged at 1.50%. Not only that, but Governor Philip Lowe and his team didn’t make any major changes to their biases either.
RBA still expects GDP to pick up at an average of 3% “over the next few years” but they remain concerned over increasing debt levels and slow-growing household incomes.
The labour market still point to “solid growth” over the period ahead even as wage growth will continue to remain low “for a while yet.”
Inflation is also expected to “remain low for some time” though the central bank expects prices to “pick up gradually as the economy strengthens.”
Last but not the least, the RBA still thinks that the Aussie’s high exchange rate will “contribute to continued subdued price pressures” and that it’s “weighing on the outlook for output and employment.” Members also repeated that “An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.”
Mixed dollar action
The Greenback caught some pips after registering losses across the board. However, its gains remain limited by expectations of North Korea-related remarks from Trump now that he’s visiting Asia.
It also didn’t help that Asian session traders caught up to pricing in Dudley’s resignation announcement from the U.S. session. A third rate hike this year seems to be priced in, so traders are now worrying about the new mix of Fed members maybe not being as hawkish next year.
Overall risk appetite
A lack of fresh catalyst inspired Asian session traders to carry over the risk-friendly vibe from the U.S. session:
- Nikkei is up by 1.28% to 22,836.50;
- Australia’s A SX 200 is up by 0.87% to 6,005.30;
- China’s A50 is up by 0.98% to 12,935.12, and
- Hang Seng is up by 1.29% to 28,967.00.
Major Market Mover(s):
A risk-friendly environment hadn’t been so friendly to the low-yielding yen in the past couple of hours.
USD/JPY is up by 13 pips (+0.11%) to 113.90
EUR/JPY is up by 21 pips (+0.16%) to 132.26
CAD/JPY is up by 16 pips (+0.18%) to 89.61, and
GBP/JPY is up by 24 pips (+0.16%) to 150.10.
The New Zealand dollar took some hits thanks to Prime Minister Jacinda Ardern hinting that she’s pretty cool with Kiwi’s recent losses.
NZD/USD is back down to .6935 after hitting a high of .6958,
EUR/NZD is up by 6 pips (+0.04%) to 1.6743, and
NZD/CAD is down to .8815 after rising to .8841.
Watch Out For:
- 7:00 am GMT: Germany’s industrial production (-0.7% expected, 2.6% previous)
- 7:45 am GMT: France’s government budget balance
- 8:00 am GMT: Switzerland’s foreign currency reserves
- 8:30 am GMT: U.K. Halifax house price index (0.2% expected, 0.8% previous)
- 9:00 am GMT: ECB’s Draghi to give a speech in Frankfurt
- 9:00 am GMT: Italy’s retail sales (0.2% expected, -0.3% previous)
- 9:10 am GMT: Euro Zone’s retail PMI