Risk appetite trickles back into the markets early on supporting the commodity currencies, while the Kiwi gets a boost from Q3 inflation numbers.
Economic data released through the Asian session this morning included 3rd quarter inflation figures out of New Zealand and September inflation numbers out of China, with the RBA releasing its monetary policy meeting minutes from the 2nd October meeting.
For the Kiwi Dollar, 3rd quarter inflation came in better than expected, with the annual rate of inflation hitting 1.9%, up from a 2nd quarter 1.5% and ahead of a forecasted 1.7%, according to figures released by NZ Stats.
The Kiwi Dollar moved from $0.65432 to $0.65931 upon release of the figures before easing back to $0.6572 at the time of writing, the Kiwi up 0.32% for the session.
For the Aussie Dollar, the RBA minutes provided few surprises, salient points from the minutes including:
The Aussie Dollar moved from $0.71385 to $0.71346 upon release of the minutes, which preceded inflation figures out of China.
Out of China, the annual rate of inflation picked up from 2.3% to 2.5% in September, year-on-year, which was in line with forecasts. Month-on-month, consumer prices rose by 0.7%, which was in line with August’s rise and forecast. The Producer Price Index rose by 3.6% in September, coming up short of a forecasted 3.7% rise, while wholesale inflation eased from August’s 4.1%.
The Aussie Dollar moved from $0.71374 to $0.71366 upon release of the figures, before easing to $0.71357 at the time of writing, the Aussie Dollar up 0.07% for the session.
Elsewhere, the Japanese Yen was down 0.09% to ¥111.87, with a pickup in risk appetite through the early part of the day easing demand for the Yen.
In the equity markets, there was some early respite, with Nikkei and ASX200 up 0.30% and 0.48% respectively, while the Hang Seng led the way early, with a gain of 0.63% at the time of writing. The CSI300 was up 0.47%, with the upward moves across the majors supported by the U.S Futures that moved into positive territory in the early part of the day.
For the EUR, economic data scheduled for release through the day includes August trade data for the Eurozone and October economic sentiment figures out of Germany and the Eurozone, the economic sentiment figures the key driver, while the markets will likely pay some attention to the trade data following Trump’s comments about the EU in his Sunday 60 Minutes interview.
Outside the numbers, we can expect the markets to continue to respond to Italy’s budget plans, which were approved by the coalition government on Monday following the submission of draft budgets to the European Commission on Monday. The European Commission now has 1-week to raise any concerns or indicate that it is non-compliant, which then gives the European Commission until 29th October to reject the budget. Rejection would then give the Italian government until 19th November to submit a revised budget. It could be a testy 4th quarter for the EUR…
At the time of writing, the EUR up 0.07% to $1.1587.
For the Pound, economic data scheduled for release through the day includes August wage growth figures and unemployment rate along with September claimant count numbers.
While we will expect the Pound to respond to the stats, focus will ultimately be on Brexit, with negotiators needing to come to an agreement in kind by Wednesday to avoid raising the chances of a “no-deal” as time becomes the British government’s enemy.
At the time of writing, the Pound was up 0.05% to $1.3157.
Across the Pond, economic data is on the lighter side, limited to September industrial production figures and August JOLTs job openings. While on the lighter side, both sets of numbers will likely provide direction for the Dollar, a strong JOLTs job openings continuing to support sentiment towards labour market conditions.
With concerns over the global economic outlook rising, industrial production figures will be looked at closely to assess whether there has been any negative impact from the ongoing trade war between the U.S and China.
As always, noise from the Oval Office could overshadow today’s data, with the markets now expecting Trump to inflict more pain on China through tariffs.
At the time of writing, the Dollar Spot Index was down 0.03% to 95.035, with today’s stats and chatter from the Oval office needing consideration through the day.
For the Loonie, economic data through the day is limited to August foreign securities purchases data that will likely have a relatively muted impact on the Loonie, with sentiment towards the global economic outlook and risk appetite through the day to provide direction.
The Loonie was up 0.07% at C$1.2982 against the U.S Dollar at the time of writing.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.