Asia Summary and Highlights 8 October

Asia Session

Labor cash earning continues to grow strongly at 3% y/y in August while overall household improve by 2% m/m. While the data may not be as strong as forecast, it continues to point to a consumption rebound for Japan in Q3. However, Japan economy minister Akazawa left a remark after August labor cash earning data being released and says that the drop in real wages is not good news. He also voiced support that the Japanese government will create favorable environment for wage hikes but so far are just words. Both the U.S. Treasury and JGB yields are falling but the later fares better and see USD/JPY slipping 0.07% to 148.07.

Returning from the week long Chinese holiday, the Chinese equities market opened sharply higher by almost 9%. But as no new stimulus being announced so far in the NDRC conference, gains have halved and dragged the antipodeans lower. AUD/USD is trading 0.29% lower at 0.6737 while NZD/USD and USD/CAD both unchanged. EUR/USD is up 0.11% and GBP/USD is up 0.09%.

North American session

In an absence of major news USD/JPY kept close to 148 and EUR/USD stayed in a narrow range around 1.0975. EUR/GBP gains stalled near .84 while EUR/CHF was weaker near .9370. Weaker equities put some pressure on the commodity currencies, AUD/USD falling to .6750 from .6785 and USD/CAD rising to 1.3630 from 1.3585.

Fed’s Kashkari persisted with a fairly dovish tone despite Friday’s strong data but UST yields were higher. US August consumer credit followed a very strong July with a moderate rise of $8.9bn, slightly below consensus.