Asia Summary and Highlights 14 October

Asia Session

Over the weekend, there was a lack of extra stimulus from the Chinese government and it led to a slow start in regional sentiment. Yet, market participants are hoping for more stimulus by the late October NPC meeting and see a bounce back in regional equities. The AUD/USD initially dipped to 0.6722 before rebounding to 0.6737.

New Zealand retail sales continue to contract and service PMI for September remains in contraction at 45.7. This aligns with RBNZ’s view of soft NZ economy and supports the current trajectory. NZD/USD is trading lower at 0.6092.

Japanese Prime Minister Ishiba says will not intervene in BOJ monetary policy. It came after earlier report in the past two weeks, which he does not seem supportive towards the BoJ’s decision of further tightening in a short period of time.  USD/JPY is trading higher at 149.32. Else, EUR/USD is trading at 1.0924 and GBP/USD is trading at 1.3059 both bounced off session low while USD /CAD trades higher at 1.3776.

North American session

US PPI data was a little softer than expected, unchanged overall and up 0.2% ex food and energy, but the USD’s dip quickly found buyers and the USD moved slightly higher, though USD/JPY and EUR/USD ended not far from pre-data levels around 149 and 1.0940 respectively. EUR/GBP and EUR/CHF saw little movement. October’s preliminary Michigan CSI partially reversed a rise in September.

USD/CAD saw a 60 pip dip to a low of 1.3725 on a stronger than expected 46.7k rise in Canadian employment, with unemployment falling to 6.5% from 6.6%, though the move was later corrected to near pre-data levels with wage growth having slowed to 4.5% from 4.9% yr/yr. The Bank of Canada’s quarterly business showed activity slightly less weak but inflation expectations significantly less strong. Despite the strong Canadian data AUD/CAD rose to near .93 as AUD/USD advanced above .6750.