Asia Summary and Highlights 16 Oct
Australian September unemployment rate 4.5%
Asia Session
The Australian September unemployment rate has worsened to 4.5% from 4.2%, despite an uptick in participation rate to 67% from 66.8%. Market participants seem to have tilted towards an imminent cut but they would be caught wrong footed as RBA has previewed a higher Q3 CPI, ruling out a November cut. AUD/USD is trading 0.37% lower at 0.6488, NZD/USD outperforms and is trading 0.3% higher at 0.5741 while USD/CAD slips 0.05%.
Even since Komeito announced their departure from LDP coalition, the political front in Japan remains fluid. It is reported that LDP leader Takaichi will hold a meeting with a minor party, Ishin on Wednesday. It looks like she is racing to form a coalition before the opposition party can dispose their difference and unite to challenge her PM candidacy. USD/JPY continues to tread lower at 150.94 with JGB yields stronger than U.S. peers. Else, EUR/USD and GBP/USD is up 0.09%.
North American session
The USD softened in early North America, USD/JPY slipping back to around 151.25 and EUR/USD meeting resistance near 1.1650. GBP/USD bounced from around 1.3450 to briefly touch 1.34. Riskier currencies took a hit when equities gave up early gains, though equities did not remain negative for long and a dip in AUD/USD below .65 was corrected. USD/CAD bounced to 1.0450 from 1.0435.
Equities had their eyes on US-China trade tensions, initially taking comfort as Treasury Secretary Bessent suggested US tariffs could be delayed if Chinese controls on rare earth exports also were, but later took a hit as he called for the World Bank to end support for China. Data saw a stronger October Empire State manufacturing survey of 10.7 from -8.7, with price indices also rising. The Fed’s Beige Book saw activity and employment remaining near flat but with some increase in price pressures. Fed’s Miran stated that US-China trade tensions had increased downside economic risk.