- RBA leaves OCR unchanged at 2%, policy appropriate, AUD adjusting to lower commodity prices, policy needs to remain accommodative, economy to be with spare capacity for some time, inflation consistent with target next 1-2 years.
- Germany august industrial orders mm decrease to -1.8 % (forecast 0.5 %) vs previous -1.4 %.
- Pressure on the yen- BOJ may need to ease again as prospect of Fed rate hike fades.
- Banks face erosion of business around currency fix.
- Japan Fin Min Aso - Welcomes TPP deal, to help growth, won't intervene in BoJ policy-making, crude oil weakness making it hard for BoJ to achieve CPI target, to tell G20 Japan recovering gradually, USD/JPY move to 120 helped enhance Japan export competitiveness, to meet China FinMin on G20 sidelines.
- Japan PM Abe - Will speed up EPA talks with EU post-TPP, wants China to join TPP.
- US Tsy off'l - US to urge countries with fiscal space to spend.
- Australia August trade deficit A$3.095 bln, A$2.55 bln eyed, exports unchanged m/m, imports +1%.
- NZ Q3 business confidence index -14, Q2 +5, cap utilization 91.4%, Q2 93.4%.
- (0300 ET/0700 GMT) UK August Halifax HPI, +0.1% m/m eyed; last +2.7%.
- (0315 ET/0715 GMT) Switzerland September CPI, +0.1% m/m, -1.4% y/y eyed; last -0.2%, -1.4%.
- (0830 ET/1230 GMT) US August int'l trade balance, $47.4 bln deficit eyed; last $41.9 bln deficit.
- (1000 ET/1400 GMT) US Oct IBD/TIPP economic optimism index; last 42.0.
Key Events Ahead
- China on holiday till Thursday.
- N/A BoJ Policy Board begins two-day meeting.
- N/A EcoFin meeting in Luxembourg, ESM E2.5 bln 3-month bill auction.
- (0500 ET/0900 GMT) BoI Gov Visco at Rome conference.
- (0500 ET/0900 GMT) Austria bln total 1.75% and 1.2% 2023 and 2025 RAGB auctions.
- (0530 ET/0930 GMT) ECB 7-day refinance at fixed 0.05%, E70 bln allotment eyed, bln last.
- (0630 ET/1030 GMT) UK GBP1.5 bln 4.5% 2034 Gilt, Germany E500 mln 0.1% 2046 Bundei auctions.
- (0915 ET/1315 GMT) KC Fed George speech in Chicago.
- (1115/1515 GMT) German FinMin Schaeuble speech in Paris.
- (1300 ET/1700 GMT) ECB Pres Draghi speech in Frankfurt.
- N/A IMF/World Bank conference in Lima, Peru, press briefing on outlook 20:30.
- (1730 ET/2130 GMT) SF Fed Williams speech in San Francisco.
FX Recap
EUR/USD: Industrial orders in the euro area's number one economy powerhouse Germany fell 1.8% in the reported period, measured on a monthly and seasonally adjusted basis, while analysts had expected the reading to post a 0.5% increase. In the prior month, the revised gauge declined 2.2%. Euro calendar holds limited macro data on the cards. IMF will release its World Economic Outlook later in the European session. The Euro group finance ministers will meet in Luxembourg to discuss a corporate-tax action plan and the Single Resolution Fund for banks. While European Central Bank President Mario Draghi's speech at the Art on Site Inauguration event in Frankfurt will wrap up today's trading session. It made intraday high at 1.1197 and low at 1.1171 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels.
USD/JPY: A quiet Asia, with the Asian markets extending gains for the second straight session this week while the USD/JPY pair steadying around 120.50. Markets await the outcome from the immediate two central banks' events - BOJ and FOMC minutes due tomorrow for further direction on the major. Pair made intraday high at 120.56 and low at 120.39 levels. Later today market will focus on US macroeconomic data for the further directions. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.
GBP/USD: The pound recovered the yesterday's losses and trading on a positive note. Yesterday UK services sector growth slowed to 53.3 in September, from the previous month's 55.6, short of expectations of 56.0. Today UK will release Halifax House price index for the further movement. Pair made intraday high at 1.5167 and low at 1.5140 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.
NZD/USD: US dollar remains largely subdued against the NZD, as Friday's weak US labor market report continues to weigh on the buck. Today the NZ business confidence index showed sharp deterioration. The latest NZIER Quarterly Survey of Business Opinion shows business confidence falling to its lowest level since March 2011. The index dropped to -14 against a 5 point reading booked previously. It made intraday high at 0.6515 and low at 0.6478 levels. Initial support is seen at 0.6195 and resistance at 0.6605 levels.
AUD/USD: The Aussie jumped to fresh two-week highs as the Reserve Bank of Australia (RBA) kept rates on hold for the fifth month in a row. The AUD/USD rallied nearly 60 pips shortly after the decision, firmly above the $0.71 level, boosted by the policy announcement. The central bank sounded optimistic on the economic growth prospects, while it noted that further assessment of the monetary policy outlook will remain data-dependent. The statement itself was also mostly unchanged. The most significant change was the RBA acknowledging that housing regulations are starting to have an effect. Pair made intraday low at 0.7066 levels and high around 0.7134 levels. Initial support is seen at 0.6908 and resistance at 0.7245 levels.
Equity Recap
Another flying start for the Asian equities on Tuesday and subsequently clinched solid gains, following suit after the strong finish overnight on Wall Street and the European stock markets as well.
The Japanese benchmark, the Nikkei continues with the recent winning streak as the exporters' stocks remain boosted on the back of persisting yen weakness versus the US dollar amid rising risk-appetite. While nothing of relevance in terms of economic news is on the cards this session.
The benchmark Australian S&P/ASX 200 extended the upbeat momentum, with liquidity back in the markets as Australian traders returned after a long weekend.
Chinese markets stay closed in observance of National Day - Golden Week.
Hong Kong's Hang Seng trades marginally higher by 0.14% at 21,876.
Tokyo's Nikkei average closes up 1.00 pct at 18,186.10.
Treasury Recap
South Korea sells 30-year treasury bonds at average yield of 2.280 pct.
Thailand 35 bln baht, 91-day central bank bond average accepted yield 1.48102 pct. Thailand 20 bln baht, 182-day central bank bond avg accepted yield 1.49056 pct.
BOJ offers to lend Y400 bln of JGBs on spot basis through 10/7 as a secondary source of JGBs.
New Zealand government bonds slipped, sending yields as much as 8 basis points higher on the long end of the curve.
Australian government bond futures fell, with the three-year bond contract off 6 ticks at 98.210. The 10-year contract dropped 5.5 ticks to 97.3650.
10-year US treasury yield at 2.033 percent vs US close of 2.056 percent on Monday.
Commodity Recap
Gold held just below a one-week high on Tuesday as investors bet sluggish U.S. nonfarm payrolls data would deter the Federal Reserve from hiking rates this year, although some cautioned that profit taking could hurt the metal in the near term. Spot gold was little changed at $1,136 an ounce by 0337 GMT. Prices had risen to $1,141.80 in the previous session, the highest since Sept. 28, before closing down 0.2 percent.
Oil was trading with small gains on Tuesday after both benchmarks rallied in the prior session, with investors now cautious ahead of the weekly inventory report. Futures for WTI added 0.19% to trade at $46.35 per barrel, while Brent futures were traded 0.12% up at $49.41 per barrel.
