Better-than-expected exports data in China failed to lift equities in Asia as a big slump in imports underscored concerns about the slowing economy. Exports in September fell by 3.7% year-on-year, beating estimates that they would fall by 6%. But imports plunged by 20.4% over the year, much bigger than the fall of 15.9% anticipated. Some analysts expect Chinese authorities to announce further stimulus measures to boost the domestic economy in the coming months.
In Australia, business confidence improved in September, with the NAB index rising to 5 from 1 in August. The business conditions index fell slightly though to 9 from 11 previously but the figure was still above average. The data failed to provide support to the Australian dollar, which was dragged lower by a reversal in commodity prices from the recent rally. The aussie was down at 0.7319 against the dollar in late Asian trading on Tuesday, coming off near 2-month highs of 0.7381 on Monday.
Oil prices fell sharply yesterday on profit taking but were higher again on Tuesday. WTI crude oil futures was up 0.8% at $47.49 in late Asian session.
The dollar gave up some of its gains from late US session on Monday falling back to three-week lows in today’s Asian session. The greenback came under pressure after comments from Fed Governor Lael Brainard contrasted those from Fischer and Lockhart in recent days who both voiced support for a 2015 rate hike. Brainard said that the risks to the economic outlook are tilted to the downside and that the time was for “watching and waiting” and not for raising rates.
The dollar was back below the 120 handle against the yen today, trading at 119.75 yen in late Asian session. The euro also rose against the dollar, climbing to 1.1395 dollars but fell against the pound to 0.7409 from an earlier high of 0.7424. The pound surged against the dollar in late Asian trading, jumping to 1.5377 from a low of 1.5299 dollars.
Adding support to the euro today was comments from ECB board member Yves Mersch. Speaking in Singaport, Mersch reiterated recent comments from other ECB officials that it was too early to judge whether recent events would derail inflation from its trajectory of meeting the ECB’s target.
Coming up later today, the latest UK inflation figures will be closely watched as annual CPI is forecast to accelerate 0.2%. The ZEW economic survey from Germany will also be important as it’s forward looking for the month of October. With no data coming out of the US today, a speech by the Fed’s Bullard will be interesting to watch.