Originally published by AxiTrader
Markets Overview:
- Equities: Nikkei 225 (-0.05 %), Hang Seng (+1.27 %), CSI 300 300 (+0.38 %), KOSPI (-0.13 %), S&P/ASX 200 (-0.51 %)
- Commodities: Crude Oil $47.07 (+0.45 %), Brent Oil $48.92 (+0.64 %), Natural Gas $3.00 (-1.02 %), Gold $1279.01 (+0.14 %), Copper $221.20 (+0.32 %)
What traders are talking about:
RBA keeps rates steady
The RBA has decided to keep its monetary policy unchanged, as expected. The RBA noted that the Australian economy has been growing at a moderate rate, but that labour market indicators remain somewhat mixed. Inflation is expected to remain low for some time, but pick up gradually over the next two years. The central bank also stated that the economy is forecast to grow at close to its potential over the next year, and that forward looking indicators point to continued expansion in employment in the near-term.
The Aussie Dollar rose slightly after the RBA announcement. AUD/USD jumped from 0.7615 to 0.7660 so far, while AUD/NZD rallied from 1.06 to 1.0680. AUD/JPY rose from 79.60 to 80.30 and is up 0.60 % on the day.
Bank of Japan keeps monetary policy unchanged
The BoJ kept monetary policy steady, as expected by the market. The interest rate remains -0.1 %, while the 10-year JBG yield target stays around 0 %. In the statement, the central bank also mentioned that inflation is likely to increase towards 2 % in 2018, but that risks are skewed to the downside. The BoJ pledged to continue its QQE programme as long as needed to achieve its 2 % target, and that today's decision on maintaining policy was made by a 7-2 vote.
In USD/JPY, there was not much of a reaction (it traded in a 104.70-95 range overnight), and the Nikkei is also almost unchanged on the day.
Chinese PMI data
The official numbers:
- Manufacturing PMI 51.2 vs. 50.3 expected
- Services PMI 54.0 vs 53.7 expected
The private survey (conducted by Caixin):
- Manufacturing PMI 51.2 vs. 50.1 expected and 50.1 prior
Caixin noted that output is expanding at the quickest rate in over five-and-a-half years. Stronger demand is driven by an increase in domestic orders, as export sales have declined slightly.
Overall, solid numbers across the board, but the Yuan declined nevertheless overnight. The PBoC set today's USD/CNY fix at 6.7734 (vs. 6.7641 yesterday), while USD/CNH (offshore Yuan) rose to 6.7860.
Australian manufacturing PMI improves
The Australian AIG manufacturing PMI arrived at 50.9 in October vs. 49.8 previously. AIG noted that the shift to mildly expansionary conditions was driven by stronger growth in exports as well as sales & new orders. Four of the activity sub-indices expanded in October (exports, sales, new orders, deliveries), while production and employment contracted.
Trades of the Week
A few of the major investment banks released their trade of the week recommendations yesterday. Deutsche Bank (DE:DBKGn) considers a short USD/CAD position attractive - with an entry at 1.3387, stop at 1.3540 and 1.2850 target. The German bank notes that "net shorts in CAD have become heavy lately" and that "political developments over the weekend have been CAD positive with the signing of CETA, while the renewed US election risk premium is best faded".
Meanwhile, US bank Citibank is taking the opposite trade. They recommended to clients to buy USD/CAD at 1.3415 with a 1.3305 stop and 1.3595 target. The reasons for the trade: Decline in oil prices after the OPEC news over the weekend, potential risk-off across markets and US & Canadian employment data.
US bank Morgan Stanley (NYSE:MS) likes EUR/GBP and recommended to buy it at market, with a 0.88 stop and 0.98 target. That is quite an ambitious target.
Economic Calendar:
- 09:30 GMT - UK Manufacturing PMI
- 12:30 GMT - Canadian GDP
- 14:00 GMT - US ISM Non-Manufacturing PMI
- 16:00 GMT - Bank of Canada Governor Poloz speaks
- 16:30 GMT - SNB Chairman Jordan speaks
- 21:45 GMT - New Zealand Employment Change
- 21:45 GMT - New Zealand Unemployment Rate