US indices edge higher
Activity in today’s Asian session was subdued as China begins its one-week National Day celebrations. US indices were up between 0.13% and 0.31% while the Japan225 index rose 0.22%.
On the currency front, the US dollar extended its month-end gains, rising 0.09% versus both the Euro and the pound. The Australian dollar was under pressure ahead of the Reserve Bank of Australia rate meeting (see below). Gold continued its slide for a third day, holding near yesterday’s low, which was the weakest since August 6.
Gold Daily Chart
Market expects a rate cut
The Reserve Bank of Australia is expected to trim its benchmark rate by 25 bps today, bringing the official cash rate to a record low of 0.75%. Market pricing is assigning an 82% probability of such a cut and the only surprise for the markets would be if they held rates this time round, instead wishing to preserve its ammunition for further down the line. That would give the Aussie a (temporary) boost.
The AUD/USD has been under pressure for the past two days and fell to 0.6733 this morning, the lowest since September 3. It is gently sitting on the 78.6% Fibonacci retracement of the September 3-12 rally at 0.6732. AUD/JPY is steady at down 0.11% at 72.98 and remains capped below the 55-day moving average at 73.11.
AUD/USD Daily Chart
All quiet in Hong Kong
With China’s National Day parade in full swing in Beijing, it all seems quiet in Hong Kong, so far. Minor scuffles reported at this morning’s flag raising ceremony, but eleven subway stations are closed, or are due to close, along with thousands of shops amid fears of large-scale disruption and protests. USD/HKD remains close to the top of its permitted trading band at 7.84.
Manufacturing PMIs on tap
Today it’s the turn of global manufacturing PMIs. Final revisions to Markit’s estimates for Germany, the Euro-zone, the UK and the US are due along with the ISM’s reading for the US. The ISM index is seen improving to 50.0 in September from 49.1 in August, which was the lowest since 2016. An improvement would halt a downward slide that has been going on for five months.
Aside from the PMIs, we have speeches from Fed’s Clarida, Bullard and Bowman and one from the RBA Governor Lowe, which could be interesting, depending of the outcome at the rate meeting.