The focus was still on Australia in today’s Asian data slate with retail sales in the spotlight this time.
The good news was that retail sales rebounded back into positive territory in August having slumped 0.8% m/m the previous month. The bad news was that it did not quite match market expectations and the AUD took another dip lower. Retail sales rose 0.2 percent m/m rather than the 0.4 percent expected as carbon tax compensation payments dwindle. This suggests the RBA will have to make another few rate cuts to entice the Australian consumer to spend.
Headline building approvals were a tad better than expected with a 6.4 percent m/m increase but most of the improvement came in the volatile apartments sector (up 23 percent) while approvals to build private houses fell 0.5 percent.
JPY crosses were active during the session with numerous funds reported JPY sellers. As a result, USDJPY edged up to 2-week highs though corporate sell orders were reported above 78.70 (the morning’s high). Note the 100-day moving average and 3-month trendline resistance come in at 78.81. No doubt the Bank of Japan meeting tomorrow is spurring some of the JPY negative positioning. The new man at the helm of the finance ministry, Seiji Maehara, may attend the meeting (as he is entitled to do) but markets do not expect any changes from the BOJ at this meeting.
The first US presidential debate came and went and had zero impact on markets. Most viewed it as a dull affair and seen more as a war of attrition between the candidates with facts and figures flying about with abandon. No gaffs, no cutting one-liners – in essence forgettable. On balance, observers suggest Romney had a slight edge with crisper answers than a rather long-winded Obama.
Yesterday’s action was relatively quiet with tight ranges across most currency pairs. EUR had a brief dip following weak services PMI from EU periphery (and also France) but EURUSD spent most of the session oscillating around the 1.29 level. Pressure on GBP continued with a weak services PMI number.
In contrast the non-manufacturing ISM reading from the US was better than expected at 55.1 from 53.7 (53.4 expected) while the private ADP employment change indicated a 160k gain, better than the 140k expected. Wall Street ended modestly higher after the better data with the DJIA closing up 0.09 percent, S&P +0.36 percent and the Nasdaq +0.49 percent.
Data Highlights
- US Sep. ADP Employment Change out at 162k vs. 140k expected and revised 189k prior
- US Sep. ISM Non-manufacturing out at 55.1 vs. 53.4 expected and 53.7 prior
- AU Aug. Retail Sales out at +0.2% m/m vs. 0.4% expected and -0.8% prior
- AU Aug. Building Approvals out at +6.4% m/m, -15.4% y/y vs. 4.7%/-14.3% expected and -21.2%/-10.6% prior resp.
(All Times GMT)
- Swiss Industrial Production (0715)
- UK BOE Rate Announcement (1100)
- US Challenger Job Cuts (1130)
- EU ECB Rate Announcement (1145)
- US RBC Consumer Outlook Index (1200)
- EU ECB Press Conference (1230)
- US Initial Jobless Claims (1230)
- CA Ivey PMI (1400)
- US Factory Orders (1400)
- US FOMC Minutes (1800)