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Forex - Aussie holds gains in Asia, yen dips on core machinery orders

Published 10/11/2016, 08:56 PM
Updated 10/11/2016, 08:59 PM
© Reuters.  Aussie holds gains in Asia

© Reuters. Aussie holds gains in Asia

Investing.com - The Aussie held gains in Asia on Wednesday as investors noted an upbeat consumer sentiment index, while the yen weakened on machinery orders data as investors looked ahead to the release of the minutes from the Fed's September meeting later in the day.

AUD/USD traded at 0.7559, up 0.25%, while USD/JPY changed hands at 103.59, up 0.09%. GBP/USD jumped 1.13% to 1.2261, continuing a pattern of sharp moves in Asia seen recently as Brexit concerns over the details of a break with the European Union dominate sentiment.

In Japan core machinery orders for August jumped 11.6%, well above the 6.5% gain expected year-on-year. But the month-on-month core machinery order figure slipped 2.2%, less than the 5.5% drop expected, but the first such decline in three months.

Japan's Cabinet Office repeated an assessment that "a pickup is seen in machinery orders" and noted that while August machinery orders dropped, the decline was not large and didn't show a change in trend as the orders increased for the second consecutive month.

Earlier, the Westpac consumer sentiment index for October rose 1.1%, compared with a previous reading of a gain of 0.3%.

Westpac Chief Economist Bill Evans said the RBA is unlikely to cut the cash rate in November as it has become clear that the new RBA governor will give considerable weighting to "financial stability."

"Indeed, while we give little probability to a further rate cut at the next meeting, our assessment of the growth outlook, including the shape of the construction cycle, points to rates remaining on hold for the foreseeable future," Evans said.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.09% to 97.63.

Overnight, the dollar remained at two-month highs against the other major currencies on Tuesday, as hopes for a U.S. rate hike before the end of the year continued to lend broad support the greenback.

Also on Tuesday, New Zealand central bank Assistant Governor John McDermott said inflation is expected to rebound in the fourth quarter, returning to the lower end of the Reserve Bank of New Zealand’s target range.

"The bank will continue to closely monitor developments in the drivers of inflation and investigate any persistent changes in how inflation is generated. Our goal will be to achieve future inflation outcomes within the target range on average over the medium term, with a focus on keeping future average inflation near the target mid-point," he said.

NZD/USD traded at 0.7077, up 0.31%.

Demand for the U.S. dollar remained supported as Friday’s disappointing U.S. jobs data was not expected to prevent the Federal Reserve from raising interest rates later this year. Markets are currently pricing in around a 69.5% chance of a rate hike at December's meeting, according to Investing.com's Fed Rate Monitor Tool.

In the euro zone, the ZEW Centre for Economic Research said that its index of German economic sentiment rose to 6.2 this month from September’s reading of 0.5. Analysts had expected the index to increase to 4.3 in October.

Additionally, the index of euro zone economic sentiment increased to 12.3 in October from 5.4 a month earlier. Consensus was looking for an increase to 6.3.

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