The Japan yen remains firm across the board on mild risk aversion. It's reported that North Korea is quietly moving another intercontinental ballistic missile towards its west coast, readying for another launch by the end of the week. But market reaction is relatively muted. There is no follow through buying seen in neither Yen or Swiss Franc. With the exception of USD/CAD, most pairs are still bounded in familiar range as consolidations continue. Aussie strengthens mildly after RBA stands pat, but similar to most others, AUD/USD is stuck in range trading for the moment. In other markets, Nikkei trades in red again today and is down -0.5% at the time of writing. Gold stays firm at around 1340/5 and could take on 1350 handle later in the week. WTI crude oil is mildly higher but struggles to get rid of 55 day EMA at 47.5.
RBA stands pat, no new information revealed
RBA left the cash rate unchanged as widely expected. And so far, the announcement feels like a non-event, with no new information revealed. RBA reiterates in the accompanying statement that "Australian economy will gradually pick up over the coming year". Employment growth has been "stronger over the recent month" and unemployment rate is expected to "decline a little over the next couple of years." Nonetheless, "wage growth remains low" and is "likely to continue for a while". Inflation remains low and is expected to "pick up gradually as the economy strengthens." Appreciation of Aussie " is expected to contribute to the subdued price pressures in the economy."
Trump agrees to sell many billions of dollars of weapons to South Korea
Following up to North Korea's latest larger than ever nuclear test, South Korea continued with its military drills today, with live-fire exercise conducted at sea. Accord to a White House statement, US President Donald Trump and South Korea President Moon Jae-In "agreed to maximize pressure on North Korea using all means at their disposal." And Trump "provided his conceptual approval" to sell "many billions of dollars' worth of military weapons and equipment" to South Korea.
United Nations Security Council held the second emergency meeting in a week about North Korea yesterday. In the meeting, US Ambassador Nikki Haley said that North Korea leader Kim Jong-Un is "begging for war". She emphasized that "war is never something that the United States wants". But "our country's patience is not unlimited". US will circulate the new draft sanctions on North Korea and will push the UNSC to vote on them on September 11.
It's reported that some form of oil embargo is an option that the UNSC is considering. However, an adviser to China's cabinet and international relations professor at Renmin University in Beijing, Shi Yinhong commented that "a temporary or partial ban is possible, but the Chinese government will definitely refuse to cut off oil exports completely or permanently to North Korea." He emphasized that "if China agreed to cut off oil exports completely, China would use all its tools but not achieve any purpose, and the consequence could be costly."
David Ramsden joined BoE as Deputy Government
In UK, David Ramsden joined BoE yesterday as Deputy Governor for markets. He will also be a member of the Monetary Policy Committee, Financial Policy Committee and Prudential (LON:PRU) Regulation Committee as well as Court of the Bank of England. Ramsden was the chief economic advisor in the Treasury Department since 2008 and served the department since 1988. At this point, analysts general don't expect Ramsden to join the hawks in the MPC, Michael Saunders and Ian McCafferty, to vote for rate hike in upcoming meetings.
On the data front
Australia current account deficit widened to AUD -9.6b in Q2. New Zealand ANZ commodity price dropped -0.8% in August. China Caixin PMI services rose to 52.7 in August. Swiss will release GDP and CPI in European session. Eurozone will also release PMI services revision. But the main market mover would be UK PMI services. US will come back from holiday and release factory orders later in the day.