COVID Dynamic In Focus For Antipodean Region

The local COVID dynamic is the focus in the Antipodean region; NZD/USD has shed a handful of pips, there were 21 new cases discovered on Sunday and hope is fading that the latest outbreak will be contained. New Zealand is under a strict lockdown until midnight on Tuesday as the outbreak has widened beyond two key cities. PM Ardern is expected to confirm lockdown extensions for Auckland and Wellington later today and consider restriction levels for the rest of the country.

• In Australia there were protests over lockdown restrictions in Sydney and Melbourne over the weekend. The weekend also saw NSW lodge a record new daily case tally of 825, while Victoria reported 71 new cases today (in what was another incremental tick higher). Flash PMI data saw the services reading move further into contractionary territory, while the rate of expansion in the manufacturing print slowed vs. July. Despite this AUD/USD has gained slightly, although the rate remains near the lowest levels witnessed since Nov '20.
• In Japan there are media reports that PM Suga is unlikely to call an early election and is expected to seek a dissolution of the lower house in early October, the deadline is October 21.
• Markets look ahead to Japanese PMI survey data later in the session, although the European flash PMI readings have a greater potential to impact markets. Broader focus for the week will fall on the Fed's annual Jackson Hole Economic Symposium, with commentary from FOMC Chair Powell on Friday headlining that (now virtual) event.