FOREX: A$ & NZD TO Multi Month Lows Amid Lower HK/China Equities

Early modest USD softness has given away to dollar gains as the Asia PAC Wednesday session unfolds. Weakness is being led by AUD and NZD, both off around 0.25% at this stage, slightly up from session lows. The USD BDXY index is little changed, last near 1263. Earlier we were at lows of 1261.37, as US yields softened. 

• The weaker backdrop for HK and China equities is likely not helping AUD and NZD. The HSI off 1.86% at the lunchtime break. Lack of any positive follow through from fresh stimulus rumours from late yesterday, is notable today.
• Earlier we had Q3 CPI print in Australia, the main release today. We saw further improvement in headline y/y momentum, but service inflation remains stick. This suggests no reason for the RBA to cut rates in the near term, but this has provided only fleeting AUD support.
• The currency got to highs of 0.6571, before turning lower to hit fresh multi month lows of 0.6537. Metal prices are also down modestly for copper and iron ore.
• NZD/USD is down by a similar amount, last near 0.5955/60. Earlier lows were at 0.5951.
• USD/JPY was lower earlier, but sits back at 153.30/35 now, unchanged. US equity futures are off earlier highs, while US yields have largely reversed earlier weakness, another USD support point.
• Looking ahead, the October European commission survey, preliminary Q3 German/French GDP, October German unemployment and October German/Spain CPIs print. The ECB’s Schnabel and BoC’s Macklem speak, and the UK budget is announced. In the US, focus turns to ADP employment data, GDP and Pending Home Sales.