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

FOREX
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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. 
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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.