Aussie Buoyed By RBA, Loonie Disappointed About NAFTA

Market Reviews

The sentiment is calm today. Nikkei fell -0.14%, China Shanghai SSE was down -0.06%, Hong Kong HSI rose 0.03%, Singapore Strait Times lowered -0.08%. 10 year JGB yield dropped -0.0066 to 0.113. WTI crude oil remained near 70 handle. Gold declined under 1200 and consolidation resumes. Euro declined to trade as the softest, followed by Pound and Loonie. Dollar, Aussie and Kiwi are trading as the firmest. Aussie is in consolidation after RBA release its policy statement.

RBA’s official cash rate remained at 1.50%. Advanced economies were described as rising at above-trend rate. Jobless rate is low. Inflation is weak but is expected to grow. Trade tension with the United States was mentioned as well. The Central Bank projects growth to be over 3% this year and the next year. Terms of trade are expected to drop but remain at solid position. Aussie has “depreciated against the US dollar along with most other currencies.” Labor market outlook is positive. Unemployment should reduce to around 5%. Wage grow should gradually improve. Inflation is expected to slow to 1.75% in the third quarter but then in 2019 and 2020 it’s projected to rise.

Today, Mark Carney (BoE Governor) will deliver a speech at the Parliament for Inflation Report hearing. The Treasury is considering giving Carney one more term. But, the Governor said he wanted to resign in 2019. Lawmakers will be the ones to decide.

The latest Reuters poll showed that odds of disorderly Brexit made up 25%. Odds of a recession in the year post-Brexit was at 15%, lowered from July’s 20%. Odds for recessions within 2 year of Brexit was at 25%. The Bank of England is expected to execute a 25bps rate hike after Brexit is over and another 25bps rate hike in 2020.

UK BRC sales monitor increased 0.2% yoy in August. Japan monetary base was up 6.9% yoy. Australia current account deficit extended to -13.5 billion Australian dollars in the second quarter. Today, Swiss will feature Consumer Price Index, Eurozone will publish Producer Price Index, US will present ISM manufacturing and construction. Canada will announce PMI manufacturing.