Asia embraces the ECB’s easing

 

US indices extend gains

The wave of risk appetite optimism unleashed by the latest ECB easing moves has continued into today’s Asian session, with the US30 index extending the current rally to an eighth day. However, Asian bourses were not admitted to the party, with China shares dipping 0.3% after a senior US Administration official debunked speculation that US President Trump was mulling an interim trade deal to avoid the implementation on the next set of tariffs on November 1. Hong Kong markets were closed for a public holiday, which affected volumes.

 

Draghi brings the bazooka (video)

Source: MarketPulse

 

Aussie posts modest gains

In the currency spectrum, the yen was sold mildly amid positive risk appetite while gold slid 0.12% to 1,497.20, negating any of the gains made yesterday. The Australian dollar eked out small gains to 0.6868 and possibly has eyes on the 100-day moving average at 0.6904, though the lack of momentum between opening and closing prices for the past four days could make it a difficult target.

 

AUD/USD Daily Chart

Source: OANDA fxTrade

 

Core US inflation heats up

Core consumer prices in the US rose more than expected in August, but this is not seen denting market expectations that the Federal Reserve will trim rates at next week’s meeting. Prices excluding food and energy rose 2.4% from a year earlier last month, which equaled the level seen in July 2018 which in turn was the highest since 2008. The headline CPI number came in at a below-forecast 1.7% y/y.

Despite the uptick in core inflation, market pricing is still assigning a 98% probability of a 25 bps cut at the meeting on September 18 which, if confirmed would extend the list of central banks that are eager to prime the easing pumps.

 

US retail sales to close the week

After an eventful week, the only major event to monitor today is the release of US retail sales data for August. Sales are expected to rise 0.2% from a month prior, a marked slowdown from July’s 0.7% increase. The provisional reading for the University of Michigan’s September sentiment index is also due, and is seen improving slightly to 90.9 from 89.8 in August.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

Have a great weekend.

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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