Week in FX: Asia RBA Holds Rates as ECB OMT Boosts Markets

The Reserve Bank of Australia held rates steady for the third month in a row as it awaits the growth prospects of its biggest trade partner China. Governor Stevens mentioned there were doubts on Chinese growth and clear decline between the ratio of export prices to import prices.

Japanese markets closed on a high boosted by the European Central Bank decision to not limit the expected bond buying program. This came after European leaders went on the record to do everything in their power to keep the eurozone united. Bank of Japan Governor Masaaki Shirakawa also spoke to the press to make clear his commitment to ensure the stability of the Japanese Financial System.

Below are some other highlights of the week:


  • CNY: A rise in China’s non-manufacturing PMI in August mitigated market disappointment with the fall in the manufacturing PMI announced over last weekend. China’s official manufacturing PMI fell to 49.2 last month from 50.1 in July (the first sub-50 reading since November last year). New orders dropped further to 48.7 from 49.0, the fourth consecutive month below the 50 mark, while export orders were flat at 46.6. Meanwhile, the non-manufacturing PMI released rose to 56.3 in August from 55.6 in July, driven by an increase in price charged and input prices sub-indices.
  • China Survey Shows Signs of Growth Slow Down
  • European Companies Foresee Chinese Growth
  • China GDP Growth Revised Upward
  • CNY: China’s HSBC service PMI fell to 52 in August from 53.1 in July, at odds with the official NBS non-manufacturing PMI released, which rose to 56.3 from 55.6.

Australia and New Zealand

  • AUD: Retail sales surprised to the downside, falling -0.8%, m/m against consensus for a +0.2% rise.
  • AUD: ANZ job advertisements were also weak, down -2.3%, m/m in August, following a -0.8% fall in June.
  • AUD: The RBA left rates on hold, disappointing rising expectations into the meeting that policy could be eased. Analysts noted a slight softening of tone, but not enough to signal an imminent move. The OIS strip sold off about -7bp and now prices 96bp over the next 12-months.
  • AUD: Aussie current-account deficit narrowed in the three-months through June as stronger shipments of ore and other minerals outpaced a decline in coal exports. The shortfall on goods, services and investment was – \$11.8b in Q2, from a revised -\$13b in Q1.
  • NZD: Kiwi terms of trade fell -2.6%, q/q in Q2, following a -2.3% fall in Q1.
  • AUD: The Aussie economy slowed in Q2 after strong growth in Q1. GDP grew +0.6%, q/q in Q2, compared with a revised +1.4% rise in Q1, and +0.7% consensus. On an annual basis, the economy grew +3.7% in Q2, following an upwardly revised +4.4% rise in Q1.
  • NZD: New Zealand showed whole milk prices rose +4.3% in Fonterra auctions following a +7% increase at the last auction.
  • AUD: Aussie employment fell -8.8K last month, against consensus for a +5K rise. July employment gain was revised lower to +11.7K from +14K. The fall was driven entirely by part-time employment, while full-time employment rose. The unemployment rate declined to +5.1% from 5.2%.
  • AUD: Aussie trade balance came at a deficit of – \$556m in July, compared with the -\$227m deficit in June, revised from a small surplus of +\$9m, making it seven months in a row of deficits.
  • Australia’s Economic Growth Slows as Rate-Cut Bets Rise: Economy
  • Aussie Employment Data Release: Reaction
  • RBA Rates Announcement: Reaction
  • Australian Economy Grows 0.6 Percent in Q2


  • IDR: Inflation edged higher to +4.58%, y/y in August from +4.56% in July, against consensus for a modest fall to +4.41%.
  • IDR: Core-inflation fell slightly to +4.16%, y/y from +4.28% in July, compared to +4.04% consensus. Separately, the trade deficit unexpectedly narrowed in July to -\$0.2b from -\$1.3b in June, driven by much weaker imports and slightly better exports.
  • THB: The Bank of Thailand kept rates on hold as expected. Like most CBank’s they would need to see further deterioration in the Eurozone for further easing.
  • TWD: Taiwan’s inflation accelerated more than expected as bad weather pushed up the prices of fruit and vegetables. Inflation increased to +3.42%, y/y in August, up from +2.5% in July, and surprised consensus for a modest rise to +2.6%. Ex-food, CPI would have risen by only +1.4%.
  • PHP: Philippines CPI rose +3.8%, y/y in August, after a +3.2% advance in July, the fastest pace in seven-months, driven by food inflation.
  • INR: India recommended deferring the General Anti-Avoidance Rule on taxation for three years, a move that may help boost capital inflows by removing uncertainty about how offshore funds’ investments in domestic equities would be taxed.


  • JPY: Japan’s capital spending surged +7.7% in Q2, following a +3.3% rise in Q1. Also, capital spending ex-software rose +6.6% in Q2, compared with +3.5% rise in Q1.
  • JPY: Japan’s monetary base was up +6.5%, y/y in August, following the +8.6% annual expansion in July. Japanese monetary base is still up just +35% since January 2007, indicating significantly less liquidity creation since the start of the crisis relative to what has occurred in Europe and the US.
  • Bank of Japan Governor Committed to Stability
  • Nikkei Posts Five Month High






  • JPY starts the week producing its current account
  • Trade Balance is released in CNY, CAD and USD
  • Mid-week we have the all-important German constitutional hearing
  • Monetary policy decisions in CHF, NZD and USD
  • Inflation and Retail sales data is presented in the USD
  • Unemployment claims numbers are released in GBP and USD
  • Week rounds off with consumer sentiment out of the USD


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.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza