Dollar in holding pattern; Asian equities follow Wall Street

A public holiday in Hong Kong ensured that today’s Asia session was a slow and steady one. Equity markets mostly took their cues from the strong Wall Street close, while the US dollar held near two-week lows, though it looks set for its second weekly decline in a row. In the G-10 space, the kiwi outperformed its peers versus the US dollar and the Swedish Kroner was the worst performer, according to data compiled by Bloomberg.

China confident of Q3 growth

Ahead of the release of China’s Q3 GDP data on Friday, Chinese Premier Li said today that Q3 growth would be at a “reasonable range” and he felt confident that economic goals would be reached this year.

Asia market update: Focus on Yuan

The dollar/yuan fix this morning was slightly below what the market had expected but, after the initial knee-jerk reaction sending USD/CNH through 6.91, the pair soon edged higher to above 6.92. The 55-day moving average is still sitting below at 6.8672.

USD/CNH Daily Chart

Source: Oanda fxTrade

Aussie wage growth still slow, RBA says

RBA Deputy Governor Guy Debelle said in a speech today that it is possible the country’s jobless rate would have to fall further than on previous occasions before wage growth would increase at a faster pace. The current unemployment rate is at 5.3%, 30 basis points above what is considered to be the full employment rate.

The central bank uses the unemployment rate as a key metric in its quest to stoke inflation to justify a potential first interest-rate increase since 2010. The RBA has kept the cash rate at a record low for almost two years to encourage growth, hiring and ultimately higher wages. September’s jobs data is due tomorrow and expected to show no change to the unemployment rate of 5.3%, with a further 15,000 jobs added during the month.

AUD/USD is little changed on the day, marginally lower on the back of slight US dollar gains. As it stands now, the pair may snap a two-day rising trend ahead of technical resistance points at 0.7223 and 0.7230, trendline resistance and the 55-day moving average, respectively.

AUD/USD Daily Chart

Source: Oanda fxTrade

Will higher UK wages filter through to prices?

The highlight on the data calendar will be the release of the minutes of the last FOMC meeting where the Fed hiked rates by 25bps. Minutes will be scrutinized regarding the discussions about the future trajectory of interest rates and any concerns about the economy that are being considered.

The European calendar also has some key data events with UK’s CPI/PPI/RPI for September on tap. Recall August’s average earnings were at their highest in almost a decade and this may filter through to prices in September. Estimates are for a 0.5% increase month-on-month and a 2.8% annualized gain. We also get to see Euro-zone CPI numbers, which are seen holding steady at +2.1% y/y.

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

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