Risk aversion hits the Aussie and Kiwi Dollar early, supporting the Greenback and the Yen, as Italy, Trade and Brexit haunt the markets.
Earlier in the Day:
Economic data released through the Asian session this morning was on the lighter side, with stats limited to August building approval figures out of Australia.
For the Aussie Dollar, building approvals tumbled by 9.4% in August, according to the ABS, which was far worse than a forecasted 1.2% rise and continued the downward trend following July’s 5.2% slide.
- The tumble was attributed to a 17.2% decrease in approvals for private dwellings excluding houses, while approvals for private houses were also in decline, down by 1.9%.
- The value of total building approved fell by 1.3%, marking a 9th consecutive monthly fall.
The Aussie Dollar moved from $0.71745 to $0.71696 upon release of the figures, before rising to $0.71709 at the time of writing, down 0.24% for the session.
Elsewhere, the Japanese Yen, was up by 0.09% to ¥113.55 against the U.S Dollar at the time of writing, supported by market jitters over Italy and, not only its fiscal policy plans, but also some chatter of being better off with its own currency. For the Kiwi Dollar, things were not much better, the risk off sentiment weighing, the Kiwi down 0.27% to $0.6575 at the time of writing.
In the equity markets, the Nikkei hit reverse, down by 0.56% at the time of writing, with risk aversion weighing in the early part of the day, while the ASX200 managed to stop the rot, up 0.32%, with support coming from the big-4 that had been under the hammer of late. For the Hang Seng, the slide continued early, the Hang Seng down 0.34%, the ongoing trade war with the U.S and weakening economic data out of China doing the damage alongside risk aversion stemming from geo-political risk rising out of the EU.
The Day Ahead:
For the EUR, economic data scheduled for release out of the Eurozone is on the heavier side and includes September service sector PMI numbers out of Italy and Spain and finalized PMI numbers out of France, Germany and the Eurozone, with the Eurozone’s August retail sales figures also due out.
While we can expect the EUR to show some response to the stats, the ongoing concerns over Italy ahead of the coalition government’s budget submission to Brussels mid-month continues to be a concern and may well overshadow the numbers should there be more chatter from members of the coalition.
One other factor to consider and monitor will be chatter from the Oval Office, the EU now in the U.S administration’s sights on trade, the last trade meeting with the EU now some time ago.
At the time of writing, the EUR was down 0.06% to $1.1541, the Italian Budget and noise from the Oval Office remaining the key risks to the EUR, with today’s stats to provide some direction at the time of release.
For the Pound, it’s the last of the 3 September PMI numbers, with September’s service sector PMI scheduled for release. While the manufacturing and construction PMIs delivered mixed results, it’s down to the more significant component of the UK economy to provide the markets with some guidance on where the UK economy is heading going into the 4th quarter. Forecasts are for a slightly softer number, anything weaker than forecasts likely to rile the Pound.
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