BoJ stands pat on policy while RBA promises to keep rates low
Today’s Economic Data:
- RBA releases monetary policy meeting minutes
- Australia new motor vehicle sales m/m -1.6% vs. -1.6% previously
- BoJ leaves monetary policy unchanged
- France CPI m/m 0.3% vs. 0.4%
- UK CPI y/y 0.0% vs. 0.0%; Core CPI y/y 1.0% vs. 1.0%
- UK PPI Input m/m -2.4% vs. -2.3%; PPI Output m/m -0.4% vs. -0.2%
- UK HPI y/y 5.2% vs. 6.2%
- German ZEW economic sentiment 12.1 vs. 18.3
- Eurozone ZEW economic sentiment 33.3 vs. 42.1
- Eurozone quarterly employment change 0.3% vs. 0.1%
- Eurozone trade balance 22.4bn vs. 21.4bn
- US core retail sales m/m 0.1% vs. 0.2%; retail sales m/m 0.2% vs. 0.3%
- US Empire state manufacturing Index -14.7 vs. -0.5
Later:
- US Capacity utilization rate
- Industrial production
- CB leading index
- Business inventories
The currency markets were busy this morning since the Asian trading session with the RBA’s meeting minutes. The minutes revealed that the RBA was committed to keeping interest rates low for the foreseeable future. The Aussie immediately came under selling pressure on the news. The currency had earlier rallied on a muted RBA interest rate decision under the assumption that the neutral tone of the RBA would signal the possible end of rate cuts. The Aussie dollar turned weaker after posting strong gains earlier and is currently down -0.19% for the day.
Hot on the heels of the RBA’s minutes, the Bank of Japan’s monetary policy today decided to leave the stimulus package unchanged. BoJ’s Kuroda maintained the same tone from the last meeting, noting that the QQE was doing its bit and that the bank remains optimistic on achieving the inflation target of 2%. However, the markets are starting to turn dovish on the BoJ with expectations that the next meeting in October would see the BoJ expand its monetary stimulus program. The Yen gained on the inaction and neutral tone of the BoJ. The Yen was up 0.46% for the day against the US Dollar.
The Kiwi dollar was however well supported and was trading stronger with 0.17% gains for the day ahead of the Kiwi Global dairy trade data due for release later today.
In Europe, economic sentiment measured by ZEW plummeted with both the Eurozone and German ZEW economic sentiment disappointing, falling to 33.3 and 12.1 respectively, largely due to the slowdown from the emerging markets. The Euro was seen trading sideways today for the most part ahead of the US data release.
In the UK, inflation was unchanged at 0.0% on the headline and falling to 1.0% as expected on the core, down from 1.2% previously. The British Pound was under modest pressure but still remains supported to the upside in the medium term. Producer price index also decline more than expected leading to possible further downside pressure on consumer inflation in the near term. The Cable tested highs of 1.544 before declining lower for the day.
The US trading session saw the monthly retail sales numbers for August. The headline retail sales grew at a slower pace of 0.2%, below estimates of 0.3%, while on the core, retail sales grew 0.1%, below estimates of 0.2%. However, retail sales data for the previous month were revised higher to 0.6% and 0.7% on the core and headline respectively. The empire state manufacturing index data also released simultaneously fell -14.7 against estimates of -0.5.
Later in the evening, other data from the US is on the tap including capacity utilization rate and industrial production.
