Forex Afternoon Wrap – 10/11

China inflation remains low. Producer Price index falls for the 44^th straight month

• Japan Current Account 0.78Tn vs. 1.50Tn
• Japan Bank lending y/y 2.5% s. 2.6% previously
• UK BRC Retail sales monitor y/y -0.2% vs. 2.6% previously
• Australia NAB business confidence 2 vs. 5 previously
• Australia home loans m/m 2.0% vs. 0.1%
• China CPI y/y 1.3% vs. 1.5%; China PPI y/y -5.9% vs. -5.9%
• Japan economy watchers sentiment 48.2 vs. 48.2
• Switzerland unemployment rate 3.4% vs. 3.4%
• France industrial production m/m 0.1% vs. 0.1%
• Italy industrial production m/m 0.2% vs. 0.5%
• US NFIB Small business index 96.1 vs. 96.4
• US Import prices m/m -0.5% vs. -0.1%

Later

• US Wholesale inventories
• BoE MPC Member Cunliffe speech
• FOMC Member Evans speech
• RBNZ Financial stability report
• RBNZ Gov. Wheeler speech

The Asian market session saw the release of China’s inflation numbers which were disappointing. Consumer inflation for the month of October increased 1.3% for the month below estimates of 1.5% while the Producer Price index remained weak at -5.9% marking a 44th consecutive month of declines. The drop in inflation was triggered by a decline in food prices. The weak inflation numbers has made the markets cautious with speculation of possible easing from the PBoC in the near term ahead of the Fed’s rate hike in December.

The Aussie and the Kiwi dollars remained subdued on inflation data. The Australian dollar is down -0.26% for the day despite the home loans for the month picking up 2.0%.

The Kiwi dollar is down a modest -0.07% ahead of the RBNZ’s Financial stability report and RBNZ Governor, Wheeler’s speech due later in the evening.

The Japanese Yen continued to trade mixed, but the USDJPY is stronger, rising 0.12% for the day. Prices however remain range bound off yesterday’s high and low.

The European trading session saw the Euro trading subdued to the Dollar. Yesterday, Reuters carried an article citing a few ECB Governing council members who noted that the ECB could look into exhausting its conventional monetary policy tools before expanding its QE program, inferring to a larger than expected cut in the ECB’s deposit rate. EURUSD is down -0.56% for the day with no major news to go by.

From the UK, the British Pound is down -0.03% with no major news to go by.

The US trading session saw the release of import prices which declined -0.5% for the month, below estimates of -0.1% declines. The US Dollar was however trading unchanged gaining against most of the currencies.

The commodities continue to remain subdued against a stronger Greenback. Gold prices were trading near $1088 an ounce, near the post NFP lows, down -0.33% for the day, while Crude Oil futures are down -0.50% for the day trading at $43.8 a barrel. The remainder of the evening is relatively quiet with the RBNZ taking the limelight later in the evening along with BoE and FOMC members due to speak.