Forex Today: Aussie sold-off into RBA’s rate cut, a busy docket ahead


Amid a better market mood and persistent broad-based US dollar strength, forex today in Tuesday’s Asian trading was quite an active affair. The Aussie enjoyed a roller coaster ride before downed to fresh four-week lows near 0.6720 on the Reserve Bank of Australia’s (RBA) expected 25 bps rate cut announcement. The Kiwi also traded with moderate losses amid weak fundamentals and tracking the losses in its OZ neighbor, the AUD.

The Japanese currency also remained on the offers, weighed down by the risk-on trades on the Asian equities and Wall Street futures while rallying Treasury yields also helped USD/JPY to clinch eight-day tops near 108.25 levels. The Japanese sales tax hike that took effect today failed to have any impact on the JPY markets.

Among the European currencies, the EUR/USD pair tested 2.5-year lows reached on Monday at 1.0885 ahead of the key Eurozone inflation data while the Cable remained depressed below 1.2300 ahead of the UK PMI and Brexit plan.

On the commodities’ front, Gold traded near eight-week lows around $ 1470 while oil prices saw a gradual recovery mode, as the focus now turns towards the US weekly Crude Inventories data.  

Main Topics in Asia

UK PM Johnson to reveal final Brexit Plan to EU leaders within 24 hours - Telegraph

PM Johnson is asking the EU to rule out a further extension to article 50 - The Times

The Bank of Japan tankan survey: Worsened for the first time in 2 quarters

Equity options market bracing for a volatility shock - Bloomberg

Japan's Abe: Will carefully watch the impact of sales tax hike

Ireland's Coveney: Its time the EU had serious proposal

Japan’s Aso: Japan’s economy 'clearly recovering', ready for tax hike

Japan’s Nishimura: BOJ will decide monetary policy appropriately

AUD/USD jumps to 0.6765 on expected RBA rate cut by 25 bps to 0.75%

RBA: Reasonable to expect extended period of low rates

Key Focus Ahead

Markets gear up for an eventful EUR macro calendar, as a raft of the Euro area final Manufacturing PMI readings will stat trickling in from 0715 GMT. The main focus will be on the German and Eurozone manufacturing sector activity, as the flash estimate showed a deepening recession. Also, of note remains the UK Manufacturing PMI due on the cards at 0830 GMT. Ahead of the PMI reports, the UK Nationwide Housing Prices and Swiss Retail Sales data will be published at 0600 GMT and 0630 GMT respectively. The main event risk for the European session today remains the Eurozone September Preliminary Consumer Price Index (CPI), especially after muted German inflation data released on Monday.

The NA session is also a hectic one, with the Canadian monthly GDP figures (due at 1230 GMT) and the US ISM Manufacturing PMI (at 1400 GMT) to headline amid a slew of Fedspeak. Markets also look forward to New Zealand’s GDT Price Index data and the American Petroleum Institute (API) weekly US Crude Stock data due later in the American session for fresh trading cues. The Fed officials Clarida, Bullard and Bowman are all due to speak in a span of one hour between 1230 GMT – 1330 GMT. Meanwhile, the trade and UK political developments will be closely eyed for any impact on the broader market sentiment.

EUR/USD registers biggest quarterly drop since Q2, 2018

EUR/USD is operating on slippery grounds, having registered the biggest quarterly drop in over a year in Q3. The focus today is on the preliminary Eurozone inflation data for September. The common currency could regain some poise if the core inflation beats estimates. 

GBP/USD: All eyes on UK Manufacturing PMI, Brexit plan

GBP/USD stays below 1.2300 ahead of the key day. The UK PM Johnson is expected to reveal secrets of his Brexit plan and while struggling with domestic politics. The UK/US Manufacturing PMIs could entertain traders.

Euro-zone inflation preview: Dismal figure already priced in – but EUR/USD unlikely to recover

Euro-zone inflation figures may disappoint as German data missed the mark. A "buy the rumor, sell the fact" response that supports EUR/USD is possible. Yet the general gloom means a rise may be temporary. 

US Manufacturing ISM Purchasing Managers’ Index Preview: Too soon to cheer

Factory sentiment expected to rebound after one month in contraction. Business spending remains weak as China trade dispute drags on. Consumer spending continues to carry the economy.

GMT
Event
Vol.
Actual
Consensus
Previous
Tuesday, Oct 01
24h
 
 
06:00
 
0.1%
0.0%
06:00
 
0.5%
0.6%
06:30
 
-0.3%
1.4%
06:30
 
-17.7%
6.2%
07:30
 
46.5
47.2
07:55
 
41.4
41.4
08:00
 
45.6
45.6
08:30
 
47.0
47.4
09:00
 
1.0%
0.9%
09:00
 
1%
1%
09:20
 
 
12:30
 
0.1%
0.2%
12:50
 
 
12:55
 
 
-1.1%
12:55
 
 
5.2%
13:15
 
 
13:30
 
 
13:30
 
50.4
49.1
13:45
 
51
51
14:00
 
50.0
49.1
14:00
 
49.3
46.0
14:00
 
0.4%
0.1%
14:00
 
0.1%
2.0%
20:30
 
 
1.4M
23:00
 
 
-0.4%

 

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