- BOJ leaves policy as is as eyed, vote 8-1, Kiuchi dissents again, not against zero rates, QQE but for taper to Y45 bln, Policy Board cuts assessment of overseas growth, exports and output as a result, moderate recovery still.
- Japan Sept Reuters Tankan manufacturing index +9, non-manufacturing +23, Aug +17 and +27, manufacturing index largest fall since Sept '14, mfg index eyed at +7 in Dec, non-manufacturing +22, China concerns, weak demand cited.
- KEXIM Bank launches Y55 bln 2-tranche samurais via Daiwa, MUFJ/MS et al.
- Turnbull to become Australia PM after Liberal Party ousts Abbott.
- RBA September 1 meeting minutes Appropriate to leave rates as is, weak Q2 growth eyed, some signs of improvement though, lower AUD on weak commodities to help growth, inflation consistent with target.
- Australia August new motor vehicle sales -1.6% m/m, July -1.3%.
- (0430 ET/0830 GMT) UK August CPI, 0.2% m/m, unchanged y/y eyed; last -0.2%, +0.1%.
- (0430 ET/0830 GMT) UK August, +0.3% m/m, +0.9% y/y eyed; last -0.1%, +1.0%.
- (0430 ET/0830 GMT) UK August RPIX, +0.3% m/m, +0.9% y/y eyed; last -0.1%, +1.1%.
- (0430 ET/0830 GMT) UK August PPI output, -0.2% m/m,-1.7% y/y eyed; last -0.1%, -1.6%.
- (0430 ET/0830 GMT) UK August core, unchanged m/m, +0.2% y/y eyed; last +0.1%, +0.3%.
- (0430 ET/0830 GMT) UK August PPI input, -2.4% m/m, -13.7% y/y eyed; last -0.9%, -12.4%.
- (0500 ET/0900 GMT) Euro zone Q2 employment; last +0.1% q/q, +0.8% y/y.
- (0500 ET/0900 GMT) Euro zone July trade balance; last E26.4 bln surplus.
- (0500 ET/0900 GMT) Germany September ZEW economic sentiment index, 18.4 eyed; last 25.0.
- (0500 ET/0900 GMT) Germany September ZEW current conditions index, 64.0 eyed; last 65.7.
- (0830 ET/1230 GMT) US August retail sales/ex-autos, +0.3%, +0.2% m/m eyed; last +0.6%, +0.4%.
- (0830 ET/1230 GMT) US September NY Fed Empire State mfg index, -0.75 eyed; last -14.92.
- (0915 ET/1315 GMT) US August industrial output, -0.2% m/m eyed; last +0.6%.
- (0915 ET/1315 GMT) US August capacity utilization, 77.8% eyed; last 78.0%.
- (1000 ET/1400 GMT) US July business inventories, +0.1% m/m eyed; last +0.8%.
Key Events Ahead
- (0230 ET/0630 GMT) BOJ Gov Kuroda press conference.
- N/A BoI Visco, Italy EconMin Padoan speak at Milan conference.
- N/A Spain 6/12-month bill, Belgium E1.9-2.3 bln each 3/12-month TC auctions.
- (0345 ET/0745 GMT) ECB/Austria CB Nowotny speech in Vienna.
- (0500 ET/0900 GMT) OECD Ireland survey, OECD Gurria, FinMin Noonan at launch.
- (0515 ET/0915 GMT) ECB Nouy speech at Vienna FMA conference.
- (0530 ET/0930 GMT) ECB 7-day refi at fixed 0.05%, E70 bln allotment eyed, last bln.
FX Recap
Euro keeps losing ground vs. the dollar albeit at snail pace, pushing EUR/USD to session lows in the 1.1301 band. A busy EUR macro calendar ahead, with the UK CPI print and ZEW figures for Germany and the Euro zone expected to be the main highlights today. The ZEW will release its Economic Sentiment Index for the next six months for Germany, as well as the Current Situation Index, reflecting institutional investors' opinions of whether the current situation. Economic sentiment is seen heading down to 19.0 in September from 25.0 measured in August, while the Current Situation Index is also expected to fall to 64.5 from 65.7 in the previous month. Pair is currently trading at 1.1309 levels. It made Intraday high at 1.1328 levels and low at 1.1301 levels. Looking towards the New York session, a flurry of US macro data including the critical retail sales and industrial production data will dominate ahead of Thursday's Fed decision. Initial support is seen around at 1.1015 and resistance at 1.1363 levels.
The Bank of Japan made no changes to its monetary easing program on Tuesday, despite the lack of inflation and economic activity in Japan. However, the bank downgraded its opinion of exports and production, which could be setting the scene for further easing. Low global oil prices partly explain why inflation in Japan is so weak, but even when excluding fuel prices, the CPI only rose 0.6% year-on-year in July, some way off the BOJ's 2% target. On Tuesday the BOJ admitted that exports and production had softened, saying that both were being affected by the slowdown in emerging economies. This change in tone could be the bank paving the way for further easing. Pair is currently trading at 120.08 levels. It made intraday high at 120.65 and low at 119.90 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels.
Downward external and domestic price pressures continue to exert significant pressure on the UK's CPI inflation. The UK consumer price growth of negative 0.1% is anticipated in August, year-on-year, after a 0.1% advance reported in July, while 0.2% growth in consumer prices is anticipated on a monthly basis, compared to the 0.2% decline reported in July. It made an intraday high at 1.5433 and low at 1.5417 levels. Moreover, markets remain wary ahead of Thursday's Fed decision, on increased speculations that the Fed rate hike could be pushed back to early 2016, thus reducing the demand for the US currency. While the US calendar remains absolutely busy today, with the traders' now shifting focus towards today's economic releases from the UK. Initial support is seen at 1.5185 and resistance is seen around 1.5507 levels.
The New Zealand dollar was the biggest loser among the G20 basket of currencies during the Asian session on Tuesday. The kiwi hovered near its intraday lows, falling 0.27% to $0.6308 ahead of the European open. New Zealand's dollar erases previous gains on Tuesday and supported above 0.6300 levels. Both antipodean currencies halted their recovery mode, returning back to negative territory as the return of risk aversion dampens the demand for higher yielding currencies. Investors are expected to remain cautious ahead of the Federal Open Market Committee's crucial decision on Thursday. It made an intraday high at 0.6342 and low at 0.6306 levels. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
The RBA minutes turned out slightly dovish and failed to lift the sentiment on the Aussie, also dragging the kiwi lower. The primary note from the minutes is that the central bank suggests that a lower AUD is favoured for the economy. The RBA minutes also showed how close the policymakers monitor what is happening in China. Pair is currently trading at 0.7115. It made intraday high at 0.7165 and low at 0.7111 levels. Initial support is seen at 0.6908 and resistance at 0.7152 levels.
Equity Recap
Japan's benchmark Nikkei 225 index rallied 1.80% to 18,288.87 points in morning trade, while Tokyo's broader Topix gauge jumped 1.76% to 1,488.15 points.
Hong Kong's benchmark Hang Seng index fell 0.38% to 21,477.26 points at the opening bell, and mainland China's benchmark Shanghai Composite plunged 1.95% to 3,054.11 points at the same time.
Korea's benchmark Kospi index edged up 0.16% to 1,934.53 points on Tuesday morning in Seoul.
The benchmark Australian S&P/ASX 200 index fell 0.41% to 5,075.40 points in Sydney, with a range of different miners trading with losses.
New Zealand's benchmark S&P/NZX 50 index rose 0.13% to 5,672.98 points this afternoon in Wellington.
Australia's S&P/ASX 200 index closes down 1.31 pct at 5,029.70 points.
Tokyo's Nikkei average closes up 0.34 pct at 18,026.48.
Treasury Recap
US 10-year treasuries yield at 2.179 percent vs US close of 2.180 percent on Monday.
Thailand 30 bln baht, 91-day central bank bond average accepted yield 1.49104 pct.
Thailand 30 bln baht, 182-day central bank bond average accepted yield 1.49897 pct.
BOJ offers to lend Y400 bln of JGBs on spot basis through 9/16 as a secondary source of JGBs.
New Zealand government bonds were a touch softer.
Australian government bond futures retreated, with the three-year bond contract off 4 ticks at 98.070. The 10-year contract was down 1.5 tick to 97.2600, leading to a bearish flattening of the curve.
Commodity Recap
Gold dipped slightly to near a one-month low on Tuesday as investors kept to the sidelines, waiting for the Federal Reserve's outlook this week on U.S. interest rates. Spot gold had eased 0.1 percent to $1,106.80 an ounce by 0331 GMT, just above a one-month low of $1,098.35 reached last week. U.S. gold was trading at $1,106.20.
Oil was trading little changed on Tuesday after booking huge losses in the previous session amid weak demand that has weighed on prices for the past few months. Futures for WTI rose 0.20% to trade at $44.23 per barrel, while Brent futures were traded 0.06% up at $47.46 per barrel.
