Stay updated on Asia market shifts, post-US session updates, key economic indicators, and global currency trends for informed decision-making.
Global Market Recap
In a tumultuous day for global markets, the release of the US ADP employment report sent shockwaves across the financial landscape. Only 89k jobs were added in the private sector for September, starkly contrasting market expectations. This dismal figure, the lowest since January 2021, led to a swift decline in the dollar index (DXY), reaching 106.50. Simultaneously, the ISM Services PMI, though expanding for the ninth consecutive month, displayed concerning signs. New orders slowed to 51.8, indicating potential challenges for the services sector. DXY managed to bounce back post-ADP, reaching 107.00 after the ISM release.
Australia faced a shrinking trade surplus in Asia-Pacific, dropping to A$8.0B in July 2023, the smallest since February 2022. This decline, attributed to reduced exports to China, Australia’s major trading partner, could exert downward pressure on the Aussie.
Asia Market Resilience: Global Economic Shifts
Dollar Index (DXY)
The US dollar remains in flux, influenced by conflicting economic indicators. Lower unemployment claims have traditionally boosted the dollar, but the disappointing ADP job figures are causing uncertainty. Traders are treading cautiously in the currency markets.
Germany’s trade surplus decreased to €15.9B in July due to reduced exports, potentially impacting the Euro. Despite this, the Euro demonstrated resilience, rebounding following poor ADP jobs data.
The Australian Dollar (AUD) strengthened as it rebounded overnight, breaking above 0.6350. The Aussie demonstrated resilience despite the shrinking trade surplus.
The Kiwi Dollar (NZD) faced fluctuations, finding support at 0.5900 and rising towards 0.5950 as Asian markets opened. The Reserve Bank of New Zealand’s decision to maintain the OCR at 5.50% contributed to the Kiwi’s movements.
The Japanese Yen (JPY) experienced increased demand, causing USD/JPY to tumble below 149.00. Speculation about a possible intervention by the Bank of Japan and poor ADP job figures contributed to the Yen’s strength.
Central Bank Updates
The Federal Reserve left the Federal Funds Rate unchanged at 5.25% to 5.50%, expressing commitment to returning inflation to its 2.0% target.
The European Central Bank raised the three key interest rates by 25 basis points, indicating cautious optimism amid economic uncertainties.
The Reserve Bank of Australia maintained the cash rate at 4.10%, with concerns about persistent inflation.
BOJ ( The Bank Of Japan) continued with QQE and Yield Curve Control to achieve a 2.0% price stability target with ongoing economic recovery efforts.
The Bank of England voted to maintain its Official Bank Rate at 5.25%, citing projections of declining CPI inflation.
The Bank of Canada kept the overnight rate at 5.0%, reflecting strong Q2 GDP growth and concerns about persistent inflation.
Oil prices experienced significant fluctuations, dropping below $84.00 per barrel due to rising US Treasury yields and concerns about supply and demand dynamics. Market biases varied, with some currencies displaying strong bullish tendencies while others remained bearish.