Equities in the region were weighed down by declining crude prices and a general risk off sentiment. The Nikkei 225 losses were magnified by a stronger JPY and finished down 2.1%, the ASX 200 closed at – 1.4% , while China`s Shanghai Composite shrugged off initial losses to finish at +1% after PBoC conducted further liquidity injections.
Data out of the region saw the RBA keeping the Cash Rate Target unchanged at 2% and yet again comment that inflation is expected to remain subdued and that an overvalued AUD will make monetary policy adjustments more complex. BOJ Gov Kuroda, tried to stem the strengthening JPY by re-iterating that it is still technically possible for a further rate cuts and that the bank is considering lower its inflation expectations on the back of lower expectations from households and businesses.
Data out of the region today is as follows:
- NZD: GDT Price Index previously at -2.9%
- CNY: Caixin Service PMI expected at 51.4, slightly higher than last month’s 51.2.
- JPN: Leading Indicators expected at 99.9%, lower than last month’s 101.8%.
Equities finished the session slightly negative as lower crude prices weighed on the energy sector. The DJIA lost 0.31%, the NASDAQ-100 was down 0.45% and the S&P500 lost 0.32%.
Data out of the region today should create some volatility after yesterday’s relatively slow day, the data expected is as follows:
- Trade Balance expected at -46.3B, worse than last months -45.7B
- ISM Non-Manufacturing PMI expected 54.1, higher than last month’s 53.4
- JOLTS Job Openings expected at 5.57M, slightly higher than last month’s 5.54M
Data out of the UK today comes in the form of the Service PMI expected at 53.9, higher than last month’s 52.7. Better than expected data will see the GBP strengthen across the board as it did after yesterday better than expected Construction PMI. However, political issues may yet drive the GBP lower as the countries BREXIT vote nears.
The Cad has fared a lot better in response to the decline in crude oil prices than it did earlier in the year and todays Trade Balance figures could strengthen this divergence if it beats expectations and prints higher than the expected 0.9B.
Crude continues to be sold off as the output freeze looks more and more out of the question after Iran rejected a production ceiling, noting that it is determined to regain its share in the global markets before any such considerations are taken. As long as uncertainty regarding this month’s Doha meeting remains, we expect crude to continue sliding with 35.50 the support zone to watch.