Asian Session Recap - 30 September
Q3 Tankan survey of Japanese businesses came in very strong. The Manufacturing Index came in at 12, (vs. expected 7) while Non-Manufacturing came in at 14. The data indicates that business conditions are strong enough for the Japanese government to increase the consumption tax from 5% to 8% in April, 2014.
The Japanese Yen has steadily weakened during the session, trading from 98.23 to the current high of 98.75
China’s manufacturing PMI for September disappoints at 51.1 vs. an expected 51.6. The news appears to have been leaked as it was reported on twitter 2 minutes before the 0100 GMT scheduled release, and 30 seconds prior on Bloomberg.
The Australian dollar initially dropped to 0.9285 on the back of the weaker Chinese figure, but quickly bounced back up to 0.9320. Additional support for the AUD came from a slightly stronger than expected M/M retail sales figure of 0.4%. Aussie dollar traded to 0.9335 immediately after the release. The next piece of news coming out of Australia is the RBA’s decision on interest rates and statement (12:30 am EST/ 0530 GMT). The RBA is expected to keep the cash rate steady at 2.5%. The market is pricing a 6% chance of a 0.25% cut by the RBA. The RBA’s post-meeting statement is expected to be neutral though there is a small chance the RBA mentions heightened risk-taking in investor housing, leading to a short term lift in AUD.
All eyes are now focused on the looming US Government shutdown at Midnight EST. The House of Representatives passed a bill to keep the government open, while delaying Obamacare’s individual mandate and canceling health-insurance subsidies for members of Congress, their staff and the White House. The Senate has, as expected, rejected the house's bill.