A pullback in base metals and weakness on AXJ currencies saw the Australian dollar continue its decline vs USD as it heads towards major support bases at 0.7305 and 0.7286. After Friday slides vs the Kiwi led to a 1.2% weekly loss, a bounce in early Asia heads towards 1.0490 attempts to retrieve last week’s losses by emerging Asian markets. No significant economic data is due for Australia this week, and RBA Governor Kent speaks tomorrow evening, USD driven sentiment will likely be the main price determinant. Key inflation indicator for New Zealand are due as quarterly retail sales and PPI input may signal if another rate cut is potential for December. Despite the $2bn damage of the earthquake New Zealand’s finance minister English said that tax cuts were very much still planned. NZD/USD still trades at 0.6994, close to its session lows.
Japan trade balance (23:50GMT) is expected Y403.3bn to exceed priors Y349.0bn potentially providing relief for USD/JPY which continues to climb breaking 111.100 this early session. Special interest will be drawn towards Takako Masai (01:30GMT), a new member of the Bank of Japan policy board in her first public speech as a board member.
Trade was the main topic for Politics over the weekend as Shinzo Abe met with US president elect Donald Trump at Trump Tower in NY to discuss the Trans-Pacific Partnership, security, and defence. Abe attended the APEC summit in Peru preaching the positive economic impacts of free trade whilst proposing the vision of Japanese technology and Chinese manufacturing. Chinese premier Xi Jinping showed appreciation to these comments reiterating the importance of strong Asian relationships and trade. Markets saw little effect.
Oil futures have risen over 1% since OPEC’s informal talks as Algerian Energy minister Noureddine Boutarfa said the “groups meeting with Russia gave him confidence a deal can be reached” and that “Algeria remained optimistic”. An output freeze for 6 months is beginning to appear a likely outcome as the cartel attempt to reduce a huge stockpile surplus. This would be the first agreement in eight years to trim output, but with Iran already exempt, the threat from non OPEC members is the main complication.
