AUD Brightest Against Major Peers, EUR Mixed

The New Zealand Dollar was better against most other major currencies through the Asian session as NZD/USD appreciated to US$ 0.8358, EUR/NZD fell to NZ$ 1.6164, NZD/JPY bettered to ¥82.60, and GBP/NZD sank to NZ$ 1.9038. Yesterday, traders rewarded NZD after data there saw the September performance services index improve to 55.6 from the prior reading of 53.3 while September REINZ house sales skyrocketed a major 19.0% y/y and house prices were up +0.8% m/m. The real estate sector in NZ remains blistering but it is expected to moderate as RBNZ instituted property loan restrictions on 1 October to slow the torrid sector. Q3 consumer prices will be released on Wednesday followed by October confidence numbers on Thursday.

The Australian Dollar was brightest against major peers through the European session as AUD/USD strengthened to US$ 0.9533, EUR/AUD depreciated to A$ 1.4216, AUD/JPY climbed to ¥93.93, and AUD/CHF appreciated to CHF 0.8685. Traders await minutes from RBA’s policy meeting in October in which policymakers did not indicate A$ is overvalued. The catalysts for A$’s move lower early this week were both weaker Aussie data and unexpectedly mixed Chinese data. Aussie data saw August home loans recede 3.9% compared with the prior reading of +2.1% as the value of loans fell 1.9% m/m. Also, August investment lending printed at +0.0%, down from the prior reading of +2.9%. Chinese numbers wrongfooted the market yesterday as it was reported the trade balance moderated to US$ 15.21 billion in September from the prior US$ 28.52 billion in August, far below expectations as exports actually contracted 0.3% y/y, down from the prior reading of +5.5% y/y. Other Chinese data saw September CPI pick up to +3.1% y/y, up from August’s +2.8% y/y reading, and PPI improved to -1.3% y/y, up from the prior reading of -1.5%. Also, Chinese numbers saw September M2 money supply up 14.7% y/y while September new yuan loans climbed. Also, September foreign reserves outpaced expectations, printing at US$ 3.66 trillion.

The Euro was mixed against major peers through the European session as EUR/USD improved to US$ 1.3566, EUR/JPY softened to ¥133.42, EUR/GBP fell to £0.8477, and EUR/CHF moved lower to CHF 1.2341. Eurozone finance ministers convened in Luxembourg yesterday and discussed recent improvements in Spain, Ireland, and Portugal and also discussed ongoing improvements in Greece. Yesterday, ECB rate-setter Coeure reiterated the ECB’s monetary policy needs to remain accommodative for an “extended” period and predicted the economic recovery will remain weak in the coming months. Excess liquidity in the Eurozone’s banking system has fallen to about €216 billion, close to the €200 billion level the ECB has identified as a floor. Short-term interbank lending rates are moving higher and these factors will likely result in additional stimulus programs from the ECB, possibly including new LTROs. ECB’s Noyer echoed Coeure’s sentiment, adding the Eurozone may take longer to terminate its monetary accommodation. Noyer also warned of violet consequences if there is a US debt “accident.” Eurozone industrial production numbers released yesterday printed at +1.0% m/m and -2.1% y/y. German August import prices data will be released today.

The Swiss franc came off through the European session as USD/CHF moved higher to CHF 0.9114, CHF/JPY weakened to ¥108.04, GBP/CHF improved to CHF 1.4563, and CAD/CHF bettered to CHF 0.8813. SNB Chairman Jordan defended the central bank’s EUR/CHF 1.2 floor this past weekend, indicating it is required to avoid a tightening of monetary conditions in his country, adding it is a “crucial tool” of monetary policy. Data released in Switzerland yesterday saw September producer and import prices print at +0.1% m/m and +0.0% y/y. The October ZEW survey will be released on Wednesday.