Yen gains as mild risk aversion mood sets in!

Today’s Economic Data:

• Australia HPI q/q 4.7% vs. 2.4%; HPI y/y 9.8% vs. 8.0%
• Swiss Trade balance 2.87bn vs. 2.75bn
• Swiss exports m/m -2.4% vs. -2.3% previously; imports m/m -4.0% vs. -1.8%
• UK PSNB 11.3bn vs. 8.8bn; PSNB ex. banks 12.1bn vs. 9.2bn
• UK CBI trend selling prices -8 vs. -5; total orders -7 vs. 0

Later:

• US HPI
• BoE Shafik speech
• Fed Lockhart speech

The markets opened to another slow day with no major economic releases on the agenda. However, the US Dollar remained on the forefront and continued to surge higher across the board, with the exception of the Yen, which is the top performing currency at the time of writing, gaining close to 0.53%. The Asian session saw the commodity risk currencies come under pressure. The Aussie dollar was the weakest currency of the day losing -0.59% at the time of writing. The decline in the Aussie comes amid the mining sector taking a big hit today. European mining stocks were trading deep in the red as China reduced its growth forecasts as the decline in the country’s appetite for raw materials has seen the commodities trade lower today, and dragging the Aussie dollar along with the rest. The house price Index from Australia which saw a big jump failed to hold the declines in the Aussie. Crude Oil, Gold futures and WTI were all trading deep in the red today.

The Kiwi was faring better compared to the Aussie, although down -0.28% against the Greenback.

The European trading session saw the release of the UK’s PSNB which rose more than expected to 11.3 billion. The British Pound was down -0.40% against the Greenback while the Euro was moderately better in comparison but down -0.29% for the day. The Euro continued its strong decline with the currency now trading near the 1.1135 level of support. A break below could see the single currency decline to the 1.11 level of psychological support.

The US trading session is calm with the exception of the house price index which is expected to print a 0.4% growth, up from 0.2% last month. The remainder of the evening is scheduled with speeches from BoE’s Shafik and the Fed’s Lockhart. Being a hawk, Dennis Lockhart joins nearly three other Fed members who cited the need for a rate hike in 2015. The US Dollar has gained strong momentum despite the dovish Fed outlook. This comes as various Fed and ECB officials, in the past few days have managed to remind the markets of the diverging monetary policies. Although the Fed might have missed hiking rates in its September meeting, the possibility to see at least one rate hike in 2015 is still strong.