Forex Today: USD jumps, AUD slumps in Asia, UK PMI in spotlight

Broad based US dollar strength remained the main theme in Asia this Tuesday, with most major bearing the brunt of it and trading at multi-week lows. Among the Asia-pac currencies, Kiwi was the weakest amid poor NZ business confidence numbers and bleak NZ treasury report, while the Aussie soon followed suit and slumped on RBA’s jawboning. The Yen also slipped sharply on downward revision to the BOJ’s inflation outlook and also on the back of the Japanese political woes.

Meanwhile, the EUR/USD pair dropped further to test 1.17 handle, while Cable moved-off lows and traded near mid-1.32s, awaiting fresh impetus from the UK construction PMI release.

Main topics in Asia

RBA leaves rates on-hold, a rising AUD would slow the economy

The Reserve Bank of Australia (RBA) at its October monetary policy meeting, kept the policy steady, leaving the official cash rate (OCR) unchanged at a record low of 1.50%, as widely expected.

RBA: Higher AUD is restraining price pressures

Key headlines from the October RBA monetary policy statement (via Reuters)…

Dollar Index clocks fresh 7-week high of 93.89

Dollar Index [DXY] clocked a fresh 7-week high of 93.89 as the odds of the December Fed rate hike rose to 77% on the back of firm data releases.

New Zealand Treasury expects gradual decline in annualized inflation in the near-term

The monthly economic indicators report released by the New Zealand Treasury shows the annualized inflation is seen gradually declining in the near term.

Bank of Japan Q3 Tankan Survey - Companies revise inflation forecasts lower

Bank of Japan [BOJ] third quarter Tankan sruvey released this Tuesday morning in Asia showed the Japanese companies have revised their inflation projections lower to an average 0.7% a year.

First Impressions: NZ Q3 business confidence - Westpac

Analysts at Westpac offered their first impressions for the NZ Quarterly Survey of Business Opinion, September quarter 2017.

Key Focus ahead

Markets now look forward to the UK construction PMI release and BOE FPC meeting minutes amid holiday-thinned trading, as the German markets remain closed in observance of German Unity Day. Also, of some relevance will the Eurozone PPI data, as lower price pressures continue to pose a threat to the ECB’s tapering plans.

The NA session also remains data-light, with nothing major on the cards except for the NZ GDT price index. Meanwhile, speeches from the FOMC member Powell and BOC Governing Council member Leduc will be closely heard for fresh policy guidance.

GBP/USD: Will the UK construction PMI rescue the bulls?

The minor-recovery seen in GBP/USD from three-week lows of 1.3231 appears to have run into 1.3250 resistance, with markets now awaiting the UK construction PMI data for fresh trading impetus.

Daily Forex Outlook: What you need to know for Tuesday

Heading into Tuesday, traders must also brace themselves for other key events. Firstly, as a reminder, we'll have public holidays in both China and Germany Out of the UK, the UK construction PMI is due, with no surprises expected. 

Two Trade Ideas on the Radar

US NFP: Harvey and Irma likely to knock down payroll growth - Wells Fargo

On Friday, the US employment report will be released. Work disruptions due to Hurricanes Harvey and Irma are likely to knock down payroll growth substantially in September according to analysts from Wells Fargo.