Daily Market Briefing, Asia Pacific

• Mixed signals. Equities & bonds consolidate. Commodities firmer. In FX, the JPY has weakened, while the AUD has outperformed.• AUD rebound. More reports out of China pointing to growth-supportive measures coming through have boosted the AUD in the lead up to today’s RBA decision.• Hike or hold? There are arguments for & against a move. Markets & analysts are split. Given pricing a hike could see the AUD spike higher, but it may not last. It was a quiet end to the month for most markets. US equities edged higher (S&P500 +0.2%), bond yields consolidated (US 2yr and 10yr...

• Positive sentiment. Softer US price & wage data supported risk appetite. Equities & commodities firmer, US yields lower. FX was more mixed.• BoJ tweak. BoJ adjusted its yield curve control framework. Based on further steps & improvement in other fundamentals we see the JPY strengthening over time.• RBA in focus. Will they hike or hold? Analyst community is leaning towards a move. Markets are less convinced. A change would generate a knee-jerk AUD lift. Risk sentiment ended last week on firmer footing, although FX markets moved a bit more to the beat of their own drum. US equities rose...

• Divergence. A ‘dovish’ ECB hike & solid US data weighed on the EUR. Reports the BoJ could tweak its policy settings today also boosted the JPY.• AUD weaker. The USD rebound pushed down the AUD. Locally, retail sales are due today. The US PCE deflator & employment cost index are released.• BoJ in focus. Higher inflation means the BoJ’s ultra-loose stance is untenable. A change would be step along the normalisation path & could jolt markets. Markets were jolted overnight by the combination of a ‘dovish’ ECB rate hike, strong US data, and reports the Bank of Japan could...

• Fed hike. Another rate rise from the US Fed. But it remains data dependent when it comes to future moves. USD a bit softer, tracking a slight dip in US yields.• AUD weaker. AUD underperforms after Q2 CPI undershot predictions. In response markets have reduced RBA rate hike expectations.• AUD events. ECB meeting, US GDP & jobless claims tonight. Australian retail sales & BoJ announcement tomorrow. RBA next week. The US Fed decision and Chair Powell’s press conference were in focus overnight. As widely expected, the US Fed hiked interest rates by another 25bps, taking the target range up...