NZ Dollar Retreats As Asian Stock Markets Traded Lower

NZ Dollar Retreats As Asian Stock Markets Traded Lower

NZ Dollar Retreats As Asian Stock Markets Traded Lower

Indonesia stocks rose 0.2%, helped by gains in energy and financial stocks, while an index of Indonesia's 45 most liquid stocks rose 0.3%.

CURRENCY: The dollar rose to 111.39 yen from Friday's 110.82 yen.

U.S stocks are set to open in the black (+0.2%).

In Europe, France's CAC 40 was up 0.1 percent at 5,234 while Germany's DAX was 0.1 percent lower at 5,234.

OIL: Benchmark U.S. crude added 35 cents to $50.25 per barrel on the New York Mercantile Exchange.

A relatively quiet North Korea and U.S. Secretary of State Rex Tillerson's recent comments on "peaceful solution" also led investors back to riskier assets.

However with the jump largely being prompted by a rise in energy prices and core inflation remaining flat at 1.2%, the European Central Bank may still make the case that inflationary pressure remains below expectations. Friday's Baker Hughes report revealed that U.S energy firms cut seven oilrigs in the week to September 15, bringing the total to 749, the fewest since June.

The Federal Reserve is widely expected to leave interest rates untouched after the two-day policy meeting this week, but economists are split on whether the impact of Hurricanes Harvey and Irma will create enough uncertainty to delay the next tightening move until 2018.

Meanwhile, slumped 0.37% to 1.2247.

'The Fed won't want to commit to another rate hike until it is sure that activity is rebounding after the storm disruption'.

US crude oil prices CLc1 edged up 2 cents to settle at $49.91 a barrel, after hovering near multimonth highs. Rising US Treasury yields boosted financial stocks, as higher interest rates tend to lift bank profits, but rate-sensitive sectors such as utilities were the weakest.

CME's FedWatch tool now places the odds of a December rate hike from the Fed at about 50/50 so the tone of this week's meeting could have considerable impact on US Dollar sentiment, especially should the Fed remain committed to one final rate hike in 2017. Investor focus now shifts to the Fed directly.

In emerging markets, the Mexican peso fell 0.3 percent to 17.8125 peso per US dollar following reports of extensive damage to buildings in Mexico City in the aftermath of the second major natural disaster that rocked that country in less than two weeks.

The Fed meeting, which starts Tuesday, is expected to yield details on how the central bank will unwind its $4.2 trillion portfolio of Treasuries and mortgage-backed securities, almost a decade after the global financial crisis.

Ahead of the FOMC meeting, it's still too soon to say that a low is in place for the US Dollar on a broad basis.

Data this morning from Eurostat showed that Euro area (monetary union of 19 members) annual inflation was +1.5% in August 2017, up from +1.3% in July 2017.

The greenback fell 0.3 per cent against the euro ahead of the two-day talks, with markets awaiting guidance on whether the Fed will signal a further hike in interest rates at its December meeting.

10-Year Treasury 2.23 +0.02%.

Note: ECB President Draghi indicated earlier this month that the bank would outline plans next month to scale down its +€2.3T bond-buying program (QE). This article is strictly for informational purposes only.

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