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    Asian Session – Yen weighed down by weak exports data

    Japan’s exports rose by less than expected in September, rising by just 0.6% year-on year – the lowest rate since August 2014. Estimates were for exports to rise by 3.4%. Imports were slightly better-than-expected though, declining by 11.1%, versus estimates of an 11.7% drop. With industrial production falling in both July and August, the prospects for third quarter growth are looking bleak. The Bank of Japan has so far maintained an optimistic view of the economy and on inflation but many economists now expect the Bank to loosen monetary policy when it meets at the end of the month.

    The yen fell against major currencies after the data. The dollar climbed to a 1-week high to briefly top 120 yen but fell back slightly to 119.95 yen in late Asian session. The euro was higher at 136.19 yen.

    The New Zealand dollar fell sharply on Wednesday after the latest dairy price index showed a drop in dairy prices. The kiwi tumbled from around 0.6840 to 0.6745 against the greenback yesterday and extended its slide in today’s Asian trading to drop to 0.6705.

    The euro was off yesterday’s highs when it rallied on an ECB survey that showed credit conditions were easing across the Eurozone and banks were lending more. This reduced the likelihood that the ECB would expand its quantitative easing program anytime soon when the current policy appears to be working. Although many analysts believe the ECB will signal its readiness for additional measures at its policy meeting on Thursday if the inflation outlook deteriorated.

    The single currency peaked at 1.1386 against the dollar on Tuesday but strong US housing data later in the day lifted the dollar and dragged to the single currency down to 1.1331 dollars. The euro climbed higher in today’s Asian session as it attempted to claw back its losses and was trading at 1.1354 dollars. It was also higher against the pound at 0.7362. Sterling was headed lower against the dollar for a second day and was down at 1.5426 in late Asian trading.

    Coming up later today, UK government borrowing figures will be the main data in European session, while the Bank of Canada’s latest policy decision will be the main event in US session. The Bank of Canada is expected to hold rates at 0.5% and will follow its announcement with a press conference. Also to watch out for later today are speeches by Bank of England Governor Mark Carney and Fed Governor Jerome Powell.


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