*Potential US-China delay caps gains
*Aussie CPI data makes for Asia session highlight
*UK House of Commons approve Dec 12 election date
Jittery in the US-China complex
Headlines have emerged this morning and overnight speculating on whether Trump and Xi's widely anticipated meeting after the APEC Chile Summit on Nov. 17 will be able to see Trump's "substantial phase one deal" finalised or not. SCMP initially reported that "if everything goes smoothly", a deal most definitely could get through. However, Reuters quickly tempered the positive rhetoric with claims that "phase one trade agreement may not be signed at Chile APEC meeting in November". Reuters also added that progress was being made and that it didn't necessarily mean a phase one signing had been derailed. From our end, it's a poignant reminder that the translation, rigorous enforcement and potentially restrained economic significance of phase one might be substantially underpriced and underappreciated.
Markets are marginally risk-off this morning. USDJPY was swiped down to 108.75 but has since steadied. USDCNH edged higher towards 7.068 making weekly highs. We expect ASX Cash to open lower following a 23pt slide in Dec Futures.
Locals catch Aussie CPI
Event risk is highlighted by Aussie CPI numbers out at
11.30am AEDT today. We expect surprises in this announcement to impact
AUDUSD seeing as it gives markets a view into the RBA's recent rate cuts and whether they're having an incremental impact on what the RBA repeatedly describes as subdued inflation and softer housing consumption in the Aussie economy. CPI q/q consensus is 0.5% while CPI y/y consensus is 1.7%, an improvement on the prior 1.6% reading. A miss would be dovish for
AUDUSD.
Aussie CPI y/y. Source: Eikon
We also flag RBA Gov. Lowe's speech in Canberra which delivered little in terms of something new. Though he did mention that "returning interest rates to normal levels was beyond central banks' control". It hints at both the need for unconventional measures and greater fiscal policy down the track.
US Confidence okay, UK heads to the polls
Elsewhere, US Consumer Confidence data remains positive having printed slightly under expectations, 125.9 vs 128 consensus. Nothing too concerning here.
In Brexit, we saw a UK pre-Christmas election voted in for Dec. 12. The motion was passed in the House of Commons but still needs to get through the House of Lords before it takes effect. As a reminder, the Brexit bill will be set aside for now, and there will be no leaving the EU as of Oct. 31.
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