• New Zealand’s terms of trade miss the forecast but stick to historically high levels
  • Chinese Markit manufacturing PMI comes in above expectations
  • China’s Communist Party Congress kicks off October 18

There was exceptionally calm session across the Asian markets both in equities and FX. Lack of larger moves could have been a consequence of some uncertainties related to the NFP report which is going to come in at 1:30 pm BST. Either way, there were a few economic releases of note and quite the relevant announcement from China which could carry potential huge reverberations going forward.

First and foremost, New Zealand’s terms of trade (TOT) in Q2 turned out to be weaker than expected and showed 1.5% qoq against the estimate at 3% q/q. According the NZ’s Bureau of Statistics, it could have stemmed from lower than expected export prices which had increased 2.4% qoq mainly on the back of higher meat and dairy prices. Anyway, the TOT index for the New Zealand’s economy is still close to its all-time high marked in Q2 of 1973. In turn, weighing it against the Australian TOT one could notice that the former is in a better position.

link do file download linkThe New Zealand’s terms of trade index seems to be in a better position against its peer from Australia. Source: xStation5

Moving on, there was a reading of Chinese Markit manufacturing PMI which came in at 51.6 compared with the forecast at 51. Nonetheless, even as the data seems to be reassuring, it has not helped the Asian stock markets which have fallen so far. On to of that, there was a much more important announcement. It concerns a date of the Chinese Communist Party Congress which has been set on October 18. Taking into account recent stellar performance of the Chinese Hang Seng (HKComp on xStation5), one could not rule out that a larger pullback might lurk just around the corner. Let us remind that some sources suggested that the Chinese had reportedly defended its stock market before crashing which may be ascribed to political reasons.

link do file download linkMeanwhile, the NZDUSD seems to be already poised to move down as it’s already broken a notable support area. Source: xStation5

After a bleak yesterday’s session the NZD got another reason (the feebler TOT index) to slide. Having said that, the NFP report could jolt various currency pairs quite meaningfully, hence cautiousness when it comes to betting against the greenback could be warranted.