Asian equities bounced back on Wednesday after a positive close on Wall Street on Tuesday. Positive consumer confidence figures from the US and the eurozone eased fears of a global slowdown. The rebound in equity prices helped the dollar firm in today’s Asian trading, while the yen eased on improved risk sentiment.
Weaker-than-expected industrial production figures also weighed on the yen. Preliminary figures for August industrial production in Japan showed output dropping by 0.5% month-on-month against estimates of a 1% rise. This was the second month in a row of falling output. Retail sales also disappointed, recording no growth in August, against expectation that they would rise by 0.5% on the month.
The yen was weaker against the dollar as the greenback rose to 119.93 yen in late Asian session. But it was stronger against the euro as the single currency fell to 134.68 yen.
The Australian dollar gave up earlier gains to fall back to 0.6992 against the greenback in late Asian session. The Aussie briefly fell after disappointing building approvals data but then extended its gains to a day’s high of 0.7020 before declining again. Australian building approvals fell by a larger-than-expected 6.9% month-on-month in August, versus estimates of a 2% drop.
The euro fell after German retails sales fell unexpectedly in August. Retails sales were 0.4% lower in August month-on-month after rising by 1.4% in July. Estimates were for a 0.2% rise. The euro fell to 1.1230 dollars having reached 1.1261 dollars earlier in Asian session. Against sterling, the euro fell to 0.7409. The pound was little affected by strong housing data and cable had eased to 1.5158 in late Asian trading, coming off highs of 1.5173 dollars.
Crude oil prices fell back on Wednesday after rallying around 2% on Tuesday. A bigger-than-expected rise in US stockpiles pulled oil prices lower with WTI futures down 0.5% in late Asian session to $44.98.
Looking ahead to the rest of the day, German unemployment and flash inflation data for September will be the main data coming out of the eurozone. The third estimate of UK GDP growth in the second quarter is not expected to have a major impact as it’s forecast to stay unrevised. Later in the US session, the ADP employment change for September should provide some clues for Friday’s jobs report, and the latest Chicago PMI number should also keep investors busy.
But the focus of the day is likely to be Janet Yellen’s speech at 19:00 GMT when she’s due to speak at the Fed’s annual community banking conference in St. Louis. Analysts will be closely watching Yellen’s words for further signs on Fed policy in the coming months.