9 Oct: US$ mixed, Yen firm, Euro heavy. Thin calendar today but higher US yields likely to underpin the dollar

Despite it being a US holiday there has been plenty of action on Monday to keep traders on their toes. Despite the PBOC cutting the Chinese RRR by 1% over the weekend, the Shanghai Composite led Asian stocks lower (-3.7%) while the CNY is back above $6.9, and looks to be headed higher, towards 7.00. Trade war concerns seem set to come back into focus. The US$ was mixed as traders look towards the mid-term elections, weaker against the Yen, which was again in demand on safe-haven grounds, but stronger against the Euro, which lost ground due to the re-emergence of Italian political/budget issues. The Aud and Kiwi seem to have found a short term base, but vulnerable in the longer term, while Cable bounced around on Brexit headlines.

Elsewhere, WTI initially traded heavy on the possibility of the US permitting waivers to countries who are seeking to continue to buy Iranian crude after the November 4 deadline. However, prices then reversed in the NY session after Canada’s biggest oil refinery was hit by an explosion and fire. Gold fall by-1.50%, under pressure from firmer US yields, with the US10Y today reaching 3.248%. US Stocks were choppy in thin conditions.

The US will be back from holiday today but the calendar for the session, and for the rest of the week, is fairly thin. Tuesday will kick off with the NAB Australian Business Conditions/Confidence for Sept (exp Condition; 9, Confidence; 5), There is then nothing until the German Trade Balance (Aug) and then again until the US NFIB Business Optimism Index (Sept), which probably all adds up to make for a quiet session.