Asia-Pacific equity markets are rallying after US stocks fell overnight, sent lower by a big 4.91% drop in Apple stock, a huge chunk of S&P 500 component. Several Federal Reserve members, including Mary Daly and James Bullard, reiterated FOMC’s hawkish outlook, which kept Fed funds futures rigidly priced.
The market posits a 68% chance that the Fed will hike by 75 basis points at the November 02 meeting. The US Dollar DXY Index dropped for a second day, letting out steam after an outsized move over the past several weeks.
The market has the Australian Dollar in focus ahead of Chinese economic data on tap. The National Bureau of Statistics (NBS) is set to report the data for the manufacturing and services sectors at 01:30 UTC, with analysts expecting those purchasing managers’ indexes (PMIs) to cross the wires at 49.7 and 52.4.
That would be little changed from 49.4 and 52.6 in August, although a surprise move above 50 in manufacturing may spur some upside in iron ore and other industrial steel prices.
The Caixin PMI manufacturing gauge is due out shortly after at 01:45 UTC. The Chinese Yuan gained nearly 1% overnight against the USD. However, the USD/CNH is yet above the 7 levels, and 1-week risk reversals show traders remain biased toward call options.
Iron ore prices in China are down more than 5% from the September high set two weeks ago. The Australian Dollar is on the back foot against its major peers, with EUR/AUD rising to its highest level since July.
Elsewhere, Japan is due to print an August update on its unemployment rate, and industrial production and retail sales data will be out soon. The Reserve Bank of India (RBI) is poised to hike its benchmark rate to 5.9%. USD/INR is on track to record a monthly gain of around 2.5%.