Australian dollar was the top winner in Asia, gaining 0.83% for the session, after Reserve Bank of Australia held policy steady as expected and supported by upbeat China’s PMI data. RBA’s Board decided to leave cash rate unchanged at 1.5%. The decision was based on several key factors, improving conditions of labour market in major economies but subdued growth in global industrial production and trade and inflation below most central banks’ targets.
On the other side, economic conditions in China have steadied as growth in infrastructure and property construction supports the outlook, although med-term risk to growth remains.
RBA’s decision sent the Aussie dollar well above 0.7600 mark against the US dollar, however, the pair continues to trade within wider range since end of July.

The Bank of Japan was also unchanged on today’s meeting, holding off on expanding stimulus despite once again pushing back the timing for hitting its inflation target. The BoJ signalled that it will keep policy unchanged unless a severe shock threatens to derail a fragile economic recovery.
Japanese yen did not show stronger reaction on central bank’s decision, holding under 105.00 barrier against the greenback.
The US dollar held within a narrow range in Asia and accelerated lower in early hours of European session. US presidential campaign entered into final days, with recent turmoil on FBI’s probe against Hillary Clinton, changing positions of candidates and overshadowing this week’s key events, FOMC policy meeting, due on Wednesday and Friday’s US Non-Farm payrolls data.
The US dollar index fell to session low at 98.26, coming close to near-term consolidation range floor at 98.21, following upside rejection on approach to recent peak at 99.09.
The dollar’s near-term sentiment is weakening on increased uncertainty over the upcoming US presidential election.
The Euro and Sterling were higher in early Europe, with the single currency hitting session high at 1.0985 and pressuring last Friday rally’s peak at 1.0990, while the British pound extends recovery rally for the third day and pressures strong resistance at 1.2270.
Gold prices rose in early European trading, pointing again at fresh four-week high at $1284, posted last Friday, as traders are awaiting the outcome of Fed’s policy meeting, as gold is highly sensitive on US interest rates changes. In addition, increasing uncertainty over the US presidential election, keeps investors at high alert. Spot gold moved higher on weaker dollar, up 0.16% for the session and retesting important technical resistance at $1280.
Oil price were slightly higher in early Tuesday’s trading, on bounce from one-month lows, relieved from OPEC’s agreement on long-term strategy that was seen as signal that oil producers coming closer to consensus on managing production.
US crude oil was up 0.66% in Asia, on bounce from Monday’s fresh low at $46.62, hit on strong downside acceleration in past two days.
Asian shares were mixed on Tuesday as releases of regional PMI’s and central bank policy reviews were noted. Focus is now turning towards Fed rate review on Wednesday and the U.S. presidential vote next week.
The Shanghai Composite gained 0.33%, while Australian S&P/ASX 200 index fell 0.67% and Japan’s Nikkei 225 fell 0.37%.
European stocks opened higher on Tuesday, with German DAX being up 0.37% from Monday’s closing, French CAC-40 up 0.38% from last traded on Monday, while Britain’s FTSE100 gained 0.72% in early hours of Tuesday.

Highlights of the day

The calendar is full today, with a number of events that started in Asia with two central banks and Manufacturing PMI data from China and Japan.
China’s Caixin Manufacturing PMI beat the forecast on 51.2 release in October vs expected 50.2 and 50.1 in September, showing the fastest pace in expansion in manufacturing sector in over two years.

On the other side, Japan’s Manufacturing PMI fell to 51.4 in October, undershooting forecast at 51.7, which was also the figure from September.

Europe
Manufacturing PMI from the UK is in focus of European session today. Forecast for October is at 54.5, below September’s 55.4 release.

America
GDP data from Canada are due at 12:30 GMT, with the economy growth expected to slow in August, according to 0.2% forecast vs 0.5% in July.
US ISM Manufacturing PMI is is due at 14:00 GMT, with forecast for October at 51.7, slightly above September’s release at 51.5.
Bank of Canada’s Governor is due to speak at 16:00 GMT.
Labor data from New Zealand are expected late in US session (21:45 GMT), with forecast for Employment change in Q3 at 0.6%, being well below Q2 release at 2.4%, signalling that the number of people employed has sharply fallen in the third quarter.

Important levels
AUDUSD
The pair skyrocketed in Asia and peaked so far at 0.7671, on rally from 0.7556 low that extends for the third straight day. Improved near-term technicals shift focus at 0.7707 spike high of last week and series of recent peaks between 0.7732 and 0.7758.
Initial support lies at 0.7644, followed by 0.7627 and 0.7600 pivot.
EURUSD
The Euro returned to last Friday’s high at 1.0990 on strong bullish acceleration on Tuesday, pressuring psychological 1.1000 resistance and shifting focus towards next strong barriers at 1.1013/38. Break above the latter resistances would confirm reversal and open way for stronger recovery from 1.0849 low.
Initial support lies at 1.0958; followed by 1.0943 and 1.0930., Market Analysis