Aussie data slump and China import surge set the tone before US CPI

Weak Australian surveys and a surge in Chinese imports gave the Australian dollar mixed signals in Asia on Tuesday. Two Australian readings hit multi-year lows, while China's October trade data beat forecasts, and the wider market kept its focus on the US inflation report.

What moved and why

According to investingLive, NAB business conditions fell to a six-year low as forward orders slid. The outlet said the survey strengthens the case that the RBA's five hikes this year are biting and lowers the odds of a sixth, leaving the cash rate on hold at 4.85%.

Consumer sentiment then sank to a four-year low, investingLive reports. It said the two readings together strengthen the case for an RBA pause in December and leave the Aussie with little support from rate expectations.

China offered a partial offset. investingLive reports that October exports beat forecasts and imports surged 41.6%, narrowing the trade surplus. The outlet noted that if the import jump reflects firmer domestic demand rather than higher commodity prices, it would be a positive for commodity exporters and the Australian dollar. You can follow the pair on the AUD/USD chart.

The majors in the fixings

The latest ECB reference rates are from 9 November, compared with the 6 November fixing. They show the dollar easing from its payrolls rally, led by a 1.25% gain in NZD/USD.

Over five fixings, AUD/USD is still down 1.63% and USD/CAD is up 0.92%. Investing.com described Monday's dollar dip as a breather after last week's advance.

Central banks and data in the news

Federal Reserve and Treasuries

In its Americas wrap, investingLive reported that Fed's Goolsbee said he is starting to see inflation kick up in services. Fed's Barkin called the jobs report "healthy" but said firms still see a low-hire, low-fire economy. The NY Fed's October survey showed 1, 3 and 5 year inflation expectations unchanged. The same wrap said Iran optimism and a tech rebound drove a risk surge.

The Treasury sold $58 billion of 3-year notes at a high yield of 4.627%, investingLive reports. It tailed by 0.5 basis points with a 2.53x bid-to-cover, and the outlet graded it C−. Earlier, Investing.com said Treasuries were treading water as a CPI and auction gauntlet loomed.

Bank of Japan

Japan household spending plunged 6.8%, a 10th straight drop, according to investingLive. The outlet said the miss adds a dovish counterweight as the BoJ weighs a December hike, which could temper the yen's gains from rate expectations. It added that a strongly hawkish Summary of Opinions would likely outweigh one weak, volatile data point. For background on how Tokyo has defended the yen, see this explainer on currency intervention and USD/JPY.

UK

UK retail sales rose 1.5%, the best since June, investingLive reports. It called the signal mixed for sterling, since much of the gain reflects higher fuel prices. Non-food sales were flat and confidence was the weakest since April.

What to watch next

• US CPI. investingLive's preview says the 43-day shutdown leaves no official annual rate, so monthly core carries most weight. It said a 0.3% core print would revive hawkish Fed pricing for December and likely lift yields and the dollar, while 0.2% or softer would support the case for a pause.
• Treasury auctions. Investing.com flagged more supply after the 3-year sale.
• BoJ Summary of Opinions. investingLive says traders look to it for confirmation of a December hike.
• RBA December meeting. investingLive sees the weak surveys strengthening the case for a pause.