BOC Holds, RBNZ Cuts, Aussie Jobs Next

Central banks continue to grapple with an uncertain global economy and mixed data. The BOC and RBNZ are seeing different pictures markets are facing the same tug-of-war as emphasized by a complete intraday sentiment swing on Wednesday. Chinese CPI and Australian employment are up next. A new video of charts analysis for Premium subscribers has been issued on Ashraf's take on the major indices, including the DAX failure and the key FX pairs ahead of Thursday's BOE announcement/MPC minutes.

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The BOC struck an optimistic tone after deciding to hold rates at 0.50%. They noted global uncertainty but were upbeat about the US economy and exports. Yet, growth in exports certainly isn't universal. Despite the massive declines in the yen, Nikkei reported the BOJ is considering lowering its outlook for exports and overseas economies at next week's meeting.

Meanwhile, the RBNZ cut rates for the third consecutive meeting and said further easing seems likely. The market had fully expected the cut but anticipated a shift toward the sidelines not more dovish rhetoric. The kiwi fell almost a cent on the announcement as Wheeler outlined a series of worries.

In markets, what had been an optimistic day -- including the eight largest Nikkei rally on record -- quickly unraveled. Sentiment was already waning when JOLTS rose to a record high at 5.75M vs 5.3M expected. That started a decline in stocks that slowly turned into a rout with the S&P 500 finishing 1.4% lower and USD/JPY off 60 pips from its highs.

More than ups and downs, the story is becoming the volatility and uncertainty in markets. This isn't an environment that's conducive for investors. The kinds of rapid gains and losses that have taken place over the past month wear down patient players and eventually sends them toward safe assets.

Looking ahead, some top tier economic data is due in the hours ahead. It begins with Chinese CPI at 0130 GMT. The consensus is for a rise to 1.8% y/y from 1.6%. A surprise further climb could curb speculation about more easing and badly undermine sentiment.

Today's RBNZ comments underscore the potential downside for Australia. The economic picture there will come into sharper focus with August jobs data, which is also at 0130 GMT. The consensus is for 5.0K new jobs in addition to the 38.5K announced for July. One bad number won't radically change the picture but it could expose the underlying market jitters.