Asia trades mixed ahead of Reserve Bank of Australia policy decision

Asian markets were mixed in morning trade on Tuesday, despite U.S. equities closing at record highs overnight.

Japan’s Nikkei 225 climbed 0.78 percent to 20,560.05 and the Topix index rose 0.46 percent to 1,681.48.

Hong Kong’s Hang Seng index resumed trading on Tuesday, after being shut on Monday. The HSI rose 1.71 percent to 28,026.25 in mid-morning trade.

In Australia, the ASX 200 dipped 0.35 percent to 5,709.10 in late-morning trade. The Australian dollar traded at $0.7827, which was a level similar to last Friday.

Traders will be looking ahead to the monetary policy decision from the Reserve Bank of Australia due at 2:30 p.m. local time.

“Most of the focus today will be on the RBA … and what the statement says about the economy, including any amendment to their language on the dollar other than to recognise the recent mini-rally in the USD,” David de Garis, director of economics at the National Australia Bank, wrote in a morning note. “This part of the statement will require some re-jigging, if only to refresh it for the recent pull back in the Aussie,” he said, adding the bank expects the central bank to “continue acknowledging the evolving improvement in the domestic economy” and give the RBA “more confidence that growth is building.”

Major Australian banking stocks were mixed, with ANZ shares up 0.37 percent, Commonwealth Bank down 0.63 percent and the National Australia Bank declining 0.46 percent.

Resources producers were mixed, but major miners Rio Tinto and Fortescue gained 0.65 and 0.48 percent, respectively.

Markets in South Korea and China remain closed due to public holidays.

In the currency market, the dollar index, which measures the greenback against a basket of currencies, traded at 93.853, rising from levels below 92.500 in the prior week.

“Dollar dominance was not a one-sided story,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note. He suggested that events unfolding in Catalonia, emerging risks from the euro zone, Brexit “woes” and snap election uncertainties in Japan could have contributed to the dollar strength against major currencies.

Varathan also said on Monday that the dollar rally is likely due to a “short dollar positioning squeeze instead of a real turn.”

Among other currency majors, the Japanese yen traded at 113.10 per dollar, weakening from an earlier high of 112.63. The euro traded at $1.1708, falling from a previous session high of $1.1740.

Elsewhere, oil prices fell Tuesday morning Asia time. U.S. crude was down 0.32 percent at $50.42 a barrel, while global benchmark Brent fell 0.43 percent to $55.88.

“The unwind in long crude positioning continued overnight,” Jeffrey Halley, senior market analyst at OANDA, said in a note. He added that separate surveys pointing to a “higher than expected OPEC production in September was enough to see the rot set in.”

Halley added, however, that “extended speculative long positioning in both contracts” was the real culprit behind the drop in oil prices in the previous session.

Source: CNBC