Welcome to my daily Markets Musings.
You’ll see things are different from now on. That’s because the full note was approaching 2,000 words some days and I’m breaking it up into a number of reports on the Axi Blog each day now.
That way traders can subscribe to the Axi Blog easily and then cherry pick the yarns and markets of interest
Feedback always welcome
Market Summary (7.43 am Friday August 24)
Even before Jerome Powell gives his speech at Jackson Hole tonight we are hearing from influential Fed figures that rates need to continue to increase. Robert Kaplan and Ester George both highlighted rates need to keep rising. That’s reinforced the message in the FOMC minutes the previous day and helped the USD catch a bid tone in what’s been a good day for the Greenback.
But even with the march of the USD the Australian dollar is the big G10 forex story this morning with the political turmoil of the Liberal Part implosion seeing it lose 1.3% over the past 24 hours as it crashed to 0.7250 this morning. That’s even worse than the Pounds Brexit worries fall of 0.75% which sees it at 1.2813 and much worse than the Euro’s 0.5% fall to 1.1542, or the Yen’s 0.6% los with USDJPY up at 111.29.
There’s likely to be – but not certain to be – a party spill around lunchtime today when, assuming it happens, the Australian Prime Minister will not stand. The challengers are former Home Affairs minister Peter Dutton, Foreign Minister Julie Bishop, and Treasurer Scott Morrison. Interesting day for the AUDUSD – more in the AUD section of the macro note.
The Kiwi got belted as well last night losing 0.9% with NZDUSD at 0.6635 while the CAD lost 0.62% with USDCAD at 1.3081. But it’s politics in Australia and the Aussie dollar which are the big losers.
Back to the US and stocks are mildly lower in all of the big 4 indexes. The S&P has had another troubling day when I look at the candle. It’s at 2,856, down 0.17% - 5 points – and at risk of another run to 2,820 perhaps a little lower. The Dow is off 0.3% at 25,656 while the Nasdaq 100 is off 0.14% at 7,413. The Russell 200 was also lower falling 0.32%.
Those are not big falls by any stretch and Europe had similar moves with the DAX off 0.16%, the CAC was basically stable, and the FTSE 100 in London dipped 0.15%. But SPI traders have seen some positivity somewhere and added 22 points overnight. Good luck with that folks.
On commodity markets copper lost 1 per cent as the next tranche of $16 billion of tariffs were imposed overnight on each side of this US-China trade battle. Gold is down $10 an ounce at $1185, and oil has consolidated the previous days gains to be basically flat day on day at $67.87 in WTI terms and $74.81 in Brent terms.
There was a little kerfuffle in EM forex as well with USDMXN up 1.2%, USDBRL up 1.86%, and USDZAR up 1.6%. The Turkish lira lost about 1.15%. Watch this space folks.
On the day it’s Kiwi trade, Japanese inflation, and Singaporean industrial production in out time zone. And the LibSpill political mess of course here in Australia. Tonight it’s Fed chair Powell at Jackson Hole as well as German GDP and US Durable goods.
Just another quiet end to week. Have a good one.
Macro Stuff that affects everyone and everything – either today or eventually
Have a great day's trading.
Chief Market Strategist
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Ongoing rate curve repricing and risk asset reaction perfectly illustrate how worryingly reliant investors have become on easy money policies