US Equities hold up as USD remains pressured


USA30,H1

US Equities resumed their firmer path as low-level Sino-US trade talks later this week remain an anchor for optimism for now as the Bull market rally nears the record books. WSJ also reported that the urgency of Trump’s auto tariff timetable was slipping, due perhaps to some progress on that count with EU and NAFTA partners. Yet with Trump jawboning the Fed of late on rate hikes and warning of FX manipulation, the Dollar index probed over 1-week lows near 95.42 before finding traction again. The USA30 is 44 points firmer, USA500 gained 4 points and USA100 is up 16 points at the opening bell. This followed gains of 0.7-1.0% across most of the European majors, though the UK100 is flat. Asia was mixed, with Japan’s N-225 marginally firmer and the TOPIX banking index 0.4% lower. China’s CSI 300 rose 1.8%, however, with another leg up likely from state fund buying. While the docket is light today, focus will shift to a likely more upbeat FOMC minutes tomorrow and Fed Powell’s keynote Jackson Hole address on Friday.

AUDUSD has settled lower, around 0.7330-40, after posting an 11-day high during the London AM session at 0.7365. AUDJPY has seen almost the same price dynamic, having also ebbed back after earlier making an 11-day peak. The Aussie also posted gains versus the Canadian Dollar, though has lost ground to the Euro and the New Zealand Dollar, so overall a somewhat mixed picture for the antipodean currency. RBA released the minutes of the August 7 policy meeting to little fanfare today, which affirmed an ongoing on-hold policy stance with an eventual tightening seen as more likely than an eventual loosening. The minutes noted continued global economic expansion, which have contributed to higher commodity prices this year, increasing both upstream inflationary pressures globally and Australia’s terms of trade. The minutes also stressed that the “direction of international trade policy in the United States continued to be a source of uncertainty for the global outlook.” Australia is particularly exposed to any Chinese economic slowing as a consequence of the US trade dispute with Beijing. While AUDUSD has now rallied in three out of the last five sessions, the pair remains amidst an overall bear trend, with channel resistance coming in at 0.7376-78 and support at 0.7120-22. The Australian calendar is light this week.