Market Brief: Trump Leans On Fed Ahead Of Jackson Hole

• Trump says the Fed need to be proactive and cut interest rates and they should cut by a minimum of a full percentage point over ‘a period of time’. He’d also love to reduce capital gains tax.

• RBA’s Governor Lowe is reported to have called tensions between US and China “very worrying” during a private meeting, backing up yesterday’s minutes which placed greater concerns with global issues over domestic.

• South Korean producer prices contracted YoY for the first time since 2016. The Korean Won hit a 13-day low following the data.

• Another session of predictably small ranges for FX, with all pairs remaining well within their typical daily ranges. August is typically a quiet part of the year, but Jackson Hole is also suppressing volatility as investors appear reluctant to take risk.

• JPY and CHF are the weakest majors, AUD and CAD are the strongest by a very tight margin.

• Ahead of the European opening session, Asian stock markets have started to see profit-taking activities today after two days of consecutive gains in line with the weak performance seen overnight in the key benchmark U.S stock indices.

• Trade related news flow are backed in the limelight where U.S. President Trump has indicated that his administration is not backing down on U.S.’s “tough stance” towards China even if the on-going trade tension causes short-term harm to the U.S. economy.

• Rising European political risk is also adding to the on-going jitters where Italian Prime Minster Conte has been forced to resign due to infighting with the far-right Eurosceptic League political party.

• The worst performer as at today’s Asian mid-session is the Australia’s ASX 200 that has dropped by close to -1.00 % that wiped out yesterday’s gains. Mining stocks are the main culprit where heavy weights; BHP, Rio Tinto and Fortescue Metals have declined by -1.5% to -2.4%. In addition to the negative trade related news flow, weak iron ore and copper prices have also added to the woes.

• After a drop of -0.79% seen in the S&P 500 at the close of yesterday’s U.S. session, the S&P E-mini futures has shaped a minor bounce of 0.38% in today’s Asian session to print a current intraday high of 2906.

Up Next:

• The FOMC minutes are released tonight, although even they’re going to be overshadowed by the Jackson Hole symposium, given the event will provide opportunity to provide real-time information (whereas the minutes are backwards looking). Still, this puts USD crosses, gold, oil and indices into focus for potential reactions.

• Canadian CPI data could be of interest, although as outlined in their July MPR (Monetary Policy Report) they expect inflation to dip before returning to their 2% target. With YoY expected to fall to 1.7% (2% prior) it may have to be a particularly poor number / big miss to jolt markets.