- Forex today was more favourable for risk-FX on and Dollar firmed with yields up.
- DXY got a boost from Boston Fed President Rosengren, (hawk).
Forex today was more favourable for risk-FX on, yet again, mixed trade headlines where on one hand, Trump said he wasn't ready to do a deal with China yet the US confirmed a 90-day extension to US tech companies' business with Huawei. Additionally, Germany and the US are contemplating fiscal stimulus.
While central banks are likely to be the next key focus with the Jackson Hole coming up as well as the FOMC minutes as well as the Reserve Bank of Australia's today, geopolitics remains in the driving seat and volatility can be expected to continue. Economic contingency plans from Germany and talk of one from the White House which could be triggered in the event of a recession sounds good on paper but will unlikely to pair off the risks of a protracted trade war and desperate measures from central banks reacting to deteriorating economic activity.
The data was light, although the DXY got a boost from Boston Fed President Rosengren who dissented against the rate cut in July, advocating for the Fed to pause at this stage, bullish on the US economy and showing little concern for overseas doom and gloom. In turn, US 2-year Treasury yields climbed from 1.50% to 1.55% while the 10-year yield rose from 1.58% to 1.61%. Still, markets expect a rate cut as soon as September.
As for currency action, analysts at Westpac summed it up as follows:
- The US dollar was broadly stronger, supported by higher yields - The Washington Post reported that the White House was considering cutting the payroll tax to stimulate growth.
- EUR/USD fell from 1.1110 to 1.1080.
- GBP/USD was choppy, overall a little lower, around 1.2130.
- USD/JPY rose from 106.30 to 106.70.
- AUD/USD ground lower from 0.6785 to 0.6765. NZD similarly fell from 0.6425 to 0.6407. AUD/NZD found resistance at 1.0570.
- Eurozone core inflation for July was finalised at 0.9% yoy, as expected, although the headline measure was revised lower from 1.1% to 1.0%.
Key notes from Wall Street:
Key events ahead:
RBA minutes are up today.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.