Forex today was choppy amidst lower markets, risk aversion and a mixed message from Fed's Dudley.
US data was on the whole poor with the miss in PPI arriving at 1.9% vs 2.2% expected and below previous by 0.1% y/y although US Initial Jobless Claims came in at 244k and beat expectations of 240k. The dollar is fragile considering it dumped a cent on the PPI data, usually being, as is JOLTS, a second tier number.
Elsewhere, Fed's Dudley told markets that he expected inflation to rise in the medium term towards the 2% target, but told reporters separately that he doesn't feel inflation stands a chance of reaching the 2% target in the medium term considering the low inflation we have seen from the economy in previous quarters.
US Rates:
"US 10yr treasury yields fell from 2.25% to 2.20% - a one-month low. Fed fund futures yields slipped, pricing the chance of a December rate hike at around 42%. In addition to the risk averse mood, there was a soft PPI inflation report to help depress yields. Fed dove Dudley sounded upbeat on the economy, causing a temporary bounce," explained analysts at Westpac.
In respect to the tensions in geopolitics, Trump said that perhaps the 'fire and fury' comments were not strong enough and that North Korea should be "very, very nervous" if it does anything to the United States. However, markets are less sensitive to the war of words at the moment.
The yen was up -0.76%, ending at 1.09.23 trading between a day's range of 109.16 - 110.18. EUR was +0.15%, ending the day at 1.1777 trading between a day's range of 1.1704/85. GBP was -0.18%, ending the day at 1.2980 trading between a day's range of 1.2952/15.
For commodities, WTI dropped heavily dispute the bullish inventory data and news that Gazprom looks beyond OPEC production deal to increase its output was a concern weighing on oil. Metals were mixed but copper fell on market-induced macro concerns. gold was up to near YTD highs playing put its safe haven role.
AUD was down -01.4%, ending the day at 0.7877, trading between a day's range of 0.7867/ 11. Kiwi was down -0.80%, ending the day at 0.7277, trading between a day's range of 0.7252/71. CAD +0.32%, ending the day at 1.2740, trading between a day's range of 1.2673/42.
Key events ahead for Asia:
Analysts at Westpac highlighted the key events coming up in the Asia session:
- "NZ: Minor data for markets today: manufacturing PMI, July food prices, and possibly REINZ housing data.
- Australia: RBA Governor Phillip Lowe testifies before the House of Representatives’ Standing Committee on Economics in Melbourne at 9:30AM (AEST)."
Key notes from US session
- US: PPI for final demand falls 0.1% in July; services decrease 0.2%, goods decline 0.1%
- Fed's Dudley: Modest wage growth reflects sluggish productivity
- Gold consolidates gains, set for highest close in two months
- US Pres. Trump: Maybe 'fire and fury' statement wasn't 'strong enough' - AP
- WTI intermarket: stocks down, risk off, too much production
- CIA agrees North Korea can fit nuclear weapon on missile - NBC
- US: Weekly initial claims was 244,000, an increase of 3,000 from previous week
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