Market warp: dollar falls, stocks at all time highs, US yields up - Westpac

Ross J Burland FXStreet

Analysts at Westpac offered their market wrap and highlight the key risk events ahead.

Key Quotes:

"Global market sentiment: US interest rates rose and some equity indices made all-time highs, while the US dollar fell. There was little news to drive markets.

Interest rates: US 10yr yields rose from 2.21% to 2.24% (a fresh one-month high), 2yr yields from 1.38% to 1.40%. Fed fund futures yields continued to price the chance of a December rate hike at 56%.

Currencies: The US dollar index is down 0.3% on the day. EUR ranged between 1.1960 and 1.2007. USD/JPY fluctuated in a slightly higher range of 111.20-111.90. AUD was supported by USD weakness, rising from 0.7960 to 0.8020. NZD similarly rose from 0.7280 to 0.7327. AUD and NZD were the two best performers, with the latter slightly ahead, pushing the cross from 1.0960 to 1.0934 (a one-month low).

Economic Wrap

US housing starts fell 0.8% in August (vs +1.7% expected), while building permits rose 5.7% (vs -0.8% expected) – a decent result considering hurricane disruptions. Import prices rose 0.6% and export prices rose 0.6% (both beating expectations of 0.4% and 0.2%, respectively), led by fuel imports and non-agricultural exports.

The GDT dairy auction resulted in prices overall rising 0.9%, led by fat products (AMF +5.3%, butter +1.2%). WMP rose 0.6%, in line with earlier futures pricing.

Event Risk

NZ: the Q2 current account balance is expected to remain at -3.1% of GDP, with exports remaining firm.

Australia: Aug Westpac-MI Leading Index was last at -0.32%, having swung from well above trend to back below trend in recent months. RBA Assistant Governor Ellis speaks at an ABE briefing, Sydney 1:05 pm.

UK: Aug retail sales are expected to rise 0.2% following a 0.3% gain in Jul. Effects from a recently stronger pound are balanced by softer housing prices.

US: The FOMC interest rate decision is widely expected to be on hold. It has been well-telegraphed that the specific start date of the balance sheet normalisation plan will be announced at this meeting. Areas of interest for policy going forward centre on forecasts for inflation and the fed funds rate, which recent communications indicate may come under some pressure. Aug existing home sales are expected to rise 0.6% but have a lost a bit of momentum in recent months."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.