Analysts at Westpac explained that the FX and bond markets showed signs of risk aversion with emerging markets under pressure, especially Turkey and Russia.
"Equities were resilient however. AUD/USD dropped 0.5c to 0.7380 though NZD was weakest in the G10 in the wake of the RBNZ statement. Today we see the RBA's Statement on Monetary Policy, Japan Q2 GDP and US July CPI."
"The US dollar rose against all major currencies aside from safe havens CHF and JPY, where it was about flat. The Turkish lira hit yet another record low, -4.7% on the day, undermined by poor fundamentals and with investor concerns heightened by the diplomatic dispute with the US. The Russian ruble slipped -1.6%, the South African rand -2.1%. Equities even in these countries however were resilient, indicating it is not yet a broad risk-off move."
"EUR/USD fell steadily from 1.1615 to 1.1530 in London/NY. Risk barometer EUR/CHF dropped -0.7% to 1.1455, a low since 30 May. GBP/USD dropped half a cent to just above 1.28, its weakest point since August 2017. USD/JPY was little changed either side of 111. AUD/USD fell from 0.7440 late Sydney to 0.7375, a result of USD strength."
"Underperformer NZD extended its RBNZ-fuelled decline, from 0.6680 to 0.6615, down 2% over the day and the lowest since March 2016. AUD/NZD consolidated its RBNZ-fuelled rise around 1.1150, up 1.2% and having reached 1.1175 – the highest since November 2017."
"US data was minor. Headline producer prices were unchanged in the month while the core measure rose just 0.1%. Notwithstanding the weaker than expected outcome, upstream input cost pressures are building thanks to the robust US economy, higher energy prices and import tariffs. Jobless claims fell 6k to 213k, holding near 48 year lows for yet another week, while wholesale inventories rose 0.1%, prompting a slight trimming of the Atlanta Fed’s Q3 GDP nowcast to 4.3% from 4.4%."
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