The week started in slow motion amid a holiday in the UK and a scarce macroeconomic calendar. Speculative interest already digested the dovish stance from Federal Reserve Chair Jerome Powell, with the focus shifting to US employment-related data to be released later in the week. Sentiment remained elevated in equity markets, the S&P500 up 0.5% to a fresh record high. Bond yields fell slightly further, though, Fed Chair Powell’s weekend caution lingering.
Commodities, Brent crude oil futures rose 0.9% to $73, copper rose 1.1%, gold fell 0.4%,
Overnight Currency Range
AUD/USD 0.7285 0.7318
EUR/USD 1.1783 1.1810
GBP/USD 1.3734 1.3773
USD/JPY 109.70 109.96
NZD/USD 0.6988 0.7014
USD/CAD 1.2575 1.2636
USD/CNH 6.4620 6.4687
AUD/JPY 80.07 80.37
AUD/NZD 1.0415 1.0439
AUD/USD has given back some of the headway made since the Jackson Hole on Friday that failed to support the greenback on account of a dovish speech from the Federal Reserve's chairman. Jerome Powell, chair of the Fed, delivered a speech that enabled the commodity complex to rally and the Aussie responded in kind, rallying to a fresh August high of 0.7318 offered.
Meanwhile, markets are in wait and see mode on a critical week for both the US and domestically. Owing to the speech from Powell, traders are in high anticipation of both US PMIs this Wednesday and the Nonfarm Payrolls at the end of the week especially.
AUD/USD traded in a tight 0.7285/0.7318 range overnight so all key technical levels remain intact. Offering interest should be thick ahead of 0.7400/15 while downside demand should materialise if we dip back to 0.7260.
Event Risk Data Today
Australia: Markets anticipate a 5.0% fall in dwelling approvals in July as HomeBuilder support unwinds amid lockdown disruptions. For July private sector credit, Markets is forecasting a 0.5% gain with housing aided by low rates and as businesses in lockdown tap lines of credit. The current account balance is forecast to widen to $20.5bn in Q2 as high commodity prices boost export earnings. Q2 net exports should take 0.7ppts from GDP growth however as import volumes rebound on domestic recovery while export shipments fall as a result of weather and maintenance disruptions.
New Zealand: Building permits are forecast to fall 3.0% in July mainly due to an expected pull back in the ‘lumpy’ apartments category after a large number of consents were issued last month. Despite this setback, annual consent numbers will linger near record levels. ANZ business confidence will capture some of the lockdown which started on 18 August.
China: The August manufacturing and non-manufacturing PMIs are set for release, providing the market with a helpful barometer of the impact of recent restrictions.
Euro Area: Annual inflation is expected to trend back down in coming months. The Market is forecasting a 2.6%yr result in August.
US: FHFA and S&P/CS home prices are expected to have gained 1.9% in June, supported by loose financial conditions and with affordability yet to become an issue. Conference Board’s consumer confidence index is anticipated by the market to drift down to 124.0 in August as delta uncertainty remains front of mind.