US equities steadied following the previous day’s sharp fall, the S&P500 down just 0.1%, with little fresh news to drive markets. Bond yields were rangebound, while currencies were mixed. US 2yr treasury yields traded around 0.21%, while the 10yr yield ranged between 1.30% and 1.34%. Commodities, Brent crude oil futures rose 0.8% to $75, copper fell 0.2%, gold rose 0.7%, and iron ore remained at $91. The bi-monthly GDT dairy auction resulted in an overall price rise of 1.0%, with whole milk powder up 2.2% - in line with yesterday’s futures market pricing.
Overnight Currency Range
AUD/USD 0.7225 0.7283
EUR/USD 1.1715 1.17485
GBP/USD 1.3641 1.3692
USD/JPY 109.15 109.75
NZD/USD 0.6994 0.7057
USD/CAD 1.2745 1.2865
USD/CNH 6.4722 6.4875
AUD/JPY 78.82 79.83
AUD/NZD 1.031 1.0359
Market participants put aside Evergrande-related concerns, as the focus shifted to the US Federal Reserve monetary policy announcement. The US central bank is widely anticipated to remain on hold, although it would present fresh Economic Projections and even provide clear hints on tapering. Should policymakers decide to trim QE before year-end, the US dollar will likely benefit from a likely equities’ sell-off.
AUD/USD traded in a 0.7221/0.7283 range overnight with support still close by at 0.7220 while offering interest remains above 0.7300
Event Risk Data Today
Australia: The full effect of the current lockdowns is likely to be seen in the August Westpac-MI leading index. RBA Assistant Governor Bullock will provide an address at Bloomberg Inside Track.
Euro Area: September consumer confidence will reflect delta headwinds.
US: The market expects the FOMC’s September statement and press conference to highlight the progress the economy has made and confidence in the outlook. No official decision to taper is anticipated, but the tone of communications will emphasise that this decision is only months away.