Good Morning,
Market Headlines
US equity indices reversed sharply, the S&P500 falling 3.5%, amid stretched valuations and technicals, all the big names were hit including Apple which was down 8% and Amazon which was 6.2% lower. US 2yr treasury yields fell from 0.14% to 0.12%, while the 10yr yield fell from 0.67% to 0.60%. Commodities, Brent crude oil futures fell 1.0% to $44.00, copper fell 1.3%, iron ore rose 2.0% to $130.75 – the highest level since January 2014, and gold fell 0.4%.
Currencies
AUD/USD: 0.7265 – 0.7319
EUR/USD: 1.1789 – 1.1865
GBP/USD: 1.3244 – 1.3318
USD/JPY: 106.00 – 106.55
USD/CAD: 1.3074 – 1.3162
NZD/USD: 0.6695 – 0.6755
AUD/JPY: 77.03 – 77.75
AUD/NZD: 1.0826 – 1.0859
AUD Thoughts
- AUD/USD sellers attack lower end of the recent 0.7265-82 trading range after flashing three-day losing streak.
- US Dollar Index staged three-day run-up despite mixed data.
- Risk catalysts, Australia’s final version of July Retail Sales ahead of Non-Farm Payroll tonight
Markets may get intermediate clues from July month’s final reading of Retail Sales, expected 3.3% initially, as well as the key risk catalysts like the coronavirus (COVID-19) updates, US stimulus news and the US-China tensions. However, a lack of liquidity can be witnessed during the generally following pre-NFP trading lull.
Having slipped below an ascending trend line from July 31, the pair trades near the late-August top with the 21-day EMA level, around 0.7240, acting as immediate support. However, the buyers may remain hopeful unless the quote slips below an upward sloping support line from July 14, at 0.7210.
Event Risk Data Today
AU – July retail sales, market predict July retail sales growth will be confirmed at 3.3% in the final estimate, up from 2.7% in June. The AiG PSI increased 12.5ppts in July to a still-weak 44.0 as restrictions eased. The August read will likely tumble on the Melbourne lockdown.
NZ - Market forecast Q2 building work to drop sharply (-30%) as COVID-19 restrictions limit activity (prior: -5.7%).
US – August nonfarm payrolls, both the ISM employment indexes and ADP print point to downside risks for nonfarm payrolls in August (prior: 1763k, market f/c: 1350k,). Unemployment will remain elevated for some time; market forecast 10.0% and 9.8% in August (prior: 10.2%). And downward pressure will remain on average hourly earnings (prior: 0.2%, market f/c: 0.0%).