It has been another generally rangebound session, with the market shrugging off the FOMC Minutes as traders await the action that will possibly arrive via the headlines coming from Jackson Hole over the next couple of days. The Minutes did show that the Fed debated cutting interest rates more aggressively at the last meeting, as there was broad concern among the participants over a global economic slowdown, trade tensions and sluggish inflation although there were also some members who did not want to cut rates at all. However, the board was also united in wanting to avoid the appearance of being on a path to more rate cuts, despite only eventually cutting by 25 bp.
The result of the minutes saw the US$ rise slightly, but it remained within its recent range against the other majors, while stocks regained the dip from the previous session, ending up by around 0.8%, while WTI and the metals were slightly lower.
Thursday will look to the global Flash Services/Mfg/Composite PMIs for guidance, although the reaction may be limited while traders await the headlines from Jackson Hole on Friday. Ahead of that though, the PMIs could provide some reaction, particularly for the Aud$ and for the Euro, where weak numbers could easily place further downside pressure on both currencies. The EU PMIs will be especially closely watched as the question remains whether or not the ECB will need to reintroduce QE, and last week’s comments from Bank of Finland Governor, Olli Rehn, hinted that the ECB are already looking into that possibility. A poor set of numbers today would only underpin that theory, which would again weigh on the Euro.
Economic data highlights will include:
Thur: CBA Australian Flash Services/Mfg/Composite PMIs, Nikkei Mfg PMI, EU/US Flash Services/Mfg/Composite PMIs, ECB Minutes, Jackson Hole Symposium, Kansas Fed Mfg Activity,
Market moves, in brief:
FX: DXY +98.32 (+0.17%)
Bonds: US10Y; 1.593% (+2.23%), German 10Y; -0.675% (+2.12%), UK 10Y; 0.468% (+3.06%), Australian 10Y; 0.942% (-0.51%), NZ 10Y; 1.070% (-0.47 %), China 10Y; 3.014% (-1.45%)
Stock Indices: DJI; +0.93%, S+P; +0.82%, NASDAQ; +0.90%, EUStoxx50; +1.33%, FTSE100; +1.11%, Shanghai Composite; 0.01%,
Metals: Gold $1502 oz (-0.32%), Silver $17.13 oz (-0.19%), Copper $2.579 lb (+0.04%),),
Oil: WTI $55.89 pb (-0.32%)
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