22nd Aug – Solar eclipse the highlight of US market overnight

By | August 22, 2017

The first solar eclipse on US soil since 1979 got more attention overnight than  markets. Lack of any significant data and a market waiting for Jackson Hole also an excuse. Bond yields were lower by 1-2bps across the curve and Dec Fed rate hike odds have slipped to only 30%. USD cant rally on that and the USD index (DXY) was 0.4% lower. The market now is only pricing 1.3 rate hikes through to the end of 2018. The Feds dot points is 4. Either the market or the Fed is wrong and if the market is wrong a big repricing is needed. But it needs a catalyst …. does it start with Jackson Hole?  Citibank seems to think so with their trade of the week long USDYEN. Their entry is 109.20 with a stop at 107.85.

No event risk in Asia today, however its worth keeping an eye on the  Chinese casino. Its   focused on the commodity market at the moment taking base and industrial metals alot higher. They have taken zinc to its highest level in a decade and iron ore futures up 14% in 3 days. The speculative trading frenzy generally ends in tears but its just the timing when it happens. Its keeping Aussie bid at moment and providing a solid floor in the 0.7900/20 region.