· Asian stock markets: Nikkei rose 1.21 %, Shanghai Composite rose 2.10%, Hang Seng gained 2.53 %, ASX200 rose 1.46%
· Commodities: Gold at $1127.71 (0.22 %), Silver at $14.13 (0.60 %), WTI Oil at $39.41(+2.10%), Brent Oil at $44.12 (+2.27 %)
· Rates: US 10 year yield at 2.14% UK 10 year yield at 1.95%, German 10 year yield at 0.70%
· Australia Private Capital Expenditure (QoQ) Q2: -4.0% (exp -2.5% prev -4.4%)
· Kuroda: PBoC Easing Necessary To Mitigate Negative Effects On Economy – RTRS
· Kuroda: Some Market Watchers Are Too Downbeat On “Robust” Chinese Economy
· Kuroda: Could Adjust QQE To Both Upside & Downside Risks, No Plans For Further Easing At Present
· Kuroda: Not Concerned On Currency Wars, MonPol Targets Inflation Not Exchange Rate – BBG
· S&P closes up 3.9% – biggest rally since Nov 2011; All ten sectors in +ve territory, gains led by IT, healthcare and financials
· Fed's Dudley: We are a long way from further QE, September hike is less compelling now than a few weeks ago, Market turmoil could affect US employment prospects.
· US Durable Goods Orders (MoM) (Jul): 2.0% (est -0.4%; prev rev 4.1%) -Durables Ex-Transportation (MoM) (Jul): 0.6% (est 0.3%; prev rev 1.0%)
Global markets are recovering from the initial shock to risk-appetite seen earlier in the week, with global equities staging a comeback to the upside. On the FX side, risk-sensitive currency pairs like the USDJPY has also recovered, gaining a 100+ pip recovery to the upside in yesterday’s trading session, climbing to sub – 120.00 levels. Key, immediate resistance for the pair resides in 120.40 (July 2015 low). At the moment, the pair has recovered an approximate half of its losses experienced in the strong, sell-off day in Monday’s trading.
With the EUR being seen by many as a ‘funding currency’ for macro-themed positions, that is, gaining on risk-off market conditions, the currency has dropped an ample 200 pips versus the dollar in yesterday’s trading session, as bearish markets sentiment subsides further. Unlike the USD/JPY, the EUR/USD pair has already fully recovered against the volatile upmove on Friday, and has since today’s Wellington open, traded below Monday’s opening price. Spot currently trades at 1.1348.
Cable has been relatively lacklustre as of late despite volatility surrounding China, but has responded aggressively yesterday, selling off sharply, sending the pair 200 pips lower to current levels of 1.5500. Aside from perhaps following a similar reasoning to USD’s strength vs the EUR, UK CPI 1 Year Inflation expectations poll from YouGov showed a decline to 1.4% from 1.6%, in July, raising speculation that the Bank of England has to wait longer before taking affirmative decision to raise interest rates.
Commodity Currencies update: Commodity currencies remain vulnerable to China developments, especially with the backdrop of falling commodity prices. The AUD/USD experienced a quiet day of trading yesterday, and has now begin to slowly trade to the downside in today’s Asian session, trading 50 pips off a high at 0.7150, with spot now approaching 0.7100.
· 9:00 BST – Europe M3 Money Supply y/y
· 13:30 BST – US Prelim GDP q/q
· 13:30 BST – US Unemployment Claims
· 15:00 BST – US Pending Home Sales
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