Spreadex Market Update
USD Pull-Back Continues As Traders Cover Positions Ahead of Jackson Hole
On the back of Tuesday’s PMI disappointment, the US Dollar has since softened and is back under pressure again today. The Dollar Index failed to break the previous 2022 highs, for now at least, and is potentially threatening a double-top scenario. Further data weakness yesterday (weaker durable goods) did little to inspire a rebound in the Dollar and with traders await Fed chairman Powell’s speech at Jackson Hole tomorrow, today is likely to be more of the same. Ahead of that main event, however, we’ll hear from a raft of Fed speakers today, meaning plenty of opportunity for volatility across the board. We also have Q2 preliminary GDP on deck today.
Key Factors for Today
- USD correction deepens ahead of Jackson Hole tomorrow
- US GDP and Fed speakers on watch today
- Risk sentiment rebounds – China adds more stimulus
- AUD leading in FX – safe-havens weaken
- ECB meeting minute due
- Oil rallies on EIA report
Coming Up
- USD US prelim GDP Q2
- EUR ECB meeting minutes
- USD US weekly unemployment claims
Equities Rebound on Weaker USD & Fresh China Stimulus
Equities prices have found their feet a little over the last 24 hours or more. With USD pulling back from recent highs, asset prices have seen better demand. News of yet further stimulus in China (a new fiscal package focused mainly on infrastructure) has added some support along with USD weakness. Tomorrow’s Jackson Hole speech from Powell will no doubt be make-or-break for equities sentiment near-term, so the current moves perhaps suggest some pre-positioning ahead of that.
US GDP On Watch Today
We’re seeing strong buying across the board over the European open on Thursday. The S&P, FTSE, DAX, NIKKEI, ASX and Hang Seng are all trading firmly in the green as risk on moves dominate the early session. The big data focus today will be US preliminary GDP for Q2, expected to lift to -0.7% from -0.9%. Any improvement on that last reading should help lift stock prices further with a bigger upside surprise the ideal scenario for stock traders.
AUD Rallies Amidst Risk-On Moves
In FX, the pull-back in USD has fuelled a strong reversal of recent themes. AUD is leading the pack today as the lift in risk sentiment drives the currency higher across the board. EUR has also risen firmly following a heavily bearish start to the week. Safe-havens are on the back foot today. With asset and commodities prices soaring, USD and JPY has softened materially along with CHF.
ECB Meeting Minutes Due
EUR traders will be looking to today’s ECB meeting minutes for further clarity on the bank’s near-term outlook. Rate-hike expectations remain front and centre despite the recent GDP weakness given the still-elevated levels of inflation in the eurozone.
Oil Rallies on Bullish EIA Report
Oil prices are moving higher again today as USD weakness continues to lift demand. Crude futures were boosted yesterday by news of a deeper-than-expected drawdown in commercial stores, as reported by the EIA. The group reported a 3.3 million barrel decline, lower than the 2.5 million barrel dirge forecast, reflecting better demand again last week.
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