Jackson Hole Arrives, Jay Powell in the Spotlight
AUD
The AUD continues its recovery from the depths of last week against most major currency pairs overnight. The Aussie pairs benefiting from the recent Iron Ore resurgence, and for now ignoring record daily infections at home. Asian Equities were mixed on Wednesday with the Nikkei closing at 0%, Shanghai Comp closed up 0.7% and the ASX closed up 0.38% driven by the continued rebound of Commodities. Commodities had a positive session overnight with Silver and Copper gaining and Iron Ore posted significant gains of 4.4%. To the data today, Australia’s next part of the GDP puzzle is released within the Capex data. The key component of the capex release is machinery and equipment, with expectations of a 2.7% QoQ increase. No other noteworthy data locally today with markets focus still firmly on the Covid situation in Australia. Victorian cases this morning are in the 90s despite hard-and-fast lockdowns with the inclusion of curfews and mandatory mask wearing. Vax rates are up which is offering hope as the scramble for 70% continues
USD
The AUDUSD continued to advance towards the 73’s on firmer market sentiment, currently trading at a rate of 0.7275 this morning. It was a quiet session for US Equities overnight as investors await further information from this weekend's Jackson Hole Symposium (see below) with all three major indices posting minor gains, Dow & Nasdaq closed up 2% and the S&P closed up 0.3% and the 10-year yields ticked 5bps higher to return 1.345%. The US gears up for the Jackson Hole Symposium to be held August 26th – 28th. The title for the annual gathering of global central bankers is "Macroeconomic Policy in an Uneven Economy". Chair Powell's speech will receive particular interest and may shed further light on a potential tapering timeline. It’s expected that Powell is more than likely going to emphasise ‘progress’ rather than ‘risks’ in discussing the economy, and that Friday’s speech will mark new rhetorical shift toward ‘taper’ rather than backtracking or equivocation. Powell’s intention may be to prepare the market for a ‘taper’ announcement by year-end, or to squelch hopes of a delay.
EUR
The AUDEUR trades higher this morning with the AUD really taking the lead off the back of stronger commodities and reversal of market sentiment, trading at 0.6179 this morning. European Equities were mixed overnight with the CAC closing up 0.2% while the DAX was down -0.3%. In some early Euro data, German IFO business climate for August printed at 99.4, missing expectations of 100.4 as the decline in expectations outweighed the modest rise in assessment. Little in the way of data this evening as the Eurozone releases the ECB Monetary Policy Minutes for August, no other note-worthy mentions on the docket.
GBP
The AUDGBP pair followed suit to make minor gains overnight, coming in to trade at a rate of 0.5285 at the time of writing. The London Benchmark FTSE 100 posted modest gains of 0.3%. No local data for the UK this week as markets await next week’s UK GDP & PMIs. There has been an absence in major data for the Pound, both pairs have come under recent pressure as the spread of the Delta variant in both the UK and Australia continue to rise, the UK has continued to report a steady 30,000 new cases per day.
NZD
The AUDNZD pair bucked the trend to trade at similar levels seen to yesterday, currently trading at 1.04347 at the time of writing. Both antipodeans have been trading among the other as they benefit from the global risk appetite reversal and broader US dollar weakness. However, as we have noted throughout the week, the unwinding delta variant is in the eyes of markets as it continues to cause strife in the trans-Tasman region with NSW recording record-high numbers yesterday and the New Zealand outbreak reaching a total of 210 confirmed covid cases yesterday. No noteworthy data on the docket today.