Market Update – August 2 – Pelosi Taiwan Visit Saps Sentiment

USDIndex sinks again to 105.00, dragged lower by falling Yields (10yr -2.88% to 2.54%). US Stocks lower following record July. HSBC +6.5% Boeing +5.96% Pearson +12.66% BBBY +14.77%. Asian markets pressured lower by Pelosi’s proposed visit to Taiwan and China promising “countermeasures” including “military actions”. (Hang Seng -2.68%, Nikkei -1.44%). European FUTS also lower. (-0.6%).  Oil tanks under $93, Gold spiked to  $1780  and BTC down under $23k.

RBA raised rates 50bp, as expected, (3rd consecutive month & fastest rate hike cycle since 1994) – BUT cools forward guidance will raise rates in months ahead, but adds “not on a pre-set path” #AUDUSD falls from 0.7030, to 0.6950, AUDJPY -1.66%.

Biden announces US have killed head of Al-Qaeda, Zawahiri in Kabul drone strike.

USDIndex weakens further to test under 105.00 now. YEN & CHF outperform again in Asian session.
EquitiesUSA500 closed lower -11.66pts (-0.28%) (4118), US500FUTS at 4100 now.  4175 remains next key resistance 
Yields 10-year yield dived into close 2.60%, down again to 2.54% now. 
Oil – tanked to $93.00 from $101.80 highs on Friday. 
Gold – spiked to $1780 before cooling to $1773 now. Support at $1770 & $1766.
Bitcoin also weaker USD to trade at $22.8K now, from as high as $24.4K. 
FX MarketsEURUSD rallied to test 1.0300 zone, USDJPY dived under 131.00 to 130.40 lows. Cable holds over 1.2200 and tests key 1.2260 resistance area.   

Overnight – AUD Building Approvals better than expected (-0.7% vs. -5.3%), Commodity prices lower (14.1% vs. 24.3%) UK House inflation a tick lower at 0.1% m/m. 

Today – Canadian Manufacturing PMI, New Zealand Unemployment, US NY Fed Household Debt & Credit Report, Speeches from Fed’s Bullard, Evans & Mester. Earnings BP (out – EPS exceed by +26%), CAT, UBER, AirBnB, AMD, PayPal, Starbucks, Gilead, Marriott.

Biggest FX Mover @ (06:30 GMT) AUDJPY (-1.66%). Dovish RBA and Taiwan tensions hit the key most risk sensitive pair. Collapses from 92.500 to 90.75 lows. MAs aligned lower, MACD histogram negative & falling, RSI 22.5, OS & falling,  H1 ATR 0.294, Daily ATR 1.198.


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Stuart Cowell

Head Market Analyst

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