Market Update – August 22 – Dollar back on front foot

USDIndex pushed higher again in early trades this week touching 108.20; and still holds 108.00, Yields rallied on Friday with the 10yr within a smidge of 3%, with the yield curve still significantly (40+bp) inverted. Stocks moved lower into close on Friday  (NASDAQ -2.10% & -2.6% for the week) but it was on a very low volume (10 million). S&P500  -1.2% for the week and +16% from June lows. Asian markets followed through too, (Hang Seng0.14%, Nikkei -0.55%) and European futs are lower. Oil & Gold down to start the week, following poor runs last week. BTC tanked on Friday and trades at 21.4k now. Fed’s Barkin “a lot of time before September 21”, Russia shuts Nord Stream-1 for 3-day maintenance, EUR slips again. 

Overnight – China cuts interest rates : 1 year (loans) 3.65% (from 3.7%) & 5 year (Mortgagees) 4.30% (from 4.45%), Yuan slips. “The crisis in real estate is deepening and threatening a much deeper slowdown in China’s economy,” – Action Economics.

Week Ahead Jackson Hole 25-27, Global PMIs from 23/8, US Durable Goods  24/8, US 7 German  GDP 25/8 & US PCE 26/8. Wednesday (24/8) – 6-mths since Russia’s invasion of Ukraine.

USDIndex continued to rally as markets eye QT talk from Jackson Hole and PMI & PCE data this week.  108.00 holds. NZD, AUD and JPY all in play in Asian session.
EquitiesUSA500 closed down 55pts (-1.2%) to 4228, US500FUTS at 4202 now having rejected key 200-day moving average last week. Meme stocks in play (BBBY -40.5%,)  Ryan Cohen (GME Chair) sold entire 9.8% stake for  gain of $60 million.
Yields 10-year yield rallied to 2.989% into close and trade at 2.9758% now.  The 2/10yr. yield curve also remained firmly inverted by 40.95 bp.  
Oil – spiked to $91.65, on Friday back under $90.00; at $88.92 now. 
Gold – dropped under $1750 aon Friday and ois lower gain to today a $1742 now. 
Bitcoin a weak Friday and mixed weekend sees the key Crypto at $21.3 now.
FX MarketsEURUSD down to 26-day lows at 1.0025 now, testing Parity again. USDJPY rallied to 137.40 earlier and trades at 137.00 now. Cable tanked under 1.1800 on Friday and holds at 1.1820 now.

Today – UK CBI Trends & US National Activity Index Earnings from Zoom.

Biggest FX Mover @ (06:30 GMT) NZDCAD (+0.64%). Continues recovery from Friday’s low at 0.8010 to over 0.8060 now.  MAs aligning higher,  MACD histogram negative but  signal line rising, RSI 55.96 & rising, H1 ATR 0.00125, Daily ATR 0.01520.

 

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Stuart Cowell

Head Market Analyst

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