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Stock markets began the week on a positive note, with attention shifting to upcoming policy meeting minutes and the Fed’s Jackson Hole Symposium later this week. The S&P 500, Euro Stoxx 50, and FTSE 100 all gained about 0.6%. Meanwhile, the US 10-year yield dropped slightly by 1.9 bps to 3.86%.
Comments from Fed officials reinforced the expectation that the easing cycle will begin in September. Daly, a voting member, expressed increased confidence that inflation is under control, while Minneapolis Fed President Kashkari mentioned that a weaker job market could pave the way for a rate cut in September.
The USD has been under pressure in recent months, with the DXY falling from 106 at the end of June to the high 101’s now. While this range might not seem significant, it’s the lowest level since December 2023. In the short term, it certainly appears that the USD is oversold, but on a broader scale, it remains within one standard deviation. This suggests there could be further declines in the lead-up to the November elections. However, in the short term, a slight rebound wouldn’t be surprising.
European CPI in focus tonight at 9:00 pm. On the central bank front, RBNZ’s Hawkesby speaks this morning, and the RBA minutes are due this afternoon. It seems this the highlight of the week, expecting the minutes to have a hawkish tone, particularly looking at how close the board came to tightening earlier in the month and what the key arguments were.
Mid market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6729 |
| AUD/NZD | 1.0997 |
| AUD/JPY | 98.41 |
| AUD/CNY | 4.7945 |
| AUD/EUR | 0.6069 |
| AUD/GBP | 0.5180 |
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