Here are the latest developments in global markets:
FOREX: Dollar/yen continued to pare Friday’s losses, last seen at 110.62 (+0.13%), while the dollar index, which gauges the dollar’s strength versus six major currencies, was also in recovery mode, trading at 96.30 (+0.21%), helped by a weaker euro and pound. Euro/dollar was on the back foot at 1.1422 (-0.15%), after rising softly the past two days, with investors worrying that the political turmoil between the US and Turkey could weigh on the Eurozone’s banking sector. On Monday, the Turkish President, Tayyip Erdogan, maintained his harsh tone, saying in a pre-recorded message on the Eid-al-Adha religious festival that “an attack on Turkey’s economy was no different from a strike against its flag or call to prayer”. Pound/dollar rose to 1.2765 (+0.13%), with Brexit uncertainties holding gains limited as the UK government has yet to find an agreement with the EU on its departure terms, around seven months before Britain leaves the bloc. In the antipodean sphere, aussie/dollar slipped to 0.7304 (-0.05%) ahead of the RBA’s meeting minutes due early on Tuesday, while kiwi/dollar declined to 0.6610 (-0.39%) on the back of a stronger dollar. Dollar/loonie edged up to 1.3070 (+0.08%).
STOCKS: European stocks opened higher on Monday on hopes the US and China could hold talks this week to make progress on their trade disagreements. The benchmark STOXX 600 and the blue-chip Euro STOXX 50 were up by 0.52% and 0.47% respectively at 1150 GMT. The German DAX 30 gained 0.92%, the French CAC 40 rose by 0.54%, while the British FTSE 100 climbed by 0.31%. The Italian FTSE MIB was steady. US futures tracking the S&P 500, Nasdaq 100 and Dow Jones were flashing green, pointing to a positive open later today.
COMMODITIES: WTI crude was lower at $65.81/barrel (-0.21%) early in the European session and the London-based Brent was trading higher at $72.06 (+0.33%), with tensions between the US and Iran supporting prices. Note that the first round of US renewed sanctions which target car parts and metals took effect on August 6, while the US administration prepares to kick off another wave of sanctions early in November to hit Iran’s oil industry. In precious metals, gold maintained its short-term bullish mood, reaching an intra-day high of 1,189.79 (+0.31%).
Day Ahead: US-China trade talks in focus; RBA minutes pending
In the absence of any major economic releases later in the day, the trade story will remain on center stage as investors will be eagerly waiting for a sign confirming that US and Chinese officials are meeting in Washington this week, probably on August 21 and 22. While markets hope for the gathering to de-escalate tensions, the talks could deliver little given that they are to be held between low-level officials.
Moreover, early on Tuesday, at 0130 GMT, the Reserve Bank of Australia (RBA) will be publishing minutes from its latest policy gathering that took place on August 7. During that meeting the Bank left the cash rate unchanged at a record low of 1.5% as expected, while it also revised its near-term inflation forecasts lower but expressed that the unemployment rate will decline further to 5.0% over the next couple of years compared to 5.25% predicted in previous statements. Subsequently, markets are now pricing a rate hike coming only around the end of 2019.
Elsewhere, the Bank of Canada Senior Deputy Governor, Carolyn Wilkins, will be participating in a panel discussion at 1215 GMT, while Atlanta’s Fed President, Raphael Bostic, a voting FOMC member in 2018, will be speaking on the US economic outlook at 1500 GMT.
