Headlines:
- Equities recover some allure after post-Jackson Hole drop
- A couple of reasons for the softer dollar today
- Saxony August CPI 7.3% vs 7.2% y/y prior
- Bavaria August CPI 8.4% vs 8.0% y/y prior
- North Rhine Westphalia August CPI 8.1% vs 7.8% y/y prior
- Spain August preliminary CPI 10.4% vs 10.9% y/y expected
- China to hold 20th Communist Party congress starting on 16 October
- UK July mortgage approvals 63.77k vs 61.73k expected
Markets:
- AUD leads, CHF lags on the day
- European equities higher; S&P 500 futures up 0.8%
- US 10-year yields down 4.7 bps to 3.063%
- Gold down 0.3% to $1,732.53
- WTI crude down 3.0% to $94.08
- Bitcoin up 1.1% to $20,408
With month-end trading in focus, markets are reversing some of the post-Jackson Hole moves as the dollar falls, equities climb and bond yields retreat in European trading today.
It could also be because the White House alluded to labour market conditions going to "cool off" ahead of the US jobs report on Friday and we have seen how those comments affect markets previously when it comes to inflation data.
Either way, the theme is consistent with a retreat of the moves from Friday and yesterday. The dollar fell with EUR/USD climbing up from parity to 1.0055 before easing a little to 1.0020. Meanwhile, GBP/USD pushed to a high of 1.1760 before falling flat on the day to 1.1710 at the moment.
USD/JPY is looking heavy as bond yields fell, with the pair easing from 138.50 to 138.05 before keeping around 138.20 currently.
As equities pushed higher, commodity currencies are benefiting with AUD/USD up 0.4% to 0.6930 with the high earlier coming in at 0.6955. USD/CAD was down to a low of 1.2973 before a drop in oil prices pressured the loonie and the pair is back up to flat levels at 1.3010 on the day.
It looks like markets are going to get stuck in once again over the next few days as the dollar momentum has been quelled. That means we are likely to see some pushback on the gains from Friday but I would expect the greenback to still hold its ground before we get to the NFP release at the end of the week.
