Currency Market Analysis

Aug 29, 2019 | Currency Market Analysis

Global Themes

USD steady at highs as markets take a pause from trade

A night with no news from the US-China trade war saw the US shares climb and US Treasury yields close at new multi-year lows.

In short, the money flow favoured US assets, and the USD remained supported.

More broadly, key markets, including US shares and the USD, remain stuck in recent ranges as the traditional low volatility seen in August continues. (The Northern Hemisphere summer usually sees market activity slow.)

However, these ranges might eventually build to a crescendo, with the global economic slowdown, trade tensions and a potential Federal Reserve rate cut creating a potentially explosive move in September.

Low close

The Chinese yuan remained pressured with increased focus on potential rate cuts when the People’s Bank of China next meets on 20 September.

The British pound weakened after UK Prime Minister Boris Johnson announced plans to suspend parliament in order to avoid a no-confidence motion.

The AUDSGD, felling the pressure from the US-China trade war, closed near the lowest level since March 2009.

Capex in focus

Today, Australian June-quarter capital expenditure is due on Thursday with the release seen as a first guide to next week’s economic growth numbers.

Australian GDP slipped to ten-year lows last quarter with an annual rate of 1.8%.

German inflation numbers will also be closely watched as markets look to the next European Central Bank meeting on 12 September.

Tonight, June-quarter US GDP is released.

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