Global overview
Key FX markets in Asia were heavily sold overnight after US shares were unable to sustain an early rally and reversed sharply lower. The AUD/USD fell 0.9%. Global markets are nervous ahead of tonight’s major speech from Federal Reserve chair Jerome Powell.
US shares reverse lower
US shares saw a massive reversal lower overnight with the tech-focused Nasdaq flipping from an early 0.6% gain to an eventual loss of 2.2%.
A strong result from AI-chipmaker Nvidia saw an initial flurry of buying in US markets but the optimism quickly turned negative.
Other key US sharemarkets were also weaker with the Dow Jones down 1.1% and the S&P 500 falling 1.4%.
The overnight weakness extends a theme seen since mid-July in which US shares have been more cautious with investors unwilling to push equity markets higher after an almost 20% gain in the S&P 500 and a more than 45% in the Nasdaq in the first seven months of the year.
Aussie’s downtrend resumes
The Australian dollar’s short-lived rally from early this week was quickly extinguished with the AUD/USD down 0.9% overnight.
The Aussie saw large losses in most other markets but managed to close higher versus the British pound.
The NZD/USD fell back to nine-month lows with a 1.0% fall.
The USD/SGD climbed 0.3% but the USD/CNH fell.
Across other markets, the British pound saw the biggest losses, with the GBP/USD down 1.0% after a large drop in retail sales from the Confederation of British Industry index. The overnight result followed weaker UK PMI numbers this week.
All eyes on Jackson Hole
FX markets face further risk tonight with Federal Reserve chair Jerome Powell speaking at 12.05am AEST.
Last year’s Jackson Hole speech saw a sharp reaction across markets – the S&P 500 fell 3.4% while the AUD/USD lost 1.4% – when Powell warned of “economic pain” from higher interest rates.
Powell might be keen to stress that US interest rates will remain at elevated levels – the so-called “higher for longer” outlook – that could see worried markets fall further overnight.
Aussie lower again
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 21 – 26 August
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
