6 things Australian traders will be talking about this morning

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Good morning.

To the scoreboard:

  • Dow: 25,790.35 +133.37 (+0.52%)
  • S&P 500: 2,874.69 +17.71 (+0.62%)
  • AUD/USD: 0.7325 +0.0079 (+1.09%)
  • ASX200 SPI futures (September contracts): 6,220 (-1)

1. US Fed chair Jerome Powell’s much-anticipated speech on Friday night was the main catalyst for market moves to end the week. Powell said the Fed would stick to a “gradual” pace of rate hikes while noting inflationary forces remain muted. Overall the speech was interpreted by markets as dovish in nature.

2. The US dollar fell against the major pairs and also EM currencies, as US durable goods orders for July also missed expectations. Weakness in the USD helped the Aussie close back above US73 cents after it fell sharply amid the political chaos in Canberra last week, although analysts at ANZ expect more downside pressure for the AUD in the near-term.

3. Powell’s dovish speech gave US stocks a boost, as the S&P500 closed at a new record high. Meanwhile, Elon Musk said he won’t be taking Tesla private after all. ASX futures closed down 1 point after the local index posted a small gain on Friday.

4. And the yield spread between US 2-year and 10-year government bonds is now at just 18.6 basis points, after 10-year bond yields edged lower in the wake of Powell’s speech on Friday.

5. In commodities, the weak US dollar helped gold break back above $US1,200 and also gave oil another boost, along with reports that a major Chinese refinery will recommence buying US crude after a two-month hiatus due to the trade war. Copper prices also ripped higher to end the week.

6. The week ahead: Domestically, it’s fairly quiet in the early going as Scott Morrison begins his tenure as Prime Minister. Key data abroad will be led by US PCE inflation figures on Thursday night. Check out the full calendar here.

Have a great week.

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