Good morning and happy Friday.
To the scoreboard:
Dow: 22,381.20 +40.49 (+0.18%)
S&P 500: 2,510.06 +3.02 (+0.12%)
AUD/USD: 0.7856 +0.0007 (+0.02%)
ASX200 SPI futures (December contracts): 5,660 (+14)
Iron ore benchmark 62% fines: $US62.89/t (-2%)
1. US dollar rally stalls: The USD fell back overnight as markets assessed the impact of the Trump administration’s new tax plan, with Wall Street analysts saying it’s still a little light on the details. There’s also the issue of how the cuts will be paid for.
2. Aussie still under pressure: The AUD traded as low as US78 cents overnight before buyers stepped in, and it closed the session slightly higher against the greenback. But the Aussie remains under pressure and finished the overnight session lower against most major currencies. Iron ore fell again and hit a fresh three-month low.
3. It’s quiet out there: Global markets continued their recent pattern overnight — and by that, we mean they’re doing very little. Stocks in the US edged higher as the final reading for Q2 GDP just beat estimates. Futures traders are again confident that the ASX200 will climb at the open, with the local index consistently under-performing the overnight lead from global markets this week.
4. Finals fever: Given the quiet conditions, there’s a good chance traders will close out their positions early this afternoon – it’s a public holiday in Melbourne – and begin firing up for a massive weekend of footy. Crows vs Tigers in the AFL tomorrow, then the Cowboys vs Storm Sunday evening. Interstate rivalries, premiership hoodoos, Macklemore…get the beers on ice.
5. Bond yields fluctuate: US 10-year bond yields jumped again before an equally rapid fall overnight. After climbing by eight basis points to 2.31% in the wake of the tax plan announcement yesterday, US 10-years rose another 5 basis points early in the session — above their 200-day moving average — before falling back to finish even.
6. On the data front: The RBA has private sector credit figures for August at 11:30am AEST. Also this morning Japan has a number of August data points including unemployment and inflation. Later tonight there’s UK GDP and German retail sales, and most of the attention will likely be on US personal income/expenditure data which includes the monthly PCE inflation reading for August.