Good morning and happy Friday.
To the scoreboard:
Dow: 21,784.78 -22.86 (-0.10%)
S&P 500: 2,465.10 -0.44 (-0.02%)
AUD/USD: 0.8044 +0.0044 (+0.55%)
ASX200 SPI futures (Sept contracts): 5,693 (+16)
Iron ore benchmark 62% fines: $US75.61/t (-1.6%)
1. Euro roars ahead: In comments after the meeting of the ECB governing council, the bank’s president Mario Draghi made no attempt to directly talk down the euro and confirmed that the ECB will announce plans to taper its bond purchasing program in October. That was enough for bullish currency traders who immediately sent the euro back over $US1.20.
2. The US dollar tanks again: Strength in the euro drove the greenback lower, and the USD wasn’t helped by a surge in jobless claims after Hurricane Harvey. The US dollar index is now below 92 for the first time since January 2015. With the USD index in a bear market, the AUD is sitting comfortably above US80 cents this morning. Here’s the US dollar’s fall over the last 6 months:
3. Bonds rally: There was also strong demand for bonds overnight after Wednesday’s sell-off. Yields on benchmark US 10-year bonds — which move inversely to their price — fell by more than 6 basis points to 2.04% and yields on German 10-years have fallen back to 0.3% for the first time since May.
4. Data today: Capping off a huge week of domestic data, the ABS has housing finance figures for July at 11.30am AEST which shows the split between owner-occupier and investor loans. There’s also multiple RBA speakers: deputy governor of the RBA Guy Debelle participates in a panel discussion at 1.30am AEST, and RBA governor Philip Lowe will give a speech in Sydney this evening.
5. Stocks do nothing: Despite some big moves on currency and bond markets, US stocks were little changed while European markets shrugged off the stronger currency to move higher after an upward revision to Q2 GDP numbers. The ASX200 remains stuck below 5,700, at the lower end of its recent trading range but futures traders are optimistic that buyers will step in to end the week.
6. Iron ore dips again: That makes it three straight days of falls for benchmark 62% fines, which are now down by more than 5% since the latest rally hit its mid-August high. Gold got another boost from the weaker US dollar, and is knocking on the door of $US1.350 an ounce for the first time since July 2016.
Enjoy your weekend, I’m on Twitter @Mr_SamJacobs.
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