To the scoreboard:
Dow: 21,797.79 +13.01 (+0.06%)
S&P 500: 2,461.43 -3.67 (-0.15%)
AUD/USD: 0.8056 +0.0001 (+0.01%)
ASX200 SPI futures (Sept contracts): 5,667 (-2)
Iron ore benchmark 62% fines: $US74.36/t (-1.65%)
1. AUD eases back: The Aussie started the week at 0.8055 against the greenback, after hitting its highest level in two years above US81 cents on Friday. The currency remains elevated amid continued US dollar weakness, but slipped back amid a slight risk-off environment on Friday night as iron ore prices fell again and base metals — copper, zinc and nickel — all dropped sharply.
2. A quiet lead: Safe haven currencies continued to see demand in a quiet session to end the week, amid lingering geo-politial concerns and the threat of Hurricane Irma. The US dollar has pushed back above 108 yen this morning — perhaps because Kim Jong-un celebrated the founding of North Korea with a party rather than a missile launch — while the euro, pound and Canadian dollar are all at or near recent highs after strong rallies against the greenback last week.
3. Bond yields still compressed: At 2.05%, the yield on benchmark US 10-year treasuries are now trading at their lowest level since the US election in November. 10-year bond yields fell by 11 basis points last week, and the recent moves suggest that the bond market has serious doubts about the pace of growth in the US economy. The CME’s Fedwatch tool is now assigning just a 27.3% probability of another rate hike in the US by the end of the year.
4. ASX stuck in the mud: The ASX200 closed down 1% for the week and global markets on Friday night provided little impetus for the local stocks this morning. At 5,672, the index is near the lower end of the recent trading range that it’s been stuck in since June. The market is likely to focus on resources stocks along with the energy and materials sectors, given the moves in commodity prices to end last week.
5. The week ahead: It’s a quieter week of data scheduled following a huge week to start the month. NAB’s closely-watched business confidence index comes out tomorrow, followed on Wednesday by the Westpac/ Melboure Institute consumer confidence survey. Then all eyes will be on Thursday’s employment data, with the market forecasting 20,000 jobs to be added. The full calendar is here.
6. Bitcoin takes a fall: Prices dipped by almost 6% on Friday to below $US4,300, and continued to slide over the weekend. It followed a report from Chinese news outlet Caixin that Chinese authorities may ban cryptocurrency exchanges, following the crackdown on ICOs earlier in the week. Bitcoin Cash (-18%) and Ethereum (-11%) were also lower.
Have a great week, I’m on Twitter @Mr_SamJacobs.