Market Summary for 19/8/2015

Aug 20, 2015
The day begun with a second round of selloff in China and Hong Kong equities, which saw the Aussie dollar dip briefly below 0.7325, but recovered quickly along with Chinese stocks later in the day. Otherwise, the Asian and European session was relatively uneventful, with markets trading within the previous day's range. During the night, CPI came in line with expectations, which saw the US dollar trading both ways but failed to have much of a long term impact. Fed July meeting minutes was released ahead of schedule, which showed that fed officials were still concerned about low inflation and the economic situation in China. While conditions were noted to be approaching a point for policy firming, there was as yet no strong consensus on raising rates immediately despite the impending September deadline. The US dollar was heavily sold off following the release, with usd/jpy falling firmly below 124 while eur/usd smashed through 1.11 to close around 1.1125. Aud/usd remained capped around 0.737. 

Key risk events today: UK retail sales, US jobless claims, US existing home sales
Markets are now settling after the fed minutes, pricing in a strong possibility of no September rate hike. The minutes remain open to interpretation, with dissenting views either way on whether the fed should raise rates soon, but nevertheless the lack of a strong consensus so close to September remains a cause for concern, which caused some unwinding of long dollar positions, with USD expected to stay lower today.