Market Summary for 26/8/2015
Aug 27, 2015
Markets saw a dramatic reversal yesterday, retracing all of the previous day's losses from the week's lows to the highs. The combined measures from the PBOC and possible further stimulus from the ECB seemed to be finally having an effect to shore up investor confidence. The euro was heavily sold off in the latter part of the day, falling over 200 pips over the course of the day to reach 1.13 while the US dollar rallied along with risk. Strong durable goods orders gave the US dollar an additional boost, although Dudley's comments that a September rate hike seems less compelling somewhat dented investor enthusiasm for the Greenback. Nevertheless, markets had mostly priced out the possibility of a September rate hike given current market conditions and Dudley's comments failed to stem dollar appreciation. USD/JPY closed back near 120, while euro/usd ended the day below 1.135. Aud/usd was unchanged around 0.713.
Key risk events today: UK Nationwide HPI, US PCE, US GDP
Markets seem range bound on the risk side, while euro remains under pressure because of bund strength and anticipation of stimulus from the ECB.