• Asian session brought declines on the US dollar on the Fed talk
  • AUD gains despite weaker data from the economy
  • Equities remain buoyant, China’s Hang Seng leads gains

One of the reasons behind a recent renewed strength of the US dollar was a talk that president Donald Trump could not extend the tenure of Janet Yellen at the FOMC and instead promote ex-governor Kevin Warsh. Warsh criticized the QE policy in the past so markets quickly assumed that he’d be more hawkish president. While the news is that Trump will announce his decision this month, it’s not yet a “done deal”. Bloomberg reveals that there are 3 names on the short list: Warsh, economic adviser Gary Cohn and a current FOMC member Jerome Powell. Cohn seems to be the least likely choice after a rift with president that occurred after an infamous Trump’s Charlotte speech. Meanwhile Powell is considered to be a dove at the Fed so a choice between himself and Warsh could be of far reaching consequences for the markets like Tnotes, Gold and all US dollar pairs. Anyway we can expect rumours to swirl and enrich the US dollar trading that could be more lively anyway given a streak of data that will be released in following days (with the NFP on Friday being the most relevant).

US dollar has been under pressure overnight while the Aussie outperformed despite weaker data from the economy. We had two PMIs from the services sector: CBA PMI declined a full point to 53.2 pts. while AiG slipped from 53 to 52.1 pts. stressing a moderate growth that could make it hard for the RBA to consider interest rate increases. Moreover the PMI in Japan slid as well (from 51.6 to 51 pts.) and given a touch weaker measures from China that we got during the weekend it shows that growth momentum could be fading in Asia. Nonetheless AUDUSD rallied on the USD pullback and it could have a far reaching consequences on a daily chart. We can see that this rally came after 4 days with a long lower shades just above the key supports so buyers can fell encouraged and since the longer trend is still positive a return towards 0.80 cannot be ruled out. 

link do file download link

AUDUSD rebounds from the key support in an impressive way. Source: xStation5 

Global equity markets continue to impress with the S&P500 (US500 on xStation) making its wau through 2530 pts. and German DAX (DE30) closing in on the 13000 points barier for the second time this year. In Asia stocks continued advance in Hong Kong with Hang Seng CE (CHNComp) leading the gains at +0.8%.