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Another day, another chance to price in global trade and emerging market concerns!

  • Australia’s trade surplus tightens from 1.94B AUD to 1.55B AUD vs. 1.46B AUD expected

Major Events/Reports:

Australia’s trade data

A report from the Land Down Under showed the trade surplus narrowing by about 20% to 1.55B AUD in July.

While it’s weaker than the upwardly revised 1.94B surplus in June, it’s also a bit better than than the 1.55B figure that analysts had estimated.

A closer look tells us that exports had slipped by 1.0% from a month ago thanks to weaker activity for metal ores and minerals (-5.0%) and rural goods (-2.0%).

Meanwhile, imports was flat at 34.52B AUD with bigger purchases of fuels and lubricants (+23.0%) and non-monetary gold (+11.0%) offset by lower demand for capital goods (-6.0%) and consumption goods (-2.0%).

Overall, the upside surprise in the headline numbers was not enough to offset concerns that Australia’s trade activity will take hits if (when?) the U.S.-China trade war escalates.

Overall risk aversion

With no fresh data to price in, Asian session market players mainly recycled previous market themes.

Specifically, traders are back to worrying about the emerging markets and their shaky growth. See, many believe that the stability and profit-taking that we saw earlier this week don’t mean that the economic weaknesses will go away.

It also didn’t help that the Trump administration doesn’t look ready to play nice with China just yet. Just yesterday Trump himself shared that:

“We’ve done very well in negotiations with China but we’re not prepared to make the deal that they’d like to make.”

The lack of resolution for one of the biggest market-movers did NOT make investors risk-hungry.

  • Nikkei is down by 0.27% to 22,520.8
  • A SX 200 is down by 0.59% to 6,168.8
  • Shanghai index is up by 0.17% to 2,708.847
  • Hang Seng is down by 0.64% to 27,068.5

Commodity prices were a little more mixed, with gold taking advantage of dollar weakness while risk aversion weighed on crude oil benchmarks.

  • Gold is up by 0.11% to $1,198.16 per troy ounce
  • Brent crude oil is up by 0.12% to $77.21 per barrel
  • U.S. WTI is down by 0.01% to $68.60 per barrel

Major Market Mover(s):

AUD and NZD

Concerns over the U.S.-China trade war and emerging markets did not fare well for the high-yielding comdolls.

AUD/USD is down by 13 pips (-0.17%) to .7179; AUD/JPY is down by 27 pips (-0.34%) to 79.94; AUD/CHF is down by 23 pips (-0.32%) to .6966; EUR/AUD is up by 40 pips (+0.25%) to 1.6205, and GBP/AUD is up by 48 pips (+0.27%) to 1.7986.

NZD/JPY is down by 12 pips (-0.16%) to 73.37; NZD/CHF is down by 9 pips (-0.14%) to .6394; GBP/NZD is up by 22 pips (+0.11%) to 1.9595, and EUR/NZD is up by 15 pips (+0.08%) to 1.7655.

USD

There were no direct catalysts for the dollar’s broad weakness today, but analysts point to the pound getting a boost from Brexit headlines as the spark that started the mini fire sale.

USD/JPY is down by 18 pips (-0.16%) to 111.35; USD/CHF is down by 13 pips (-0.14%) to .9704; GBP/USD is up by 9 pips (+0.07%) to 1.2913, and EUR/USD is up by 4 pips (+0.04%) to 1.1634.

Watch Out For:

  • 5:45 am GMT: Switzerland’s GDP (q/q) (0.5% expected, 0.6% previous)
  • 6:00 am GMT: Germany’s factory orders (1.8% expected, -0.4% previous)
  • 11:30 am GMT: Challenger job cuts (y/y)