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After a bit of a pause in the earlier session, dollar demand kicked into high gear once more, shrugging off mostly downbeat data.

This was likely due to risk aversion as another round of tariffs from both the U.S. and China took effect. The Aussie still lagged far behind, as political trouble brewed on the domestic front, and was followed by the New Zealand dollar.

  • U.S. house price index up 0.2% vs. 0.3% expected
  • U.S. Markit flash manufacturing PMI down from 55.3 to 54.5
  • U.S. Markit flash services PMI down from 56.0 to 55.2
  • Euro zone consumer confidence index dipped from -1 to -2
  • U.S. new home sales down from 638K to 627K vs. 643K consensus
  • Canadian PM Trudeau: Encouraged by progress in NAFTA
  • New Zealand trade deficit narrowed from 288M NZD to 143M NZD
  • Australian PM Turnbull to step down on leadership challenge
  • Jackson Hole Symposium kicks off

Major Events/Reports:

U.S.-China trade talks conclude

Nope, no dice! The low-level talks between the U.S. and China weren’t really enough to prevent the next set of tariffs from being imposed, despite a lot of market watchers’ wishful thinking.

With that, higher import duties are in place on 279 Chinese products, including semiconductors, plastics, chemicals and railway equipment. China has also targeted $16 billion worth of U.S. goods, such as coal, copper scrap, fuel, buses and medical equipment.

In the pipeline are U.S. tariffs on an additional $200 billion worth of goods from China, which might be imposed as early as next month, and another set of duties on $16 billion worth of U.S. goods in exchange.

Risk-off moves return

Wall Street wasn’t exactly in a cheery mood as trade tensions weighed on risk appetite and equity indices.

  • Dow 30 index is down 76.62 points to 25,656.98 (-0.30%)
  • S&P 500 index is down 4.84 points to 2,856.98 (-0.17%)
  • Nasdaq is down 10.64 points to 7,878.46 (-0.13%)

Emerging market currencies got a kick lower while commodities also ended in the red.

  • Gold fell to $1,185 per troy ounce (-0.18%)
  • WTI crude oil is down to $67.86 per barrel (-0.21%)

U.S. bond yields were slightly higher, possibly as traders are turning their focus to the upcoming testimony by Fed head Powell in Jackson Hole. A couple of other Fed officials gave speeches during the session, reiterating the central bank’s independence from government.

  • U.S. 5-year yield is up to 2.724% (+0.38%)
  • U.S. 10-year yield is up to 2.828% (+0.24%)
  • U.S. 30-year yield is down to 2.980% (-0.23%)

Major Market Mover(s):


The Greenback shrugged off weaker than expected data and another set of tariffs from China as it whipped out its safe-haven card and left its peers eating dust.

USD/JPY is up from 110.78 to 111.34, EUR/USD tumbled to a low of 1.1530, GBP/USD fell from 1.2908 to 1.2811, USD/CHF popped up to a high of .9868, and NZD/USD is down to .6619.


Apart from risk-off flows and trade tensions in China, another factor dragging the Aussie down is the rift in PM Turnbull’s own political party.

The government’s decision to ban Chinese company Huawei in its 5G infrastructure bid has also turned their relationship with the country to “It’s complicated.”

AUD/USD continued to slide from .7292 to .7248, AUD/JPY tumbled from a session high of 80.93 to a low of 80.57, EUR/AUD ticked up to 1.5930, and GBP/AUD is up to 1.7678.

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