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Key Takeaways:
- 💵 The U.S. dollar declined broadly on Monday, particularly against the yen
- 📆 Main drivers of currency movement for the week include Fed’s July policy meeting minutes and Powell’s upcoming speech
- 🇯🇵 Big move lower against yen attributed to potential U.S. and Japan policy divergence
- 💥 Bank of Japan’s hawkish tilt last month triggered market turbulence in early August
- 💲 Traders fully priced in 25-bp rate cut from Fed in September, with chance of 50 bp move at 24.5%
- 🇦🇺🇳🇿 The Australian and New Zealand dollars rose to one-month highs on expectations of a dovish Fed outcome
- 💰 Asian stocks have edged up and the dollar slid on expectations of the U.S. economy avoiding a recession
- 📉 Gold has passed $2,500 an ounce due to the prospect of lower borrowing costs
- 🏦 The Federal Reserve is considering easing in September and may acknowledge the case for a rate cut
- 📈 Expectation of a softer landing for the U.S. economy has boosted S&P 500 and Nasdaq futures
- 🌏 MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.0 per cent, with China’s blue chips firming 0.4 per cent
- 🛢️ Oil prices dipped due to concerns about Chinese demand
Currency Movements and Policy Divergence:
- 💵 The U.S. dollar declined broadly on Monday, particularly against the yen
- 🇯🇵 Big move lower against yen attributed to potential U.S. and Japan policy divergence
- 💵 The dollar weakened against the yen and euro amidst Fed easing expectations
Fed Policy Expectations and Market Responses:
- 📆 Main drivers of currency movement for the week include Fed’s July policy meeting minutes and Powell’s upcoming speech
- 💲 Traders fully priced in 25-bp rate cut from Fed in September, with chance of 50 bp move at 24.5%
- 🇦🇺🇳🇿 The Australian and New Zealand dollars rose to one-month highs on expectations of a dovish Fed outcome
Market Reactions and Economic Indicators:
- 💰 Asian stocks have edged up and the dollar slid on expectations of the U.S. economy avoiding a recession
- 📉 Gold has passed $2,500 an ounce due to the prospect of lower borrowing costs
- 🏦 The Federal Reserve is considering easing in September and may acknowledge the case for a rate cut
- 📈 Expectation of a softer landing for the U.S. economy has boosted S&P 500 and Nasdaq futures
- 🌏 MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.0 per cent, with China’s blue chips firming 0.4 per cent
- 🛢️ Oil prices dipped due to concerns about Chinese demand