AUD/USD remains bid despite risk-off in Asian equities
- The AUD is surprisingly reporting gains amid risk aversion.
- The greenback is on the defensive as turmoil may force the Fed to soften is hawkish tone.
Currently, the AUD/USD is reporting a 0.30 percent gain at the session high of 0.7080 despite the heightened risk aversion in the equities.
Stepping back, the Australian dollar and other risk currencies took a beating yesterday as the Dow Jones Industrial Average tanked more than 600 basis points. The S&P 500 and the Nasdaq also reported sharp losses.
The increased haven demand for the treasuries likely lifted the greenback higher.
However, the Asian desks are viewing things differently – the US dollar is being offered possibly on fears that sustained risk aversion may force the Fed to soften its hawkish stance and delay the December rate hike.
Looking ahead, the corrective rally in the AUD/USD may gather pace if the European and US desks also see market instability taming Fed’s aggression.
Yen strengthens as investors shun risk
The Japanese yen rose against the dollar on Thursday as a rout on Wall Street and weak European and U.S. economic data dented global risk sentiment, sending investors scurrying to safe-haven assets including government bonds.
The yen, seen as a safety-bet during times of market turmoil and economic stress, advanced 0.2 percent to trade at 112.06 on the dollar on Thursday.
Over the past week, nervousness around U.S. corporate earnings and geopolitical uncertainty added to heightened worries about global growth, Italy’s free spending budget and Sino-U.S. trade tensions.
“Yen strengthening over the past three days is partly a reflection of surging demand for safety, as a result of global equity rout and rising volatility,” said Margaret Yang, market analyst in Singapore at CMC Markets.
“Domestically, upbeat Japanese manufacturing PMI readings underpinned the strength of the currency, comparing to lacklustre US new home sales numbers last night,” she added.
Stock Market News
Here’s What to Watch in European Stocks This Morning
Stocks from New York to Tokyo slumped on a mix of concerns including a potential economic cycle peak and slowdown in corporate earnings growth, as well as the ongoing tightening of monetary policies. Reports of potential bombs being sent to two former U.S. presidents and the New York headquarters of CNN didn’t help sentiment, and the S&P 500 is now little changed for the year. The European futures open will shortly give us an idea of the extent of the damage to be expected in the region this morning.
Microsoft Corp. kicked off this week’s run of large-cap U.S. tech earnings, with Amazon.com, Inc. and Google-parent Alphabet Inc. both due after the market close later Thursday. Microsoft posted another quarter of brisk revenue growth driven by cloud services, and its stock edged higher in after-hours trading. But fellow Nasdaq-100 index member Tesla Inc. stole the limelight, announcing just the third quarter of positive earnings in its history, sending the shares up by about 10 percent. Elsewhere, another semiconductor stock plunged as Advanced Micro Devices Inc. results underwhelmed.
Banks, Banks, Banks
Banks’ results keep coming, with Swiss giant UBS Group AG reporting trading revenue at its corporate and investment bank up 19 percent from a year earlier. Its third-quarter net income beat the highest estimate of analysts surveyed by Bloomberg. U.K.-focused Lloyds Banking Group Plc is also due to release numbers this morning, after challenger Metro Bank Plc showed signs that competition in residential mortgages is putting pressure on margins; meanwhile, the Bank of England’s August base-rate increase has raised the cost of deposits.
It’s ECB rate decision day, and while eurozone interest-rate setters aren’t expected to make a change this month, the tone of President Mario Draghi’s post-decision speech could, as usual, offer clues over timing of the next policy tightening. The euro fell against the dollar on Wednesday as markets speculated that Draghi will soften his rhetoric somewhat, in response to recent disappointing economic data.
Australia stocks lower at close of trade; S&P/ASX 200 down 2.83%
Australia stocks were lower after the close on Thursday, as losses in the Healthcare, Metals & Mining and Consumer Discretionary sectors led shares lower.
At the close in Sydney, the S&P/ASX 200 fell 2.83% to hit a new 52-week low.
The best performers of the session on the S&P/ASX 200 were Lynas Corporation Ltd (AX:LYC), which rose 7.26% or 0.115 points to trade at 1.700 at the close. Meanwhile, Cleanaway Waste Management Ltd (AX:CWY) added 5.04% or 0.085 points to end at 1.770 and Resolute Mining Ltd (AX:RSG) was up 3.41% or 0.035 points to 1.060 in late trade.
The worst performers of the session were AMP Ltd (AX:AMP), which fell 23.56% or 0.780 points to trade at 2.530 at the close. Emeco Holdings Ltd (AX:EHL) declined 12.12% or 0.040 points to end at 0.290 and Super Retail Group Ltd (AX:SUL) was down 10.20% or 0.850 points to 7.480.
Falling stocks outnumbered advancing ones on the Sydney Stock Exchange by 1067 to 215 and 283 ended unchanged.
Crypto Prices Slip; Federal Judge Dismisses Lawsuit Against Coinbase
Cryptocurrency prices slipped on Thursday, with Bitcoin and Ethereum dropped more than 1%. Reports that a federal judge dismissed lawsuit against Coinbase received some focus.
Bitcoin dropped 1.2% to $6,507.5 by 12:40 AM ET (04:40GMT) on the Bitifinex exchange, Ethereum fell 1.8% to $203.88 and Litecoin was down 1.5% at $52.979. XRP lost 2.7% to $0.46067 on the Poloniex exchange.
On Tuesday, U.S. District Judge Vince Chhabria, from the Northern District of California, dismissed a lawsuit filed by Arizona resident Jeffrey Berk in March against Coinbase, CoinDesk reported.
Berk accused the exchange for letting insiders trade bitcoin cash prior to its listing on the exchange, the report said.
“Unsurprisingly, those who had been tipped off [about bitcoin cash’s listing], immediately swamped Coinbase and the GDAX [sic] with buy and sell orders, thinning the liquidity but obtaining BCH at fair prices. The market effect was to unfairly drive up the price of BCH for non-insider traders once BCH came on line at the Coinbase exchange,” said Berk.
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