Morning Markets: Housing for the hawks
Watchlist
- US: Existing Home Sales (1400 GMT)
While this week is focused heavily on Federal Reserve chair Janet Yellen's Friday speech at the Jackson Hole central bank summit, it would be a mistake to think that the data-dependent Fed will not adjust its prescriptions right up to the data on every new release.
Today's existing home sales print, then, will follow Tuesday's encouraging new home data and a good result is likely to add an upbeat demand dataset to the overall landscape. The new home release was likely particularly welcomed by hawks, as it showed the highest rate of new single-family home purchases since October 2007.
Today's session sees crude oil in the spotlight again as Iran is reportedly considering measures to boost prices. Whether this amounts to anything given Tehran's desire for crude revenues in the wake of recently eased sanctions has yet to be seen, however.
WTI crude oil (October future) currently sits at $47.35/barrel, very close to yesterday's European open level.
Finally, the summoning of South African finance minister Pravin Gordhan by police saw USD spike versus the rand, while elsewhere in the EM space the Brazilian real continues to rally.
In the majors, USDJPY sits around the 100.35 range as the JPY strength seen of late refuses to abate, even in the face of hawkish Fed speculation.
Market signals
Asian session
- Construction work in Australia fell 3.7% in the June quarter, worse than expectations
- Argentina has cut interest rates for the fourth week in a row
- Qantas has posted a record $1.5 bn pre-tax profit
- Asian stocks climbed, led by shares in Tokyo
- Turkey cuts interest rates; USDTRY gains 0.25%
- South African finance minister faces legal issues, ZAR tumbles
Forex ahead
- The Australian dollar ignored construction data to remain at 0.7613
- The USD inched 0.1% higher against the yen to 100.30 after falling overnight to 99.925
- GBPUSD loses ground ahead of European open, fails to hold 1.32 area overnight
- NZDUSD retraces much of central bank-spurred rally
From the Floor
Emerging worries. "There's plenty of pressure on EM currencies including a threatened Mexican downgrade," says Hardy.
Good foundation. "The US housing boom can still continue as mortgage rates have stabilised at decent levels," says Garnry.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
In opinion
1..2..3
US home sales may deviate from the year’s bullish trend, writes James Picerno, but it would take a dramatic tumble to signal the virtuous cycle has run its course.
Rand reacts
The main mover in emerging markets was USDZAR, up 4% after South Africa's finance minister was summoned by police, writes the Saxo APAC Sales Trading team.
AUD ever-upwards
It's hard to see the Aussie reversing its upward trend soon, writes Max McKegg, with money markets pricing in further movement in the policy rate, perhaps to as low as 1%.
US central bankers may have filled headlines with hawkish chatter of late, but none of this has had any real effect on the EURUSD rate, says Michael O'Neill.
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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