From Marc to Market:
Overview: The broad consolidative tone in the foreign exchange market is continuing today even though nearly all the preliminary August PMI readings showed improvement, including the first time since Russia's invasion of Ukraine that the eurozone's manufacturing PMI is above the 50 boom/bust level. Still, outside of the Norwegian krone, lifted by a stronger-than-expected Q2 GDP (mainland 0.6% vs 0.3% expectations, and Q1 growth was revised to 1.2% from 1.0%, quarter-over-quarter), the G10 currencies are in a narrow range (+/- 0.15%). Emerging market currencies are mostly lower.
Equities have not responded as well to the favorable PMI reports. Japan and Hong Kong equities fell, while Taiwan and Australia led the region with more than 1% gains. Chinese stocks were mixed, but the Shanghai Composite extended its dramatic rally. The Stoxx 600 three-day rally in Europe is under threat, and US index futures are nursing small losses. European 10-year yields are around 2 bp higher, but the 10-year Gilt yield is up nearly four basis points. The 10-year US Treasury yield is up about 1.5 bp to above 4.30%. Weak equities and a solid reception to the 20-year bond auction yesterday saw the 10-year yield slip to almost 4.27% yesterday, the low for the week. Gold initially extended yesterday's nearly 1% rally but encountered selling pressure as it rose above $3350. It is trading near $3340 now, after settling last week slightly above $3336. October WTI is bid at a seven-day high near $63.40. Resistance is seen in the $64.20-35 area.
USD: The Dollar Index made a marginally new six-day high yesterday near 98.45, where the 20-day moving average was found. It was sold after President Trump called for the resignation of Federal Reserve Governor Cook over some claims of that she received mortgages in two different states, claiming each would be her primary residence. There has been no investigation. DXY steadied near 98.10. It is trading within yesterday's range today. Of the slew of US data today, two reports stand out.....
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