Daily Market Briefing, Asia Pacific

• Negative vibes. Large fall in US equities overnight. Copper fell further. AUD & NZD remain on the backfoot. BoC cut rates again & flagged more moves.• JPY swings. JPY revival continues. AUD/JPY dropped sharply from mid-July peak. This looks to be a factor behind the AUD’s broader underperformance.• Data flow. US Q2 GDP released tonight. US PCE deflator due tomorrow. Next week Q2 AU CPI, the US Fed meeting, & US jobs report will be in focus. The pull-back in equities stepped up a notch overnight, particularly in the US where a tech-sector led sell-off dragged on the overall...

• Quiet times. US equities & yields consolidate. JPY’s revival continues. USD/JPY & AUD/JPY lower. Can this trend extend?• Commodity moves. Pull-back in base metal & energy prices continues. China growth concerns a driver. But copper price levels are still high.• AUD pressure. Commodity moves exerting pressure on AUD. Global PMIs due today. Bank of Canada also expected to cut rates again. The limited economic and geopolitical news flow meant it was a largely uneventful session overnight across most asset classes. US equities ended the day slightly lower (S&P500 -0.2%) with underwhelming earnings results from a couple of megacap stocks...

• US politics. No major market reaction to news Pres. Biden has withdrawn from the election. US equities bounce, while yields & the USD consolidate.• AUD turbulence. AUD lost more ground. Monetary easing in China & weaker industrial metals prices have exerted downward pressure on the AUD.• Data flow. No major releases today. Tomorrow global PMIs are due & BoC is expected to cut rates. US GDP (Thurs) & PCE deflator (Fri) also looming. News US President Biden has withdrawn from the election race clearly generated a lot of media attention, but the impact on financial markets has been minimal....

• US politics. Pres. Biden drops out of the race. Will the narrower gap between Harris & Trump in betting odds see traders unwind recent market moves?• AUD vol. AUD under pressure last week. But we think it is looking a bit undervalued given the relative macro & interest rate dynamics.• Event radar. Global PMIs due (Weds). US GDP (Thurs) & PCE Deflator (Fri) are released. Bank of Canada meets (Weds), so does the MAS (Fri). The pressure on cyclical assets continued at the end of last week with the pull-back in equities and industrial commodities extending. The US S&P500...