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JPY

Equity Unwind Sparks Risk Retreat

Risk-sensitive currencies are staging a broad retreat as losses in stock markets continue. North American equity futures are pointing to a lower open after suffering the biggest selloff in two years during yesterday’s session, with a series of earnings misses intersecting with broader economic dynamics to trigger a headlong rush out of “megacap” names that have been the prime beneficiaries of the artificial intelligence craze. Safe-haven currencies are appreciating, front-end Treasury yields are inching lower, oil prices are down, and the broader commodity complex is coming under renewed selling pressure. The proximate trigger for the selloff isn’t entirely obvious, but...

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Tech tumble

• 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...

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Earnings Season Drives Currency Markets

Foreign exchange rates are looking relatively stable this morning, with modest price action largely dictated by events in stock markets. Equity futures are down – putting some pressure on risk-sensitive currency pairs and raising the dollar’s safe-haven value – after Tesla, LVMH and Deutsche Bank reported disappointing earnings. Treasury yields are inching lower, but remain elevated on the back end as investors brace for continued fiscal expansion under either of the current front-runners for US president. The euro is trading near a two-week low after private sector activity decelerated more than expected in early July, suggesting that an early-year economic...

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AUD pressure points

• 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...

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AUD losing altitude

• 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....

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