Equities rise, the dollar dips and the yen slides

A more positive mood permeated through Asian markets during today’s session following a mid-morning statement from China’s Ministry of Commerce saying that it would send a delegation to the United States for trade talks in late August. The talks are at the invitation of the US and will be held with Under Secretary of Treasury for International Affairs David Malpass, the commerce ministry said.

Asian equity markets traded contrary to the steep losses on Wall Street after the dismal Tencent report, with the Nikkei225 up 0.61%, Australia200 rising 0.48% and the ChinaA50 gaining 0.71%. The Japanese yen gave back some of its safe haven gains made yesterday, with USD/JPY rising 0.08% to 110.83.

In emerging currencies, USD/TRY extended the recent drop to a third day, hitting a 5.6945 low. That brings the drop from Monday’s high to just over 20%. As well as the risk-on China-US news, the lira has benefitted from news that Qatar has promised to invest $15 billion in the country. The funds will be channeled into banks and financial markets, sources in the Turkish government said, according to Reuters.

NOTE: Turkey Fin Min Albayrak is to hold an investor conference call later today

USD/TRY Daily Chart

USD/MXN has dipped to 19.1181, still holding below the 55-day moving average at 19.4408, which has held since July 3. USD/SGD fell for the first time in six days, easing off 0.27% to 1.3764.

Aussie rebounds after economy adds full-time jobs

Despite the fact that Australia lost a net 3,900 jobs in July, the news was not all bad since the details showed 19,300 full-time jobs were added with the loss of 23,200 part-time ones. This is a more positive development and adds on to the 41,200 full-time jobs added in June.

More good news in the unemployment rate which dipped to 5.3% in the month, the lowest since November 2012, though this could partly be explained by the drop in the participation rate to 65.5% from 65.7%. AUD/USD squeezed up to a high of 0.7279, stemming the five-day bearish bias that had driven prices. The pair is now trading at 0.7265 and, technically, it seems the candlestick Doji reversal pattern on the daily chart yesterday is confirmed, suggesting the upward momentum may have a bit further to run. The 55-day moving average is at 0.7424.

NOTE: A$730m worth of AUD/USD options expire today at strike 0.7300

AUD/USD Daily Chart

Oil slumps after weekly data shows large inventory build

Oil prices slid 3.6% from high to low yesterday after weekly inventory readings showed rising crude stockpiles and a jump in US production.

Data from EIA showed stocks rising by 6.805 million barrels in the week to August 10, a complete opposite to the 2.5 million drawdown expected by analysts. WTI touched 64.59 this morning, the lowest since June 19, before turning and heading into positive territory on the day. It’s now trading at 65.166.

Copper is attempting a mild rebound from 14-month lows touched yesterday but there is a risk it could be merely a dead-cat bounce. Signs of a potential slowdown in the Chinese economy, as growth in fixed asset investment slumped to a record low of 5.5% in the January to July period, continues to keep prices under pressure as the demand outlook gets more cloudy.

Did UK retail sales get a boost from the FIFA World Cup?

Today’s release of retail sales data from the UK will disclose the impact England’s run in the World Cup finals in the early part of July had on consumer spending. Forecasts suggest sales grew 3.0% y/y and 0.2% m/m after June’s slump of 0.5% m/m in June. Other data points include the Euro-zone trade balance for June with the surplus not expected to yet show too much impact of the tariff wars, given the first tariffs weren’t imposed until July. The surplus is expected to widen mildly to 17.0 billion Euros from 16.9 billion Euros in May.

The Americas calendar picks up with US housing starts and building permits for July along with weekly jobless claims. Canada’s ADP employment change for July may be interesting to see if it confirms the strong official employment change reported last Friday, which saw 54,100 jobs added to the Canadian economy that month.

The full data calendar can be viewed at https://www.marketpulse.com/economic-events/