Market Commentary: A holiday in the UK keeps a wrap on FX 


  • AUD leads, JPY lags 
  • Gold up $5 to $1916 
  • US 10-yaer yields down 3.9 bps to 4.2000% 
  • WTI crude up 38-cents to $80.21 
  • S&P 500 up 28 points to 4434 

The absence of trading activity in the UK due to the holiday on Monday influenced the day’s trading dynamics. Although there was a brief period of dollar buying early in the European session, this trend swiftly reversed, resulting in a relatively sideways and unsettled movement for the dollar throughout the session. The overall sentiment was cautiously positive, reflecting the atmosphere of a late August long weekend characterized by sporadic and uncertain trading. 

Market attention was directed towards a couple of Treasury auctions that had the potential to impact the market, but both auctions ended up aligning closely with market expectations, despite their substantial sizes. As the day progressed, yields remained close to their lower levels, prompting a mild decline in the dollar towards the end of the trading day. 

Equity markets displayed resilience throughout the day, buoyed by China’s introduction of measures to stimulate its stock market. While I harbor reservations about the underlying support for the latest market rally, the current low-volatility environment during the summer makes it relatively effortless for risk-oriented trades to gain traction. 

In the commodities space, both gold and oil experienced momentary spikes before relinquishing most of their gains in a volatile trading environment. However, this price action did not notably influence commodity-linked currencies, with the Australian dollar leading the way due to optimism stemming from developments in China. 

ECB’s Nagel: We will see what we have to do in September, I will give no signals today 

The President of the Bundesbank is maintaining a reserved stance today, withholding any significant information. However, his recent statements indicate a likelihood that he will advocate for interest rate hikes. 

In today’s context, the emphasis is on banking matters. He expressed assurance that the banking resolution framework would effectively function if the situation necessitates its implementation. 

Author: Jacky.T

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