The AUD is the strongest and the JPY is the weakest as the NA session begins

The AUD is the strongest and the JPY is the weakest as the North American session begins. The US dollar is mixed with the largest gain verse the JPY at up 0.29%. The greenback is lower by a similar -0.25% versus the AUD.

In the news, the United Auto Workers union initiated a strike at major assembly plants of the “Big Three” carmakers – General Motors, Ford Motor, and Stellantis, following unsuccessful labor contract discussions. This is the first time such a strike has occurred, affecting plants in Michigan, Ohio, and Missouri with nearly 13,000 workers participating. The UAW President, Shawn Fain, has declared the strike will continue until workers achieve “economic justice”. Ford responded by stating that the UAW’s terms would result in unmanageable labor costs. The three companies produce about half of the 15 million cars made in the U.S. annually. Not a shortage again. This is not good for inflation.

In China data was largely positive. Industrial production exceeded expectations due to increased local demand and ongoing monetary support from the government. The output rose 4.5% YoY, surpassing the 4% expectations and the 3.7% last month. Year-to-date production in August also slightly increased to 3.9% from 3.8%. Retail sales was also better at 4.6% vs 3.0% estimate and the Unemployment rate fell to 5.2% from 5.3% last month. The better data can be attributed partly to a low comparison base, as large parts of China were under COVID restrictions in 2022, but is also a green shoot from the dropping of Covid restrictions too.

Additionally, the PBOC plans to reduce the reserve requirement ratio for local banks by 25 basis points, marking its second reduction this year, aiming to inject more liquidity into the economy and bolster growth.

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading up $0.43 or 0.48% at $90.58. That is the highest level since November 2022. The next major target comes in at the 50% midpoint of the move down from the June 22 hi at $93.78
  • Spot gold is trading up up $8.15 or 0.43% $1918.87
  • Spot silver is trading up $0.52 or 2.31% or $23.13
  • Bitcoin is trading at $26,471. At this time yesterday the price was trading little changed at $26,460.

In the US premarket for US stocks, major indices are trading mixed with the Dow Industrial Average modestly higher and the S&P near unchanged. The NASDAQ index is trading marginally lower.

  • Dow Industrial Average futures are implying a rise of 83 points points after surging 331.58 points yesterday. The index is up 0.96% for the week coming into the trading day
  • S&P index futures are implying a rise of 2 points points after yesterday’s 37.68 point gain.. Coming into the day, the index is up 1.07% for the week
  • NASDAQ futures are implying a decline of -21 points points after a gain of 112.47 points yesterday. After the close Adobe announced their earnings and although they beat, they weren’t good enough. Shares are trading down $-16.55 or -3.02% in premarket trading. The NASDAQ index is up 1.2% coming into the day

In the European equity markets, the major indices are trading higher on the back of the better China data, and despite the hike in rates by the ECB yesterday:

  • German DAX, +1.01%. The index is up 1.41% for the week
  • France’s CAC, +1.62%. The index is up 2.56% for the week
  • UK’s FTSE 100, +0.77%. The index is up 3.39% for the week
  • Spain’s Ibex, +0.36%. The index is up 2.3% for the week
  • Italy’s FTSE MIB, +0.83% (delayed)

In the Asian Pacific today, equity markets closed mixed

  • Japan’s Nikkei 225, rose 1.10%. The index rose 2.84% for the week
  • China’s Shanghai Composite, fell -0.28%. The index was unchanged for the week
  • Hong Kong’s Hang Seng, rose 0.75%. The index fell -0.11% for the week
  • Australia’s S&P/ASX 200, rose 1.29%. The index rose 1.7% for the week

In the US debt market, yields are higher

  • 2-year yield, 5.03% +1.6 basis points
  • 5-year yield, 4.447% +2.8 basis points
  • 10-year yield, 4.322% +3.3 basis points
  • 30-year yield, 4.414% +2.7 basis points

In the European debt market, benchmark 10-year yields are trading higher:

This article was written by Greg Michalowski at Source