• NZD is the strongest major after RBNZ’s Graeme Orr said he is “pleased” with where the OCR is. Earlier he reiterated that QE is far from the central scenario. (Odd that this keeps on cropping up since RBNZ originally bought the topic up, though…)
• USD/CHF nudges its way to a 3-week high ahead of Powell’s highly anticipated speech, EUR/USD squeezed in a minor 3-week low, gold has dipped below $1500.
• The CNY fix was set at it’s the lowest rate in 11 years, yet onshore Yuan (CNH) remains a little hesitant to catch up with USD/CNH remaining beneath the August high. This places the Yuan for its 3rd weekly loss over the past 4.
• It’s been reported that the Trump administration have floated the idea of currency taxation, which could help weaken the dollar.
• Fed’s Kaplan sees potential for a cut in September.

• Ahead of the European opening session, most Asian stock markets are showing modest gains ahead of Fed Chair Powell’s speech today (1400 GMT) at the Jackson Hole Symposium after several Fed officials (George, Harker & Kaplan) in their media interviews yesterday have indicated they are reluctant to cut rates in Sep.
• The USD/CNH (offshore yuan) has continued to inch higher to print a current intraday high of 7.1070 in the Asian session after a weaker midpoint fix on the onshore CNY today at 7.0572 from Thursday level of 7.0490 against the USD. A higher USD/CNH can ignite trade tensions between U.S. and China and stock markets seem to be ignoring its movement at this juncture; complacency at work or higher expectation of Fed Chair Powell to deliver a dovish speech later?
• The underperformer for today is Singapore’s Strait Times Index where it has shed -0.50% as at today’s Asian mid-session; dragged down Jardine Matheson Holdings and Singapore Technologies Engineering that have dropped by -0.83% and -1.74% respectively. Also, another catalyst for its weak performance is Singapore’s inflation data (core CPI) for Jul has increased at its slowest pace in three years to 0.8% y/y from 1.2% y/y in June (below consensus of 1% y/y).

Up Next:

• Fed Powell’s speech is at 13:45 GMT and has been the key event which has effectively suppressed volatility most of the week. It all comes down to whether markets expect further easing from the Fed. Whilst the minutes show only 2 members wanted a 50bps cut in July and most see it as a ‘mid-cycle cut’, it’s worth remembering that further tariffs have been implemented since then, which could force the Fed’s hand to ease further. Dovish comments could support the stock market and weigh on the dollar (initially), although our research shows that the USD has appreciated on average following Fed cuts. Either way, keep USD markets on your radar.