20 August: Overnight Market Wrap

20 August: Overnight Market Wrap

Key Points:

FOMC minutes leave markets uninspired

Gold down $74 to close at $1928

All three major US indices close in the red

The USD sell off continued from yesterday during the Asian and European sessions. We saw AUD push to a new high of 0.7275 and Cable pushed through to 1.3265, however these levels were the peak and the USD found a resurgence. Gold capped around 2000 and sat rangebound between 1980 and 2000 before the trapdoor opened. The USD rebound continued ahead of the FOMC minutes where market interpretation was that whilst there was an acceptance of continued stimulus no new stimulus was forthcoming anytime soon. The lack of any clear guidance as to what to expect for the September meeting also concerned markets. Gold fell back to 1925, AUD dropped 100 pips, Cable 150 and EUR dropped from 1.1950 to 1.1830 on the day as DXY pushed back over 93.00 with some key day reversals in place. All three major US indices closed in the red but no more than 0.5% down across the board, this despite Apple becoming the first US stock to reach a market cap of $2 trillion. The political front remained fairly quiet with the Democratic convention pushing on but one highlight was China’s probe into Australian wine imports which could impact the AUD. However, recent barbs from China have had little influence on the AUD where most of the movement has been the correlation to risk rather than domestic issues. No news or data of note for the upcoming Asian session. Tonight we will see the US weekly jobless claims release which could cause some volatility with parts of the US lockdown restrictions scaled back influencing the release.

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