August 31: Friday close and Weekend Wrap

August 31: Friday close and Weekend Wrap

Key Points:

USD slumps post Powell’s Jackson Hole comments

Japan’s PM Abe resigns amid ongoing health issues

UK ‘ready to walk away’ from Brexit trade talks

Friday saw another round of USD selling supported by the Fed’s approach to rates and inflation and further month end position rebalancing. Cable, EUR/USD and the commodity bloc currencies all made strong gains on the day vs the greenback breaking above recent highs and confirming a further bullish trend. During the Asian session even USD/JPY was well supported pushing towards 107.00 with the firm risk on moves before Japanese PM Abe announced that he would be stepping down due to ongoing health issues. The Nikkei slumped 2% and USD/JPY slipped 70 pips initially before trying to stabilise but then the USD weakness continued and we saw a further fall back to 105.20 during the US session. Press over the weekend have tried to calm markets by insisting Abenomics will continue so we wait to see who his predecessor will be with Foreign Minister Kishida and Cabinet Secretary Suga the frontrunners. For US markets all major indices put on further gains as expected post Powell while metals endured their usual roller coaster. Gold spent most of the day in Asia around 1930 but spiked to 1964 into the close of the US session. The open this morning has seen an early spike to 1976 which was near last weeks high of 1977. Likelihood is for a continuation of USD weakness and a retest of 2000 could be on the cards soon. Weekend press focused on unrest in certain US states, Brexit talks and the ongoing saga of a possible no-deal and sadly further rises in virus cases across Europe with Germany and France seeing highest spikes since May. Japanese retail sales and industrial production, Chinese NBS PMI data and some second tier Australian data amongst the schedule today but the main focus will be Fed’s Clarida speaking during the US session. The UK will take a bank holiday so expect a slower than usual European session.

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