Key Points:

US stocks start the week mixed despite best August since 1986

USD remains on the back foot into month end

Japan’s Suga set to declare candidacy to be new PM

The week started pretty much the same as last week ended with an overall weaker USD as month end selling continued and US yields remained under pressure. The DXY pushed through recent support at 92.00/20 but has since moved back above into the close. USD/JPY bucked the trend and managed to regain 106 albeit briefly but stronger on the crosses with CAD/JPY the day’s best performer. Stocks were mixed with the Dow and S&P500 closing slightly down on the day but the Nasdaq off to a flier as investors sought to pile into Apple and Tesla now that they’re 4 and 5 times cheaper respectively than last week! (Stock split influenced of course). Fed’s Clarida comments drew markets focus to the realisation that they may be on hold for the foreseeable future and reliant on fiscal stimulus more so to lift the economy in the immediate future. Despite the continued impasse, hopefully next week we will see the Democrats and Republicans agree on a new stimulus package that is already one month in arrears. Gold closed higher than Friday but failed to break above last weeks highs at 1977, but Silver was the better performer on the day. Despite predictions at the start of the month of risk to inflated stock prices and overbought currencies correcting vs the USD it didn’t pan out that way with the past month being the best month for global equities since 1986. AUD, CAD and NZD all made new recent high’s overnight and have been the greatest beneficiaries of these risk on moves but ultimately could cause pain for these countries recovery due to the uncompetitive price of their currency. Data wise China PMI was better than expected but had little impact on market moves with most Asian indexes down on the day. Today we will see Caixin PMI data alongside the RBA rate decision expecting unchanged. However we need to watch for any commentary around the ‘excessive strength’ of the AUD. The rest of the day will be dominated by further global PMI’s during the European and US sessions.

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