Summary:
- Most major stock benchmarks add to recent gains
- USD index falls back close to multi-year low
- Crypto moves lower as Dalio labels Bitcoin a “bubble”
- NZD rises as GDT jumps by the most in 4 months
- Markets await tomorrow’s Fed decision
It’s been another day of gains for major stock benchmarks with the US500, DE30 and UK100 all moving higher. A positive Asian session during which the Nikkei (JAP225 on xStation) surged strongly higher set the tone and whilst the rise is fairly modest on the whole, it represents further gains.
It was a relatively quiet afternoon in terms of economic releases with the housing data from the US probably the standout. For the month of August building permits rose by 1.30M against consensus forecasts for a 1.22M rise and a prior reading of 1.23M (revised higher from 1.22M). The US dollar remains under pressure despite the positive data, with the greenback falling against most of its peers. The US dollar index (USDIDX on xStation) remains close to its lowest level since 2014 at 90.98.
Ray Dalio, the billionaire founder of the world’s largest hedge fund Bridgewater Associates is the latest high-profile financier to weigh in on cryptocurrencies. After JP Morgan CEO Jamie Dimon labelled bitcoin a fraud last week the market went into a tailspin, plummeting some 40% from it all-time high to back below the $3000 level. Elsewhere in the crypto space talk of an Estonian cryptocurrency re-emerged today, despite receiving a stern put down from Draghi at the last ECB meeting.
The fortnightly global dairy trade (GDT) auction has shown the largest increase in what is widely seen as a global benchmark for milk prices since the middle of May. Whilst the Kiwi was already higher on the day ahead of the announcement, it has received another boost higher since the data was released and the NZDUSD is now approaching a potentially important resistance level around 0.7340.
Finally, US president Donald Trump delivered a quite extraordinary speech to the UN general assembly during which he pulled no punches in going after both North Korea and Iran. Comments such as the US is “ready, willing and able for military action” against North Korea and that if the US is forced to defend itself or allies they will have no choice but to “totally destroy North Korea” were certainly aggressive, but the lack of anything new saw little by the way of market moves.
Overall the day’s trade has been a little quiet, with some clearly opting to remain on the sidelines ahead of tomorrow’s Fed rate decision. The Federal funds rate is widely seen to be kept on hold but the keenly viewed dot-plot and Yellen’s press conference could provide some major moves. In particular any reference, or failure to significantly elaborate on prior comments relating to, the balance sheet reduction could provide the main catalyst for market reaction. Read our full preview here.