Traders focusing on the Japanese Yen are observing an increased possibility of intervention, leading to its appreciation against other currencies. Meanwhile, the US Dollar is experiencing stability amidst lower treasury yields in anticipation of a debt deal. However, growth-oriented assets have suffered a downturn due to China’s disappointing PMI performance.
The retreat in US Treasury yields has resulted in support for gold, as evidenced by the current position of XAU/USD holding above critical support. Conversely, XAU/EUR has encountered challenges with a key resistance area.
The Australian Dollar has experienced a significant shock due to the release of underwhelming Chinese data and mixed local action. This has led some analysts to predict a possible drop in the AUD/USD exchange rate. Despite this, domestic data indicates a modest expansion of credit and an increase in CPI, which could potentially offset some of the negative effects. However, it remains uncertain whether the Reserve Bank of Australia will take this into consideration when making future decisions. As a result, there is concern that the AUD/USD may struggle to maintain its current position.
The Dow Jones and S&P 500 indices have retreated from their previous highs, following the announcement of a US debt deal which suggests a move towards fiscal tightening. The reversal in intraday gains can be attributed to unofficial estimates indicating potential cuts in fiscal spending amounting to $1 trillion. These cuts could potentially increase the risk and severity of a recession, particularly considering the current high interest rates.
Several Asian indices, including the Hong Kong HSI, Australia ASX, and Singapore STI, have experienced significant declines subsequent to the release of underwhelming China data. The Hang Seng Index has notably breached critical support levels. Moving forward, what can be anticipated for the ASX 200 index and the FTSE Straits Times Index?