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US stocks took a sharp dive at the end of their session with the Nasdaq swinging from +1.5% to -1% on the day, the move lower conincided with a report on the newswires the Apple plans to slow hiring and curb spending next year to prepare for a possible recession.
This is being taken as a sign that the Federal Reserve’s tightening plans are starting to slow the economy, resulting in the unusual (recently anyway) result of seeing equities and the USD both soften over the session, equities on recession fears, USD on pricing in the Fed will have to pullback somewhat on its tightening plans.
In FX, this gave a respite to the battered EUR and JPY with EUR briefly regaining the 1.02 handle ahead of this week’s ECB meeting where the first rate hike in 11 years is expected.
Dollar weakness also helped US Oil to strongly break back above the psychological $100 a barrel level , This despite Joe Biden’s best efforts (and fist bumps) during his recent Saudi visit. Gold had an attempt to rally, but pulled back showing the yellow metals lustre is struggling to regain it’s sheen in this stagflationary market environment.
Coming up today the RBA minutes will be one to watch with Central bank policies being one of the main drivers of the current market. These minutes are from the July policy meeting at which the RBA chose a 50bp hike over a 25bp option. The minutes should help explain why, and may also indicate a preference for the size of the hike at the next meeting, AUD volatility is a possibility.
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