US Dollar Finds a Floor, Asia Markets Stall Despite Record Wall Street High. The Quiet Before Storm?

US Dollar, AUD/JPY, Iron Ore, SEC, China, Jackson Hole – Talking Points

USD found some footing in Asia today to consolidate recent gains.
APAC equities mostly flat, positive Wall Street offset by China concerns
Aluminium and iron ore rally despite broader commodity weakness.

The US Dollar moved slightly higher in Asia today as markets are generally keeping their powder dry ahead of the Jackson Hole symposium, where Fed Chair Powell will have all the focus. The FDA approved Pfizer’s Covid-19 vaccine, adding to a positive outlook.

However, another Wall Street record high failed to inspire Asian equity markets. More concerns are being raised by the SEC regarding transparency and disclosure from Chinese companies that are listed in the US. Chinese authorities also flagged domestic tech companies for further scrutiny.

Commodity markets were mixed in Asia today. Aluminium eyed off 3-year highs on concerns of supply disruptions. Iron ore recovered some ground after China re-opened the world’s third largest port with Delta variant scares abating. The rising iron ore price didn’t help the Australian Dollar as the USD firmed across the board. Gold dipped below US$1800 and other precious metals were hit. Crude oil prices moved sideways after extending higher in the US session.

Treasury yields moved slightly higher into Asia and this helped underpin the USD but the disparity between yields and equities is becoming more significant. Jackson Hole may provide the catalyst for a snap back. The question for markets now is, which asset benchmark will prove to be right?

AUD/JPY Technical Analysis

The AUD/JPY cross rate is often seen as a harbinger for market risk sentiment. The currency pair is currently trending lower within a channel chart formation, having made new lows for the year last week. Pivotal support-turned-resistance is close by at 79.85 and further resistance lies at the previous swing high of 81.60. The 20 August spike low at 77.90 marks initial support.