Daily Market Comment – US-China tensions dent appetite as yields crumble, dollar creeps higher



  • Stocks turn red amid renewed Sino-US tensions as Pelosi expected in Taiwan
  • Yen extends winning streak, dollar also catches a bid as bond yields skid
  • Aussie plummets after RBA decision, pound rally loses steam too as BoE eyed

Threat of geopolitical flare-up dampens mood

Risk sentiment took a knock on Tuesday as it emerged that the Speaker of the US House of Representatives Nancy Pelosi is on her way to Taiwan, defying China’s strong advice against visiting the disputed territory. Pelosi is currently on a tour of Asian countries and although it had been rumoured that she would make a stopover to Taiwan, her trip was only confirmed late on Monday, sparking threats of retaliation by Chinese officials.

Fears of a reprisal from Beijing have upset the market calm. Only on Friday, the VIX volatility index had fallen to the lowest in three months as the rebound on Wall Street got onto a more solid footing. But the VIX index has jumped higher today and US stock futures are declining, pointing to a second straight session of losses for the S&P 500.

Earnings results from AMD, PayPal, Starbucks and Caterpillar may bring some positive excitement later on for US traders, and in London, the FTSE 100 was outperforming its European peers thanks to bumper profits from oil giant BP, but the mood overall was sombre.

It’s quite likely that markets are overreacting to Pelosi’s visit to Taiwan and China’s response might not involve anything more than putting on a show of military force during her stay on the island. But the fact that the timing coincides with renewed jitters about a recession following yesterday’s downbeat PMI indicators globally, investors are nervous about even the slightest possibility of China retaliating with fresh trade restrictions on US imports.

Falling yields pressure dollar as yen surges

The heightened geopolitical risks bolstered bonds, fuelling a 1½-month-long rally that started when expectations around aggressive central bank tightening began to recede. The 10-year US Treasury yield has slumped from just under 3.50% in mid-June to around 2.88% at the time of writing, coming off earlier lows when it hit a more than three-month trough.

The yen also drew safe-haven demand, rising against all of its major peers and pushing the US dollar below the 131 level. The greenback has been struggling from pared back expectations for Fed tightening amid signs that the US economy is cooling and Powell hinting at a slower pace of rate increases down the line.

With the yen already enjoying a mini revival on the back of narrowing yield spreads with Japanese government bonds, it is the clear winner from today’s risk-off episode, while the dollar is barely ticking higher against a basket of currencies.

It remains to be seen whether Fed speakers coming up later today will be able to add more momentum behind the dollar’s attempt to halt its descent. Chicago Fed President Charles Evans and St. Louis Fed chief James Bullard are both set to speak.

Investors will likely be watching for any comments about inflationary pressures beginning to ease after yesterday’s ISM manufacturing PMI survey showed the prices paid index unexpectedly plunged in July.

Aussie pummelled by a more cautious RBA

In other currencies, the Australian and New Zealand dollars stood out as the worst performers, with the euro and pound faring somewhat better.

Sterling is on the backfoot today after a very strong couple of weeks, testing the $1.22 level. But growing expectations that the Bank of England will deliver a double hike on Thursday should keep the currency supported.

The same cannot be said for the aussie, which nosedived 1.50% after the Reserve Bank of Australia cast doubt about further big rate increases even as it lifted the cash rate by 50 basis points on Tuesday as expected. Like the Fed, the RBA refrained from giving guidance on the size of future rate hikes, citing the uncertainty around the outlook, with investors interpreting this as a dovish shift.


Dernières actualités



Technical Analysis – Nike stock bounces back from 2½-year low but outlook still bearish


Technical Analysis – EURUSD meets 200-period SMA and tests 0.9900


Daily Market Comment – Markets shrug off OPEC+ cut and solid US data, await US jobs report

Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.

Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.

Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.

Nous utilisons des cookies pour vous donner la meilleure expérience possible de notre site internet. En savoir plus ou modifier vos paramètres de cookies.

Avertissement sur les risques : votre capital est à risque. Les produits à effet de levier ne sont pas recommandés pour tous. Veuillez consulter notre Divulgation des risques