US stocks rise and Treasury yields fall as weak US manufacturing adds to signs the Fed can cut in September. The Aussie dollar is weak, but CPI data tomorrow could be supportive. Vietnam’s exports surge with China’s supply chain diversification.
In our bonus deep dive interview ANZ Group Chief Economist Richard Yetsenga examines what a President Donald Trump version 2.0 might mean for global inflation, interest rates and trade.
5 things to know:
The Dallas Federal Reserve’s manufacturing activity index declined more than expected in July in another economic data point supporting a September rate cut by the FOMC, says ANZ Economist Bansi Madhavani.
With the FOMC expected to hold rates this week, the question becomes what is needed to lock in a September move? Bansi says the FOMC will be looking to balance its twin objectives of price stability and maximum employment.
One of the biggest currency movers over the last two weeks has been the Aussie dollar, which has fallen from nearly 68 USc to below 66 USc. ANZ Head of FX Research Mahjabeen Zaman says that’s due to flows to safe haven currencies and weakening commodity prices.
Mahjabeen says the Aussie dollar could benefit if the inflation number is stronger than expected and that increases the chances of the RBA hiking, especially when most other central banks are cutting.
Vietnam’s exports rose 19.1% in July from a year ago. ANZ FX Analyst Kausani Basak says that’s due to China’s move to diversify its export supply chains.
Cheers
Bernard
PS: Catch you tomorrow with what to look out for in Australia’s Q2 CPI data.
