Not a massive night for price action on the currency markets, but what we did see was signs of a little further strength in the USD.  Dennis Lockhart, Atlanta Fed President and voter in 2016 (not this year) suggested the Fed’s delay from tightening at the Sept meeting was mostly influenced by market volatility. However, “as things settle down” and with the US economy ready for policy normalisation, he will be ready for the first hike on the path to a more “normal interest rate environment”. He is still expecting this by year-end, noting that the September FOMC was a “close call”. Lockhart said that October is “live” (he reminded that the Fed could do a press conference then, even though none is formally scheduled) and that a thin market at year-end is not an obstacle to a December move.  US data on existing home sales undershot expectations but as expected had no market reaction.

In contrast, and no doubt with one eye on the single currency, ECB Chief Economist Peter Praet admitted he was a “little bit worried” about the recent spike in market volatility but reiterated that if the ECB’s objectives were at risk they will do “what is necessary”, ready to “forcefully act” if their inflation mandate was seen as at risk.  Both more fuel under the fire fuelling the USD.

With a somewhat firmer USD, the AUD has been caught in the crossfire, the AUD trading toward the lower levels of earlier last week at 0.7130 this morning.  Spot iron ore fell 0.68% ($57.30/t) while copper was up 0.29%; oil rose, Brent up 2.55%.

BoC Governor Stephen Poloz has also been speaking overnight with some balanced views on the Canadian economy, noting that the Canadian dollar is mitigating the oil shock damage.  The Canadian dollar has been weaker overnight, notwithstanding a push back up in global oil prices.

BoE Governor Mark Carney has also been speaking, but on financial market reform.  Deputy Governor Cunliffe did a press interview saying that the next move for the BoE is up but hosing that down by noting disinflationary pressures from abroad and seeing no signs of building price pressure, noting rate increases to be limited and gradual.  The GBP is little changed.

Coming up today/tonight

ANZ-Roy Morgan’s consumer confidence reading for last week will be an initial reflection of the new Turnbull Government initial impact on consumer confidence. Of course, Federal leadership is but one of a plurality of factors that impact on consumer confidence but it some initial lift in confidence would not surprise, especially given this morning’s increase in Newspoll political ratings.

Today’s ABS House prices for the June quarter and will largely be seen as of historical interest given that we already have CoreLogic RP Data house prices for the first three weeks of September.  The CoreLogic RP Data prices rose by 2.5% for Q2, so we’d be looking for a rise close to that.

China’s leading index for August is out this morning but it’s not market sensitive at all, at least not so far anyway.  Tokyo’s three day holiday continues today and tomorrow.

Tonight should be relatively uneventful as far as scheduled events are concerned.  The ECB’s Nuoy is speaking and she is the Chair of the ECB’s Supervisory Council, so the market might well be looking for a renewed push from her on the need for uniform prudential supervision across Euro economies.  This comes in the light of recent comments that Germany is looking to strengthen its own legislation to go its own way, the German Finance Ministry barely giving lip services to ECB claims for cross border prudential alignment and authority, according to wire reports.  Only second tier data is due: the UK has CBI trends and monthly public finance reports, there is EC Consumer Confidence while in the US there is the FHFA house prices and the Richmond Fed manufacturing index.

Overnight

US$ up further; equities too for once: Eurostoxx 600 +0.9%, Dax +0.3%, CAC +1.1%, FTSE +0.1%.  Dow +126 points to 16,510, +0.8%, S&P 500 +0.8%, Nasdaq +0.0%, VIX 20.14 -9.6%.  Shaghai +1.9%, Mumbai +1.9%, Nikkei 225 +0.0% and ASX 200 -2.0%; ASX SPI futures this morning +0.5%.  US bond yields: 2s at 0.71% (3), 10s at 2.20% (+7).  WTI oil at $46.48 (+4.0%), Brent at $48.64 (+2.5%), Malaysian Tapis (yesterday) $47.89 (-3.1%).  Gold at $1132.60/oz (-0.5%). Base metals: LME copper +0.3%, nickel +2.0%, aluminium -0.5%. Iron ore $57.3/t -0.7% Chinese steel rebar futures -0.3%. Soft commodities spot futures: wheat +2.1%, sugar -0.3%, cotton +0.4%, coffee -0.9%.  Euro Dec 14 CO2 emissions at €7.99/t (-1.6%). The AUD/USD’s range overnight 0.7122-0.7182; indicative range today 0.7110-0.7160; the AUD/USD is 0.7130 now

China’s MNI Business Indicator (Sep) 51.3 (L: 56.0); it’s based on a survey of 200 listed companies

US Existing Home Sales (Aug) 5.31M/-4.8% (L: 5.59M/+2.0%; E: 5.50M/-1.6%)

For full analysis, download report:

• Markets Today: 22 September 2015 (PDF, 320KB)

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