US equity markets retraced off record highs, taking a breather, or perhaps recognising ‘too late’ Powells warnings that the US share markets are overvalued? The USD Current Account contracted by the largest amount in US history, as imports crashed. This has been a tumultuous time for global trade and US ‘tariff wars’, which had triggered an avalanche of imports into the US, to avoid imposed tariffs. This massive contraction is probably a reflection of this surge prior to tariff implementation and signals a return to more normalised global trade environment. The USD Dollar was steady, with the EUR holding above 1.1800, while the GBP trades around 1,3500.
Australian, European and US PMI data were softer than expected, especially in the Manufacturing, but market attention now turns to inflation and growth. Australian inflation data will be released today, for August and is expected to show upward pressure. This will not be welcomed by the RBA and will deter further rate cuts. The AUD was unable to regain 0.6600, while the NZD struggles around 0.5850.
