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Asian Stocks Mixed As Australia Gets New PM, Fed's Powell Up Next

Asian Stocks Mixed As Australia Gets New PM, Fed's Powell Up Next

2018-08-24 04:58:00
David Cottle, Analyst
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Asian Stocks Talking Points:

  • Asia Pacific mainboards put in a mixed showing Friday
  • Australia got a new Prime Minister, boosting the Australian Dollar
  • Focus remains squarely on the Federal Reserve Chair, who will speak later in Wyoming

The DailyFX Third-Quarter Fundamental and Technical Forecasts are out now,

Asian stocks put in a mixed showing Friday with Austrlian politics coming to the fore against a backdrop of ongoing trade worries across the region.

The Australian Dollar and Sydney’s ASX 200 equity benchmark both rose on news that former Treasurer Scott Morrison will replace Malcom Turnbull as Prime Minister. Turnbull had lost the support of his Liberal party, which governs in coalition and the country, which now has its sixth Prime Minister in fewer than ten years.

The broader region saw risk appetite tepid at best following news Thursday that a round of talks between US and Chinese officials had ended without any trade breakthrough. That prompted the kicking-in of an additional $16 billion in US tariffs against Chinese goods, with retaliation promised.

Japanese inflation data came in below expectation again, with the Bank of Japan’s 2% target for annualized consumer price inflation still looking quite unreachable.

As investors digested all that, the Nikkei 225 was up 0.7%, with the ASX 200 0.3% to the good. Stocks in Shanghai, Hong Kong and Seoul were all lower, if only very slightly in the case of the Kospi.

Focus is also very much on the Kansas City Federal Reserve’s annual gathering of monetary policy heavyweights. It gets under way layer in Jackson Hole Wyoming, with Fed Chair Jerome Powell due to speak. Markets are pretty sure he and the rest of the Federal Open Markets Committee will be raising rates in September, but investors will scramble for any clues as to what may happen beyond that.

In the runup the US Dollar was broadly stronger although those Australian political headlines gave AUD/USD a little lift. The pair looks set for gains on its daily chart but at present they don’t seem likely to compensate bulls for that which political upheaval has lost them this week.

Higher, but not by much. Australian Dollar Vs US Dollar, Daily Chart

AUD/USD remains well shy of its weekly peak and, with interest rate differentials still so clearly in the US Dollar’s favor, it looks set to stay pressured.

Gold prices were steady through the Asian session while crude oil prices made back some of the ground they lost earlier as investors worried about global trade’s future.

There is plenty of meat left on Friday’s economic bones. Powell’s speech will of course top the bill but investors will also get a look at key US durable-goods order levels for July

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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