The latest hit came as a round of trade talks between US and Chinese negotiators failed to yield any results.
In Frankfurt the focus shifted away from the talks and onto better-than-expected German GDP data which boosted the DAX on opening by 0.47%. The German economy expanded 0.5% in the second quarter and 2.3% on the year as household spending slowed in the quarter while government spending picked up; both exports and imports rose.
Euro firms, Australian dollar rallies the most
The slightly unexpected German numbers helped the euro firm against the dollar and the pound but the real star of the currency market was the Australian dollar which rallied as the country instated a conservative lawmaker as the new prime minister. The country has been embroiled in political uncertainty since the previous prime minister was ousted and the currency dropped 2% during August alone.
The greenback was static with traders holding back until a key speech by Federal Reserve Chairman Jerome Powell later today. Powell will meet fellow Federal Reserve bankers at the annual Jackson Hole central bankers’ retreat. European Central Bank President Mario Draghi and the Bank of Japan’s Haruhiko Kuroda who were on the invite list will not be attending the summit. The key focus of the event will be Powell’s speech on monetary policy in a changing economy which is expected to provide clues to the Fed’s plans on a further interest rate rise in September.
Oil prices spike
Brent crude is trading up 0.87% this morning following a 3% spike yesterday triggered by US inventory data that showed a decline in domestic oil reserves. However, the US Department of Energy inventory report which caused the spike has been showing wild fluctuations this summer and may not be a reliable measure of the state of the market. What it did show is that there have been fewer imports into the US and this might have caused a decline in stocks.