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The rate differential underpinning this call has widened materially over 2026, with the RBA delivering three 25 basis point hikes this year to take the cash rate to 4.35 per cent, against a single ECB move in June that lifted the deposit rate to 2.25 per cent after nearly three years on hold. That leaves a spread of roughly 210 basis points in the Australian dollar's favour, among the widest in the G10, which Morgan Stanley says gives Australia the highest forward implied yields in the group. With implied volatility sitting near multi-month lows, the bank argues the setup favours carry flows into Australia over the near term, a dynamic that tends to compress further in genuinely calm FX conditions but can unwind sharply if volatility…

The VIX sitting at its lowest level of the year points to a market pricing very little event risk into the next several weeks, a gap UBS argues is justified by improving earnings revisions and softening near term case for a Fed hike, rather than complacency. The bank's central call, that incoming data should show continued disinflation and allow the Fed to extend its pause, would remove one of the more persistent overhangs on risk assets if it plays out, particularly with markets still pricing in more than one hike over the coming year. Geopolitical risk remains the clearest source of a volatility spike, spanning the unresolved Strait of Hormuz situation, the weekend's Israeli strikes on Lebanon, and renewed intensity in the…

Positioning ahead of Jackson Hole risks overweighting the podium and underweighting the committee. Warsh has curtailed forward guidance at every opportunity since taking office in May, shortened the postmeeting statement, and given deliberately evasive answers at both press conferences held so far, framing his approach explicitly around independence from what markets are pricing. A speech billed around big picture questions rather than near term guidance is consistent with that pattern, not a departure from it, which argues against trading the event as a guaranteed catalyst for a September repricing. The more durable signal sits in the FOM committee itself, where roughly half the participants penciled in hikes at Warsh's first meeting in…

No need to pay much attention to the data agenda for the session here. 

Australian data point is unlikely to move financial maekts much at all upon release. 

Brent and WTI both firmed modestly through Monday's session as the MOU deadline lapsed without renewal, with the market treating the outcome as expected rather than shock, given weeks of signalling that a deal was unlikely. The pivot in Iranian rhetoric from defensive to fully offensive, alongside the reported UAE tanker seizure, keeps a live risk premium under Brent even as actual flow data shows crude still moving out of the Gulf. Wright's framing that the world does not need Iranian oil right now argues for policymakers tolerating a prolonged embargo without moving to release strategic reserves, a stance traders will read as reducing the odds of near-term supply relief. The Qatar back channel is the one variable that could compress the…

The major U.S. stock indices closed lower, with selling accelerating into the afternoon as rising oil prices and higher Treasury yields weighed on investor sentiment. The declines came after the S&P 500 reached a record high last week, leaving the market vulnerable to some profit-taking.

The closing levels show:

• Dow industrial average: -272.03 points or -0.51% at 53,465.36
• S&P 500: -40.37 points or -0.52% at 7,745.38
• Nasdaq Composite: -84.25 points or -0.32% at 26,644.91
• Nasdaq 100: -50.76 points or -0.17% at 29,995.38
• Russell 2000: -10.87 points or -0.35% at 3,057.53

The S&P 500 and Dow were the weakest of the major indices, while the Nasdaq 100 held up relatively better.

Helping to contribute to the declines was higher in crude oil. WTI…

• Canada July CPI 3.0% y/y vs +2.9% expected
• US Empire Manufacturing index 20.60 vs 11.00 estimate
• Iran has set a deadline of "a few weeks" for full implementation of the MOU
• US 30-year yields rise to the highest since 2007
• US August NAHB housing market index 35 vs 33 expected

Markets:

• Gold up $42 to $4417
• US 10-year yields up 2.8 bps to 4.72%
• WTI crude oil up $2.03 to $84.43
• AUD leads, JPY lags
• S&P 500 down 0.5%

We're in the summer doldrums but it wasn't exactly dead today in markets. The main swing came after Iran's Fars news agency reported that the country had captured a UAE oil tanker. That led to a bid in oil that spilled over into bond and stock market sales. Compounding the worry was US 30-year yields hitting a fresh cycle high above 5.30% as…

The AUDUSD pushed higher today, extending above last week’s high and breaking through a swing area between 0.7077 and 0.70908. The move also carried the pair back into a broader swing zone dating from April through early June, where much of the price action was contained between 0.7077 and 0.7200.

The high today reached 0.7129, adding to the bullish technical picture. As long as the price can remain above the 0.7077–0.70908 breakout area, buyers remain firmly in control. Holding that support would keep the focus on further upside within the broader range toward 0.7200.

In the video above, I break down the technical levels driving the AUDUSD, why the bias remains tilted in favor of the buyers, and what needs to happen to keep the upside…

USD/JPY is at the highs of the day, up 25 pips to 159.55 as the intervention recovery continues. More importantly, the pair has edged above the post-intervention high of 159.57 as it continues to test both Japan's ministry of finance and the US treasury.

What scares me about this pair at the moment is that I don't know what the strategy of either the MoF or Treasury is. Yes, they both want the pair lower but how much? How far are they willing to go?

Japan doesn't have limited reserves and may be threatening to sell Treasuries.  The US, in turn, is using euro reserves to buy yen in a move that's also not unlimited and threatens a rift with Europe. It's also not clear why the flows are so strong that have driven USD/JPY higher. Is it simply a…

Oil prices are closing sharply higher, with WTI accelerating to the upside in the final hours of trading. The price settled at $84.50, up $2.10 or 2.55% on the day.

The Strait of Hormuz remains the key fundamental driver, as sharply reduced shipping traffic continues to fuel concerns about potential Middle East supply disruptions. At the same time, U.S.-Iran negotiations remain stalled, helping to keep a geopolitical risk premium embedded in crude prices.

There are, however, forces working to limit the upside. Gulf producers continue to find alternative routes to move barrels to market, easing some of the immediate supply concerns. Meanwhile, softer expectations for global demand and plans for increased OPEC+ production remain potential…

Have a look at this chart.

It shows  It is showing 69.1 GW of nominal data-centre IT capacity scheduled for delivery from August of this year through 2028.

The problem (or one of the problems) is going to be powering it all. 

The US had roughly 35–44 GW of nominal data-centre IT capacity in 2024 and projects 56–132 GW by 2030. That's a potential tripling and you can see it unfolding in this chart.

I'm skeptical it will get built on time at all, as shipping a broken app update is much easier than finishing a building and procuring all the chips and racks to run it. If that somehow takes place then the next bottleneck is even tighter -- power.

Increasingly, states are demanding that data centers supply their own power and now they're trying to…

The mood in markets is darkening at the moment and I suspect it's oil that's the tail wagging the dog.

WTI crude oil is now up $1.33 to $83.74 on the day and at a session high. It was as low as $81.50 earlier but has been bid up strongly in the past hour in a sign that Iran negotiations aren't going anywhere. There's a sense of disbelief that we're in a standoff right now and Iran is talking about escalating.

The gains came as Iran has reportedly seized a UAE-owned tanker in the Strait of Hormuz, Iranian state news agency Fars reported. That's some backing to the idea that they're willing to go into an offensive mode.

The US is threatening more economic actions while Iran is threatening more military actions and no one wants to sail in the…